Winter Solstice has come and gone. As the hours of darkness shorten, the coldest days of winter are still to come. Somehow the impending gloom of winter sets just the right mood for the ongoing retransmission consent and content licensing tussles that come around this time of year.
Time Warner Cable is shaking things up with Smith Broadcasting and Sinclair. You may remember a while back, it was Sinclair who was involved in very nasty and public negotiations with Mediacom. The big issue between Time Warner Cable and Sinclair is that Sinclair is tying retransmission consent for their CW stations to retransmission consent for their Fox affiliated stations. While the concept of tying is nothing new in the content distribution world (most cable network groups require carriage of multiple services by cable operators, much like the way studios license packages of movies to broadcasters or premium services) it somehow takes on a different flavor when it is coming from the broadcasters. Time Warner would rather have the option of not carrying the CW stations or forcing them to elect must carry status with no payment required.
What make the negotiations different this time around is that Time Warner Cable has a card up their sleeve - apparent rights from Fox to carry network programming via an "insurance feed" or “cooling off feed” for up to a year. Understandably, this has left many local Fox affiliates feeling a bit confused and thrown under the bus. It is a surprising development in that it is the first time that a broadcast network has given these kinds of rights to cable operators. Just as curious is that the provision of a “cooling off” feed was not mentioned by either Time Warner Cable CEO Glenn Britt or Fox Broadcasting COO Chase Carey as part of their testimony during last month’s hearing on retransmission consent. Surely pointing to this as an example of a creative market based solution would have gained points with lawmakers who were grilling them that day.
To be sure, it’s not perfect. The deal allows Time Warner to get the national programming from the local stations feed for a reported 70 cents per subscriber per month, as long as the local affiliate OK's it. Truth be told, it is mainly the network programming that people are tuning in for anyway. The arrangement still allows the local station to deny access to its local news programming and syndicated fare. The 70 cents would then be split between Fox and the local affiliate. The big "gotcha", of course, is that the local affiliate still has the option of saying no and blocking the feed. All the same, it is something. Nonetheless, Sincliar is reportedly not interested in the option. Apparently they are not too thrilled about their take of the 70 cents.
While the local affiliate still holds the cards, it does give the network some political cover. The larger question is whether other broadcast groups will offer similar rights to other cable operators, telephone companies or satellite distributors. As the arrangement stands now, it is not a game changer, but there is a potential that the playing field could shift subtlely with broadcast affiliates left questioning where the allegiances of the network suits really lie. Does it get any colder than that?
Tuesday, December 21, 2010
Wednesday, December 1, 2010
Sweeney: ABC – Google TV Deal “Not Close”
In an interview with Reuters, Disney TV chief Anne Sweeney said that although they are in discussions with Google and have seen several demonstrations, ABC is "not close" to doing a deal to provide its content to the Google TV platform. This comes on the heels of both CBS and NBC blocking their content from Google TV.
Sweeney mentioned that piracy is one of the primary concerns, going so far as to say that it was unacceptable to ABC that the Google search platform present pirate sites when consumers search for ABC content on the web. Further, Sweeney indicated that ABC's web strategy is to provide limited programming from current seasons with wider access to prior season programming in order to drive value to the programming that is being shown on the broadcast network - moving the content through windows in a similar fashion as feature films.
In an age of instant Internet gratification and with the lesson of Napster fresh in their memories, it is little wonder that piracy is an issue for the broadcasters. They are being pressured by affiliates and cable operators who are telling them that putting content on the Internet lessens its value. Meanwhile, Gen X, Y and Millennial consumers are accustomed to having content served up at their convenience at a time and place and on the device of their choosing. They are less concerned with how it gets to them and not even remotely concerned with the content owners' business model.
Network executive like Sweeney are paid to follow the money. They are not going to jeopardize broadcast and cable dollars for digital pennies. Meanwhile, a significant portion of the Internet generation believes that content wants to be free; an attitude that undermines the business model of the content owners.
For now it looks like Google TV is on the market with only a limited amount of content. Absent providing "one stop shopping" with a line-up of content that more closely mirrors that of cable and satellite providers, Google TV is destined to be a niche curiosity product. Major content owners will not give away their product cheaply and will continue to demand assurances of security. Until Google can address the "fear of Napsterization", the big players will take meeting but won't be signing any deals soon.
Sweeney mentioned that piracy is one of the primary concerns, going so far as to say that it was unacceptable to ABC that the Google search platform present pirate sites when consumers search for ABC content on the web. Further, Sweeney indicated that ABC's web strategy is to provide limited programming from current seasons with wider access to prior season programming in order to drive value to the programming that is being shown on the broadcast network - moving the content through windows in a similar fashion as feature films.
In an age of instant Internet gratification and with the lesson of Napster fresh in their memories, it is little wonder that piracy is an issue for the broadcasters. They are being pressured by affiliates and cable operators who are telling them that putting content on the Internet lessens its value. Meanwhile, Gen X, Y and Millennial consumers are accustomed to having content served up at their convenience at a time and place and on the device of their choosing. They are less concerned with how it gets to them and not even remotely concerned with the content owners' business model.
Network executive like Sweeney are paid to follow the money. They are not going to jeopardize broadcast and cable dollars for digital pennies. Meanwhile, a significant portion of the Internet generation believes that content wants to be free; an attitude that undermines the business model of the content owners.
For now it looks like Google TV is on the market with only a limited amount of content. Absent providing "one stop shopping" with a line-up of content that more closely mirrors that of cable and satellite providers, Google TV is destined to be a niche curiosity product. Major content owners will not give away their product cheaply and will continue to demand assurances of security. Until Google can address the "fear of Napsterization", the big players will take meeting but won't be signing any deals soon.
Tuesday, November 23, 2010
Retrans Recap
So, the Retransmission Consent hearings are over (for now) and all of the usual suspects got to have their say on the issue. Keeping to the script, the MSOs asked for some changes in the regime, arguing that Retransmission Consent is another in the long litany of special privileges that broadcasters enjoy. Broadcasters insisted that they need a dual revenue stream to compete. Small programmers argued that the tying involved in many Retransmission Consent agreements makes it difficult for them to gain carriage. For the most part, the hearing was predictable and civil. It was, however, suprising to hear Jay Rockefeller (D WV) rant on the record about the polarizing nature of Fox News and MSNBC and his wish that the FCC could somehow make them go away. It was no suprise either that several Senators suggested the popular notion that the time may have come for the industry to consider a la carte pricing models. Other than that there was not much newsworthy that came of it as John Kerry (D MA) tried to keep the hearing focused on finding a solution to keep broadcast signals on cable systems during retransmission consent negotiations.
It's always easy to tell who benefits the most from the status quo - it's the guy who defends it the most vigorously. That was the role that Chase Carey from Fox played. Carey insisted that taking away the ability to deny carriage strips him of his leverage and eliminates any incentive for a cable operator to get a deal done. He also pointed fingers at Cablevision as the party that used it subscribers to win political gain. Well, there was a hearing after all.
More than a few eyebrows were raised by the fact that different cable providers in the same market can be charged different rates by the same broadcaster for the same signal. In an effort to bring a modicum of transparency to the process, it was suggested that the numbers involved no longer be subject to confidentiality (gasp!).
More than once the lawmakers suggested (or threatened) that if "the market" can't figure things out on their own, then Washington will get involved. With that stance it won't be a suprise that there will be more high profile retransmission consent disputes that result in temporary drops of broadcast feeds. For now it is hard to see what the appetite inside the beltway is for taking another swipe at cable regulation given the much larger problems that the country faces. One thing is for sure, once the ball gets rolling it may be a matter of "being careful what you wish for". Washington is a sausage factory. You can start out with the best of intentions, but along the way it inevitably gets ground up and flavoered beyond all recognition. But for now Retransmission Consent is like the weather, everyone talks about it but nobody does anything about it.
It's always easy to tell who benefits the most from the status quo - it's the guy who defends it the most vigorously. That was the role that Chase Carey from Fox played. Carey insisted that taking away the ability to deny carriage strips him of his leverage and eliminates any incentive for a cable operator to get a deal done. He also pointed fingers at Cablevision as the party that used it subscribers to win political gain. Well, there was a hearing after all.
More than a few eyebrows were raised by the fact that different cable providers in the same market can be charged different rates by the same broadcaster for the same signal. In an effort to bring a modicum of transparency to the process, it was suggested that the numbers involved no longer be subject to confidentiality (gasp!).
More than once the lawmakers suggested (or threatened) that if "the market" can't figure things out on their own, then Washington will get involved. With that stance it won't be a suprise that there will be more high profile retransmission consent disputes that result in temporary drops of broadcast feeds. For now it is hard to see what the appetite inside the beltway is for taking another swipe at cable regulation given the much larger problems that the country faces. One thing is for sure, once the ball gets rolling it may be a matter of "being careful what you wish for". Washington is a sausage factory. You can start out with the best of intentions, but along the way it inevitably gets ground up and flavoered beyond all recognition. But for now Retransmission Consent is like the weather, everyone talks about it but nobody does anything about it.
Wednesday, October 27, 2010
Cablevision vs. FOX: The Good, The Bad and The Ugly
October is winding down, trees are ablaze in orange and red, football season is in full swing while baseball season has boiled down to two teams, but it seems like everyone’s attention is held by the animosity and accusations that are being flung like so much mess in the primate house. No, I’m not talking about the waning days of highly contentious mid-term elections; I’m talking about the very public dispute between Fox and Cablevision.
It’s a week after local Fox stations going dark on Cablevision systems and the rhetoric is getting even hotter. Politicians ranging from NJ Governor Chris Christie and MA Senator John Kerry have weighed in. Meanwhile, Cablevision subscribers have been without the post season play of their beloved New York Yankees and may soon miss out on the World Series. I don’t think this is what Washington had in mind when the retrans rules were written. They expected reasonable people to come to a business agreement. Instead, what they are seeing are media moguls tussling over money while the consumer is held hostage.
Now the latest developments have both sides crying foul and hitting the press with both guns blazing; Cablevision accusing Fox of not negotiating in good faith by making “take it or leave it” offers and Fox accusing Cablevision of asking for preferential treatment (don’t get me started on MFNs) and manipulating the whole process to bring about a political resolution and a change in the law. Cablevision is making hay of Fox’s refusal to submit to binding arbitration. There was even a point where Cablevision subscribers were denied access to Fox programming on the internet. Now Fox is threatening to sue Cablevision, asserting that the MSOs phone reps are telling subscribers they can get their favorite Fox programming by accessing pirate websites. While there may be a grain of truth to each of the accusations, the amplification of the distortions makes each side’s argument look like signs at a Tea Party rally. There seems to be no end to the lengths that both parties will go to make their respective points. Jimmy Dolan even suggested a meeting be held with himself, FOX CEO Chase Carey and the FCC to hammer out a deal.
So there you have it. Another carriage dispute made very public as the cable and broadcast industry both air some very dirty laundry. Who’s right? Who’s wrong? How long will it go on? Who knows? Programming deals are never easy, and retrans deals are probably the toughest of all. While there may be something for the cable guys to gain by making the process political theater, in the short them the only thing to be had is consumer disgust. In the mean time Dolan watching continues to be one of the industry’s favorite spectator sports.
It’s a week after local Fox stations going dark on Cablevision systems and the rhetoric is getting even hotter. Politicians ranging from NJ Governor Chris Christie and MA Senator John Kerry have weighed in. Meanwhile, Cablevision subscribers have been without the post season play of their beloved New York Yankees and may soon miss out on the World Series. I don’t think this is what Washington had in mind when the retrans rules were written. They expected reasonable people to come to a business agreement. Instead, what they are seeing are media moguls tussling over money while the consumer is held hostage.
Now the latest developments have both sides crying foul and hitting the press with both guns blazing; Cablevision accusing Fox of not negotiating in good faith by making “take it or leave it” offers and Fox accusing Cablevision of asking for preferential treatment (don’t get me started on MFNs) and manipulating the whole process to bring about a political resolution and a change in the law. Cablevision is making hay of Fox’s refusal to submit to binding arbitration. There was even a point where Cablevision subscribers were denied access to Fox programming on the internet. Now Fox is threatening to sue Cablevision, asserting that the MSOs phone reps are telling subscribers they can get their favorite Fox programming by accessing pirate websites. While there may be a grain of truth to each of the accusations, the amplification of the distortions makes each side’s argument look like signs at a Tea Party rally. There seems to be no end to the lengths that both parties will go to make their respective points. Jimmy Dolan even suggested a meeting be held with himself, FOX CEO Chase Carey and the FCC to hammer out a deal.
So there you have it. Another carriage dispute made very public as the cable and broadcast industry both air some very dirty laundry. Who’s right? Who’s wrong? How long will it go on? Who knows? Programming deals are never easy, and retrans deals are probably the toughest of all. While there may be something for the cable guys to gain by making the process political theater, in the short them the only thing to be had is consumer disgust. In the mean time Dolan watching continues to be one of the industry’s favorite spectator sports.
Friday, September 24, 2010
Programmers Seek Increases, Higher Cable Rates to Follow
An adage in investigative journalism was made popular during the heyday of the Watergate investigation; “Follow the Money”. Nowadays it seems you can follow the money spent for your cable or satellite service right back to the big media companies. Bob Iger at Disney is pointing to ABC Network taking a higher share of its broadcast affiliates retransmission consent fees, while Chase Carey over at Fox is telling his investors that National Geographic Channel and FX network should be receiving higher license fees from cable operators. Meanwhile, independent programmers like Hallmark Channel are seeing themselves dropped from line-up as providers like AT&T seek ways to reduce programming costs.
Guess what going to happen to your cable bill as ABC, FOX and others continue to demand increases in their license fees? That’s right; those increases are going to be passed directly on to the consumer. Anyone who thinks different or is of the belief that cable operators should absorb the increases should refer back to their Business 101 textbook. After all, Comcast, Time Warner Cable and all the rest have investors to answer to as well. With programming costs being one of the biggest line-items that cable operators have to deal with, what else would you expect?
Meanwhile cable operators seem to be whistling past the graveyard while they are losing subscribers and insisting that cord-cutting has nothing to do with it. All the while they are rolling out their own “TV Everywhere” services, providing a collection of video to their customers in a “walled garden” fashion.
Where does that leave the multichannel industry? Is cable dying a slow death, choking on ever increasing fees and programmer demands to carry a plethora of new channels that seem to come about with every contract renewal while customers are warming to the idea of program-by-program a la carte on line? Recent reports suggest that the industry is at the precipice of a long, slow decline. This isn’t the first time that the cable industry has seemingly stood at the edge of the abyss. No doubt the cable industry will find a way to survive this too.
Guess what going to happen to your cable bill as ABC, FOX and others continue to demand increases in their license fees? That’s right; those increases are going to be passed directly on to the consumer. Anyone who thinks different or is of the belief that cable operators should absorb the increases should refer back to their Business 101 textbook. After all, Comcast, Time Warner Cable and all the rest have investors to answer to as well. With programming costs being one of the biggest line-items that cable operators have to deal with, what else would you expect?
Meanwhile cable operators seem to be whistling past the graveyard while they are losing subscribers and insisting that cord-cutting has nothing to do with it. All the while they are rolling out their own “TV Everywhere” services, providing a collection of video to their customers in a “walled garden” fashion.
Where does that leave the multichannel industry? Is cable dying a slow death, choking on ever increasing fees and programmer demands to carry a plethora of new channels that seem to come about with every contract renewal while customers are warming to the idea of program-by-program a la carte on line? Recent reports suggest that the industry is at the precipice of a long, slow decline. This isn’t the first time that the cable industry has seemingly stood at the edge of the abyss. No doubt the cable industry will find a way to survive this too.
Wednesday, September 22, 2010
Is Ivi DOA?
So there is another start-up with a great idea. It goes like this, “Let’s be disruptive and pull TV signals off-air, stream them on the internet and charge a fee to subscribers to watch them.” Seattle based Ivi thinks they have a solid business case and an iron-clad legal argument that permits them to do this. However, broadcasters and other content owners think differently and have quickly slapped them with Cease and Desist letters.
Here’s the crux of the matter, Ivi argues that proposed payment to the Copyright Royalty Tribunal (CRT) obviate the need to pay stations directly or to even have an agreement in place with the broadcasters. However, it seems that Ivi’s logic is a bit clouded. They are leaning on payment to the CRT arguing that they are operating just as any other cable operator, but are ignoring retransmission consent saying that they are not a cable operator. Seemingly, Ivi wants it both ways.
For a start-up with less than $1 million in financing, it looks like Ivi will be spending all of their seed money on lawyers. They’ve already countersued the broadcasters and rights holders that have taken action against them; asking the local district court in Seattle to issue a declaratory ruling in their favor.
It seems to me that if you could lean on payments to the CRT to avoid negotiating retransmission consent, the cable guys would have done so long ago and live internet streaming of broadcast TV would be the norm. Along with the rest of the industry, I’ll be keeping an eye on this. For now it seems that the cards are stacked against Ivi.
Here’s the crux of the matter, Ivi argues that proposed payment to the Copyright Royalty Tribunal (CRT) obviate the need to pay stations directly or to even have an agreement in place with the broadcasters. However, it seems that Ivi’s logic is a bit clouded. They are leaning on payment to the CRT arguing that they are operating just as any other cable operator, but are ignoring retransmission consent saying that they are not a cable operator. Seemingly, Ivi wants it both ways.
For a start-up with less than $1 million in financing, it looks like Ivi will be spending all of their seed money on lawyers. They’ve already countersued the broadcasters and rights holders that have taken action against them; asking the local district court in Seattle to issue a declaratory ruling in their favor.
It seems to me that if you could lean on payments to the CRT to avoid negotiating retransmission consent, the cable guys would have done so long ago and live internet streaming of broadcast TV would be the norm. Along with the rest of the industry, I’ll be keeping an eye on this. For now it seems that the cards are stacked against Ivi.
Tuesday, September 7, 2010
CableLabs 3D Specs Paves One More Lane on the Road to Mass Adoption
Multichannel video providers have been dabbling in 3D programming for the past few months in order to prove the technology, test the waters with their consumers and enhance the perception that they are keeping up with new technologies. All of the 3D programming aired to date has been event driven content. With the adoption of 3D specs, CableLabs has taken the first step in paving the way for mass adoption of 3DTV.
In a way, as with HDTV 3D is a “chicken and egg” proposition. Is it that readily available 3D content will drive purchases of sets, or will content providers wait until there is a “critical mass” of 3D sets in homes before making the content available? ESPN and Discovery (who were both early movers in the HD) have already made their bets. As with any new technology, multiple specs lead to consumer confusion, which results in the delaying of a purchasing decision. Now that CableLabs has written 3DTV specs, it seems that there is one more lane of certainty on the road to mass adoption of 3DTV.
As is always the case on cable systems, it comes down to bandwidth. Fortunately, the move to all digital, switched digital, and ultimately IPTV systems will alleviate bandwidth problems for cable operators. The other pieces that still need to be understood are consumer appetite and elasticity of demand, programmer willingness to create content, the carriage/distribution deal and how operators will charge to recover the costs of 3DTV programming. Hey, we’re just getting started, folks!
In a way, as with HDTV 3D is a “chicken and egg” proposition. Is it that readily available 3D content will drive purchases of sets, or will content providers wait until there is a “critical mass” of 3D sets in homes before making the content available? ESPN and Discovery (who were both early movers in the HD) have already made their bets. As with any new technology, multiple specs lead to consumer confusion, which results in the delaying of a purchasing decision. Now that CableLabs has written 3DTV specs, it seems that there is one more lane of certainty on the road to mass adoption of 3DTV.
As is always the case on cable systems, it comes down to bandwidth. Fortunately, the move to all digital, switched digital, and ultimately IPTV systems will alleviate bandwidth problems for cable operators. The other pieces that still need to be understood are consumer appetite and elasticity of demand, programmer willingness to create content, the carriage/distribution deal and how operators will charge to recover the costs of 3DTV programming. Hey, we’re just getting started, folks!
Tuesday, August 3, 2010
Comcast - CBS Deal Completed Above the Fray
The announcement is out that Comcast and CBS have entered into a 10 year distribution deal that covers retransmission consent of CBS O&O stations as well as carriage of Showtime, Smithsonian Channel and the CBS College Sports Network and On Demand and online rights for certain CBS owned programming. This deal is notable for several reasons
First off is the term of the deal. Rather than keep the term to 3 years in order to mirror the usual retransmission consent election cycle, the deal has a 10 year term which is rather long by industry standards. As noted by CBS CEO Les Moonves, “There is a lot of flexibility built in”. I certainly hope so given the speed at which things change in the industry.
Secondly, the agreement encompasses more than just retransmission consent. Comcast was smart to tackle all of the networks at once. Strategically, it allowed them the ability to do some good old fashioned “horse trading”. As any negotiator and chess player knows, the more pieces you have to move around on the board, the better deal you are able to craft. There is no word whether CBS College Sports will be moved from the poorly penetrated Comcast sports tier to a more penetrated “digital basic” or “expanded basic”. Of course, it doesn’t hurt that Comcast is the largest player in the game either.
Lastly, the agreement was hammered out behind closed doors. Unlike recent negotiations between other cable operators and broadcasters, there were no public theatrics or threats of pulling the stations off the cable systems. Not that I expect this to change the very public way in which Time Warner Cable and The Walt Dinsey Co. are engaging over ESPN and ABC. To be sure, Comcast has traditionally handled their negotiations without high public drama. Even more so lately as the last thing that Comcast needs is a high profile struggle with a broadcaster at the same time that their deal to acquire GE’s NBC-Universal is under review. Perhaps CBS knew that and played it to their advantage.
As if to underline the nature of Comcast’s negotiation style, there was little chest thumping by CBS. While neither party disclosed the financial terms of the deal, there was no grand statement by CBS that the deal is proof that the "marketplace works". That pronouncement will be left to the NAB. However Moonves did say that Comcast negotiated in good faith and “kept their word” – just what Comcast needs the regulators to hear.
First off is the term of the deal. Rather than keep the term to 3 years in order to mirror the usual retransmission consent election cycle, the deal has a 10 year term which is rather long by industry standards. As noted by CBS CEO Les Moonves, “There is a lot of flexibility built in”. I certainly hope so given the speed at which things change in the industry.
Secondly, the agreement encompasses more than just retransmission consent. Comcast was smart to tackle all of the networks at once. Strategically, it allowed them the ability to do some good old fashioned “horse trading”. As any negotiator and chess player knows, the more pieces you have to move around on the board, the better deal you are able to craft. There is no word whether CBS College Sports will be moved from the poorly penetrated Comcast sports tier to a more penetrated “digital basic” or “expanded basic”. Of course, it doesn’t hurt that Comcast is the largest player in the game either.
Lastly, the agreement was hammered out behind closed doors. Unlike recent negotiations between other cable operators and broadcasters, there were no public theatrics or threats of pulling the stations off the cable systems. Not that I expect this to change the very public way in which Time Warner Cable and The Walt Dinsey Co. are engaging over ESPN and ABC. To be sure, Comcast has traditionally handled their negotiations without high public drama. Even more so lately as the last thing that Comcast needs is a high profile struggle with a broadcaster at the same time that their deal to acquire GE’s NBC-Universal is under review. Perhaps CBS knew that and played it to their advantage.
As if to underline the nature of Comcast’s negotiation style, there was little chest thumping by CBS. While neither party disclosed the financial terms of the deal, there was no grand statement by CBS that the deal is proof that the "marketplace works". That pronouncement will be left to the NAB. However Moonves did say that Comcast negotiated in good faith and “kept their word” – just what Comcast needs the regulators to hear.
Wednesday, July 28, 2010
STARZ Original Programming: Billion Dollar Baby
Reports are that STARZ CEO Chris Albrecht has been tasked with raising $1 Billion of off balance sheet financing for original programming. This is yet another confirmation that original programming will continue to be the tentpole of the premium service business.
In 1975, when HBO launched as the first national premium service, the idea of showing Hollywood titles on a round robin basis made sense. TV viewers had little alternatives other than local broadcast stations and a handful of nascent cable nets. Early VCRs were just starting to come on the market. Fast forward to today and between online viewing, retail and rental; not to mention cable VOD, the consumer has a variety of methods to receive Hollywood titles.
So it is no surprise that premium services continue to stress the importance of original programming, whether it is True Blood on HBO, Dexter and Nurse Jackie on Showtime or the slate of programming that STARZ is looking to produce with the new financing. A large part of the reason STARZ brought Albrecht on broad is as a result of his experience with original programming while he was at HBO.
This latest foray by STARZ is a natural and necessary step in their evolution. Although they have aired some original programming along the way, it was never to the same extent as HBO and Showtime. This is a great opportunity for STARZ to really shine.
In 1975, when HBO launched as the first national premium service, the idea of showing Hollywood titles on a round robin basis made sense. TV viewers had little alternatives other than local broadcast stations and a handful of nascent cable nets. Early VCRs were just starting to come on the market. Fast forward to today and between online viewing, retail and rental; not to mention cable VOD, the consumer has a variety of methods to receive Hollywood titles.
So it is no surprise that premium services continue to stress the importance of original programming, whether it is True Blood on HBO, Dexter and Nurse Jackie on Showtime or the slate of programming that STARZ is looking to produce with the new financing. A large part of the reason STARZ brought Albrecht on broad is as a result of his experience with original programming while he was at HBO.
This latest foray by STARZ is a natural and necessary step in their evolution. Although they have aired some original programming along the way, it was never to the same extent as HBO and Showtime. This is a great opportunity for STARZ to really shine.
Thursday, July 15, 2010
Retrans Rhetoric Heating Up
This week sees the formation of the American Television Alliance (ATA), a consortium of multichannel providers with a goal of raising awareness and ultimately changing policy on retransmission consent. Among the “strange bedfellows” in the ATA are Time Warner Cable, Direct TV, Cablevision and AT&T – companies that often compete against each other for multichannel subscribers, and in the case of Cablevision and AT&T, fight over access to and pricing of programming (but that’s for another day). A large part of the argument made by the ATA is that retransmission consent is essentially a consumer issue since any payment made by cable operators to broadcasters are ultimately passed on to the subscriber.
Predictably, the National Association of Broadcasters (NAB) scoffed at the ATA’s consumer rights stance, with an NAB spokesman berating it “as credible as BP executives joining Greenpeace”.
The rhetoric on both sides of the issue is just about as predictable as Keith Olbermann and Glenn Beck discussing the economy. Both sides passionately make valid points filtered through their own lenses. There is no doubt that the broadcast business model is changing and that cable operators have long benefitted from the carriage of local broadcast signals. However, cable operators are increasingly coming under pressure to keep rate increases in check and have even renewed an industry conversation on smaller and cheaper programming packages. All of this comes at a time when viewer options are expanding and much of the broadcast programming is finding its way to the web for free (Hulu’s premium aspirations notwithstanding). However, for the broadcasters to paint the formation of the ATA as an effort to do little more than protect the bottom line of the operators is a bit disingenuous given the boasting that NAB member companies have been doing on their quarterly calls about how much retrans dollars are contributing to their profits.
At the end of the day, retransmission consent is a consumer issue. It is one more cost that cable operators need to either absorb or pass along. Very often, these kinds of disputes turn into high profile corporate pissing contests, where the consumer is the one who ultimately gets soaked.
But really, is it wise for either side to be airing their grievances in public? Do viewers really need or want to peek into the “sausage factory”? I don’t think so. At the end of the day, viewers are not interested in the disagreements of corporate behemoths. Don’t ask them to take sides or get involved in the details or you may find they have little appetite for supporting either company in an argument over money. They just want to turn on their TV to get relevant entertainment and information without having to pay a whole lot of money to be advertised to in the process. But on the other hand, they do have a right to know why they might be losing access to their local news broadcast.
There is no doubt that both sides are preparing the battlefield and oiling the guns for upcoming renewals. The heightened rhetoric by both sides will certainly draw increased scrutiny from Washington should any of the negotiations get close to failing or actually fall apart and result in TV stations going dark on cable systems.
As with anything involving legislation, this is very much a matter of being careful what you wish for. The issues of Retransmission Consent and a la carte programming have been raised by legislators and interest groups in the course of the Comcast-NBCU merger hearings. Granted, what Retransmission Consent has turned into may indeed have been an unintended consequence of the 1992 Cable Act (which, by the way, was the result of Congress overriding a presidential veto), but can you really expect that the people who gave you the problem have any idea of how to fix it?
Predictably, the National Association of Broadcasters (NAB) scoffed at the ATA’s consumer rights stance, with an NAB spokesman berating it “as credible as BP executives joining Greenpeace”.
The rhetoric on both sides of the issue is just about as predictable as Keith Olbermann and Glenn Beck discussing the economy. Both sides passionately make valid points filtered through their own lenses. There is no doubt that the broadcast business model is changing and that cable operators have long benefitted from the carriage of local broadcast signals. However, cable operators are increasingly coming under pressure to keep rate increases in check and have even renewed an industry conversation on smaller and cheaper programming packages. All of this comes at a time when viewer options are expanding and much of the broadcast programming is finding its way to the web for free (Hulu’s premium aspirations notwithstanding). However, for the broadcasters to paint the formation of the ATA as an effort to do little more than protect the bottom line of the operators is a bit disingenuous given the boasting that NAB member companies have been doing on their quarterly calls about how much retrans dollars are contributing to their profits.
At the end of the day, retransmission consent is a consumer issue. It is one more cost that cable operators need to either absorb or pass along. Very often, these kinds of disputes turn into high profile corporate pissing contests, where the consumer is the one who ultimately gets soaked.
But really, is it wise for either side to be airing their grievances in public? Do viewers really need or want to peek into the “sausage factory”? I don’t think so. At the end of the day, viewers are not interested in the disagreements of corporate behemoths. Don’t ask them to take sides or get involved in the details or you may find they have little appetite for supporting either company in an argument over money. They just want to turn on their TV to get relevant entertainment and information without having to pay a whole lot of money to be advertised to in the process. But on the other hand, they do have a right to know why they might be losing access to their local news broadcast.
There is no doubt that both sides are preparing the battlefield and oiling the guns for upcoming renewals. The heightened rhetoric by both sides will certainly draw increased scrutiny from Washington should any of the negotiations get close to failing or actually fall apart and result in TV stations going dark on cable systems.
As with anything involving legislation, this is very much a matter of being careful what you wish for. The issues of Retransmission Consent and a la carte programming have been raised by legislators and interest groups in the course of the Comcast-NBCU merger hearings. Granted, what Retransmission Consent has turned into may indeed have been an unintended consequence of the 1992 Cable Act (which, by the way, was the result of Congress overriding a presidential veto), but can you really expect that the people who gave you the problem have any idea of how to fix it?
Wednesday, July 14, 2010
Is it Time for Cable MSOs to Think Small?
The coverage continues to fly about Time Warner Cable CEO Glenn Britt’s comments about the possibility of smaller packages of cable programming at a lower price. While not going so far as to endorse a la carte carriage of cable services, Britt’s comments does point towards a package of programming made up of 40 or 50 channels. The tricky part will be what gets put in the package and what gets left out.
Industry research shows that the average cable viewer watches only between 10 and 17 networks on their service on a regular basis. However, each individual cable subscriber has a different list of favorite channels. The issue is compounded even more in households where mom, dad and each of the kids all have a different list.
While Glenn Britt should be applauded for moving the conversation forward, we have yet to hear from the content providers (one wonders if Mr. Britt would have made these types of comments before Time Warner Cable was spun off by its parent company). In the final analysis, the cable operators can only do what the programmers will allow. There is an expectation that smaller operators with no programming interests would love to get in on this plan. The stumbling block in the plan is that most of the programmers currently in the large “expanded basic” package likely require broad penetration as a condition of carriage. Even networks with limited appeal like Food Network and Versus could have these kinds of packaging requirements. I ask you, what network owned by a major media company will be the first to step up and permit a cable operator to reduce their distribution by putting them on a lower penetrated tier?
If it is truly a matter of controlling costs, then logic would dictate that the networks with the highest license fees would be the first to go. While some subscribers may be indifferent to the loss of highly priced sports services like ESPN and the local regional sports networks (which are typically owned by cable operators like Comcast and Cox) in return for a reduction of their cable bill, other subscribers will certainly not be happy. Of course, all it would take to derail the plan by Time Warner would be a competitor like Verizon, AT&T, DISH or DirecTV committing to keeping these services on their expanded basic service.
An alternate strategy of placing a bunch of inexpensive and relatively low viewed services like home shopping and religious networks services on a low cost introductory tier and bundling the popular services like Discovery, Disney Channel, Nickelodeon and TNT on a more expensive tier will do nothing to truly address the issue and will further damage the low reputation that cable providers tend to have among the public.
While many cable subscribers intuitively like the idea of a la carte, the average consumer’s concept of how it would likely operate is ill informed at best. Subscribers currently now getting 100 channels for $50, will not be able to simply choose any twenty channels and only pay $10. It’s not going to work that way, as cable networks will need to increase their per subscriber rate as they lose subscribers in order to be kept whole, especially taking into account the resulting loss of advertising dollars.
At the end of the day it’s all about total revenues for the programmers with the operators increasingly feeling like collection agencies for the networks. Something tells me that we haven’t seen the last of this kind of talk. If anything, the operator/programmer relationships will continue to be thorny. Networks continue to insist on wider distribution for their new and emerging services and operators of all sizes continue to find their margins squeezed by an increasingly frugal subscriber base that is beginning to look at other options for video.
Industry research shows that the average cable viewer watches only between 10 and 17 networks on their service on a regular basis. However, each individual cable subscriber has a different list of favorite channels. The issue is compounded even more in households where mom, dad and each of the kids all have a different list.
While Glenn Britt should be applauded for moving the conversation forward, we have yet to hear from the content providers (one wonders if Mr. Britt would have made these types of comments before Time Warner Cable was spun off by its parent company). In the final analysis, the cable operators can only do what the programmers will allow. There is an expectation that smaller operators with no programming interests would love to get in on this plan. The stumbling block in the plan is that most of the programmers currently in the large “expanded basic” package likely require broad penetration as a condition of carriage. Even networks with limited appeal like Food Network and Versus could have these kinds of packaging requirements. I ask you, what network owned by a major media company will be the first to step up and permit a cable operator to reduce their distribution by putting them on a lower penetrated tier?
If it is truly a matter of controlling costs, then logic would dictate that the networks with the highest license fees would be the first to go. While some subscribers may be indifferent to the loss of highly priced sports services like ESPN and the local regional sports networks (which are typically owned by cable operators like Comcast and Cox) in return for a reduction of their cable bill, other subscribers will certainly not be happy. Of course, all it would take to derail the plan by Time Warner would be a competitor like Verizon, AT&T, DISH or DirecTV committing to keeping these services on their expanded basic service.
An alternate strategy of placing a bunch of inexpensive and relatively low viewed services like home shopping and religious networks services on a low cost introductory tier and bundling the popular services like Discovery, Disney Channel, Nickelodeon and TNT on a more expensive tier will do nothing to truly address the issue and will further damage the low reputation that cable providers tend to have among the public.
While many cable subscribers intuitively like the idea of a la carte, the average consumer’s concept of how it would likely operate is ill informed at best. Subscribers currently now getting 100 channels for $50, will not be able to simply choose any twenty channels and only pay $10. It’s not going to work that way, as cable networks will need to increase their per subscriber rate as they lose subscribers in order to be kept whole, especially taking into account the resulting loss of advertising dollars.
At the end of the day it’s all about total revenues for the programmers with the operators increasingly feeling like collection agencies for the networks. Something tells me that we haven’t seen the last of this kind of talk. If anything, the operator/programmer relationships will continue to be thorny. Networks continue to insist on wider distribution for their new and emerging services and operators of all sizes continue to find their margins squeezed by an increasingly frugal subscriber base that is beginning to look at other options for video.
Thursday, June 24, 2010
3D Spaghetti
A recent interview of ESPN’s tech guru Chuck Pagano by TV Technology Editor-in-Chief Tom Butts had me thinking again about 3DTV. For now, ESPN is the only programmer actively involved in 3D on a regular basis. Although Discovery Communications made an announcement earlier this year, their 3D channel is not slated to launch until early 2011.
Pagano likens current efforts to “throwing 3D spaghetti at the wall to see what sticks” admitting that it is largely an experimental endeavor. With 85 events scheduled for 3D in the first 12 months of the grand experiment, it seems that 3D is mirroring the early days of HDTV – limited content designed to test the waters, make sure the technology is stable, and assess consumer interest. In part, the limited schedule also harkens back to the early days of HD when there were just not enough production trucks. The same may be said for other 3D events such as The Masters and TNT’s plans to broadcast the July 4th weekend NASCAR event in 3D. There is also an element of operating less on a strict 3D business plan than putting forth a PR and branding message that the company is keeping on top of new technologies.
At this point, the limited deployment of 3D sets in the market makes for an environment where it is far too early to project whether this iteration of 3DTV will be a winner or not. But one thing is for sure, 3DTV has had more traction than ever before. Producers, distributors, and consumer electronics manufacturers all seem to be puling together this time. Still, it will be a matter of distributors being able to commit enough bandwidth should mass adoption of 3DTV come to pass. For all the commitment being shown by the likes of DirecTV, Comcast, ESPN, SONY, Discovery and IMAX, in the end there is a great deal of hoping that the consumer isn’t on a low carb diet when the 3D Spaghetti comes to the table.
Pagano likens current efforts to “throwing 3D spaghetti at the wall to see what sticks” admitting that it is largely an experimental endeavor. With 85 events scheduled for 3D in the first 12 months of the grand experiment, it seems that 3D is mirroring the early days of HDTV – limited content designed to test the waters, make sure the technology is stable, and assess consumer interest. In part, the limited schedule also harkens back to the early days of HD when there were just not enough production trucks. The same may be said for other 3D events such as The Masters and TNT’s plans to broadcast the July 4th weekend NASCAR event in 3D. There is also an element of operating less on a strict 3D business plan than putting forth a PR and branding message that the company is keeping on top of new technologies.
At this point, the limited deployment of 3D sets in the market makes for an environment where it is far too early to project whether this iteration of 3DTV will be a winner or not. But one thing is for sure, 3DTV has had more traction than ever before. Producers, distributors, and consumer electronics manufacturers all seem to be puling together this time. Still, it will be a matter of distributors being able to commit enough bandwidth should mass adoption of 3DTV come to pass. For all the commitment being shown by the likes of DirecTV, Comcast, ESPN, SONY, Discovery and IMAX, in the end there is a great deal of hoping that the consumer isn’t on a low carb diet when the 3D Spaghetti comes to the table.
Monday, March 8, 2010
ABC-Cablevision Retrans Deal Announced
The highly public dispute between ABC Network and New York’s Cablevision was settled at approximately 8:50 last night and signal was restored to Cablevision subscribers shortly after the start of the Oscars broadcast, ending a long running feud that saw the signal of WABC go dark on Cablevision for 21 hours. As expected politicians weighed in including Senators John Kerry and Joe Barton as well as 60 or so New York area politicians who signed a letter urging that the signal not go dark. In keeping with the script, both sides put a positive spin on the resolution. Cablevision thanked it customers for their support while WABC7 announced “an agreement in principle that recognizes the fair value of ABC7.”
According to the Los Angeles Times, after asking for close to $1.00 per subscriber, ABC apparently settled for a monthly per subscriber rate between 27 and 65 cents. Although Verizon mounted a strong acquisition campaign to capitalize on the dispute, there is no word how many defections Cablevision experienced. If anything, the public nature of the feud helped to heighten the issue of retransmission consent among lawmakers and the general public. However, with much larger priorities in Washington, and the deal settled, the issue will likely fade into the background until the next time a deal goes down to the wire, or beyond.
According to the Los Angeles Times, after asking for close to $1.00 per subscriber, ABC apparently settled for a monthly per subscriber rate between 27 and 65 cents. Although Verizon mounted a strong acquisition campaign to capitalize on the dispute, there is no word how many defections Cablevision experienced. If anything, the public nature of the feud helped to heighten the issue of retransmission consent among lawmakers and the general public. However, with much larger priorities in Washington, and the deal settled, the issue will likely fade into the background until the next time a deal goes down to the wire, or beyond.
Wednesday, March 3, 2010
Retrans Redux
Another retrans battle is heating up. This time the battleground is New York and the contestants are Cablevision and WABC-TV 7, an ABC Network O&O station. The stakes: A threat by ABC Disney to pull Cablevision’s retransmission rights on the eve of the Oscar broadcast this weekend. The usual partisan talking points are being bandied about; WABC claiming that Cablevision should “acknowledge the station’s value to their business” and come to a “fair agreement” while Cablevision claims WABC is holding “Cablevision customers hostage by forcing them to pay what amounts to a new TV tax”, while urging ABC Disney to work with them to “reach a fair agreement.”
As is often the case, the truth lies somewhere in the middle. Most interesting in a statement from WABC Pres/GM Rebecca Campbell earlier this week, she referred to the fact the “viewers can watch their favorite ABC7 shows free, over-the-air, or by switching to one of Cablevision's competitors.” No surprise that competitors are mentioned, but to bring up “free over-the-air” to remind customers that ABC is asking Cablevision to pay for what is available free? Most curious.
So the battle lines are drawn and we all wait to see what will happen next. Who will be the first to blink? Will it go down to the wire or beyond? What New York politician will be the first to urge the parties to come to an agreement? One thing is for sure, whether WABC goes dark on Cablevision or not, eventually the parties will work out a deal and both sides will claim victory as if retrans is a zero-sum game. WABC will say the retrans regime is not broken and the market works, and Cablevision will increase its subscription rates to cover the additional cost. It’s like a remake of a movie with a stale plot.
As is often the case, the truth lies somewhere in the middle. Most interesting in a statement from WABC Pres/GM Rebecca Campbell earlier this week, she referred to the fact the “viewers can watch their favorite ABC7 shows free, over-the-air, or by switching to one of Cablevision's competitors.” No surprise that competitors are mentioned, but to bring up “free over-the-air” to remind customers that ABC is asking Cablevision to pay for what is available free? Most curious.
So the battle lines are drawn and we all wait to see what will happen next. Who will be the first to blink? Will it go down to the wire or beyond? What New York politician will be the first to urge the parties to come to an agreement? One thing is for sure, whether WABC goes dark on Cablevision or not, eventually the parties will work out a deal and both sides will claim victory as if retrans is a zero-sum game. WABC will say the retrans regime is not broken and the market works, and Cablevision will increase its subscription rates to cover the additional cost. It’s like a remake of a movie with a stale plot.
Thursday, February 4, 2010
Comcast/NBC-U Hearings Post-Game Analysis
The hearings just wrapped up on the hill. Mr. Roberts and Mr. Zucker, for the most part, did a good job presenting their case, despite the flogging Al Franken (D, MN) give Brian on Comcast's seemingly contradictory behavoir on program access and program carriage in the afternoon session.
Kudos to Colleen Abdullah of WOW for patiently, calmly and without hyperbole, explaining the position of the small cable operator/competitor. It took a fair amount of guts for her to sit at the same table with Mr. Roberts and Zucker and point out the issues that the entire industry is dealing with: program carriage demands (including tiering restrictions); retransmission consent; smaller operators paying “up to 20% more” for the same channels as larger operators; the squeezing of margins as a result of programming costs increasing faster than they can raise rates to consumers; and the lack of pricing transparency.
Although he was not a witness at the morning House Communications and Internet Subcommittee hearing, Andy Schartzman from the Media Access Project was on top of the facts and presented his arguments cogently in the afternoon before the Senate Judiciary Antitrust hearing. As usual, Mark Cooper from the Consumer Federation of America was big on sweeping generalities without presenting many numbers to back up his case - kind of scary for a guy with the word “Research” in his title. Additionally, he does not seem to grasp what TV Everywhere is all about – a value-add for video subscribers and not a product designed for cable operators to get into the OTT video business. Cooper even brought up a la carte!
Unfortunately a two to two and a half hour hearing in front of each group with each legislator getting only 5-7 minutes to question the witnesses does not provide the opportunity for the depth of discussion needed to really dig into all of the issues in the matter, while only a few of the legislators seemed to have a really good grasp on the issues. House and Congressional staffers will be working hard to sort though all of the testimony and written follow-ups that were requested. There will definitely be more hearings, and I’ll be staying tuned to see what conditions get placed on the merger.
BTW – For all of you folks at Turner, Senator Arlen Specter (D, PA) loves TCM!
Kudos to Colleen Abdullah of WOW for patiently, calmly and without hyperbole, explaining the position of the small cable operator/competitor. It took a fair amount of guts for her to sit at the same table with Mr. Roberts and Zucker and point out the issues that the entire industry is dealing with: program carriage demands (including tiering restrictions); retransmission consent; smaller operators paying “up to 20% more” for the same channels as larger operators; the squeezing of margins as a result of programming costs increasing faster than they can raise rates to consumers; and the lack of pricing transparency.
Although he was not a witness at the morning House Communications and Internet Subcommittee hearing, Andy Schartzman from the Media Access Project was on top of the facts and presented his arguments cogently in the afternoon before the Senate Judiciary Antitrust hearing. As usual, Mark Cooper from the Consumer Federation of America was big on sweeping generalities without presenting many numbers to back up his case - kind of scary for a guy with the word “Research” in his title. Additionally, he does not seem to grasp what TV Everywhere is all about – a value-add for video subscribers and not a product designed for cable operators to get into the OTT video business. Cooper even brought up a la carte!
Unfortunately a two to two and a half hour hearing in front of each group with each legislator getting only 5-7 minutes to question the witnesses does not provide the opportunity for the depth of discussion needed to really dig into all of the issues in the matter, while only a few of the legislators seemed to have a really good grasp on the issues. House and Congressional staffers will be working hard to sort though all of the testimony and written follow-ups that were requested. There will definitely be more hearings, and I’ll be staying tuned to see what conditions get placed on the merger.
BTW – For all of you folks at Turner, Senator Arlen Specter (D, PA) loves TCM!
Wednesday, February 3, 2010
Comcast/GE Head to the Hill
Tomorrow is a big day for Brian Roberts and Jeff Zucker as they head back to Washington to appear at two back-to-back hearings. In the morning they are slated for the House Communications and Internet Subcommittee, while the afternoon is the Senate Judiciary Antitrust Subcommittee. Also slated to testify at both hearings is Colleen Abdoulah President and CEO of WOW (Wide Open West) and Mark Cooper of the Consumer Federation of America. It will be interesting to see if those opposed to the merger get beyond the standard “big is bad” rhetoric that is the standard backbone of their opposition to explain exactly what their issues are.
In a world where the big keep getting bigger in order to “gain scale”, there is no question that it has become increasingly difficult for the small guys to compete. Comcast has been quite public in stating that the reason they are doing the merger is to gain scale in the programming realm. Content is still king, and those who own the content and access to it are in a position to reap the greatest profits.
Perhaps of greatest concern to WOW and other competitors like RCN and Knology, not to mention Dish Network and DirecTV, is how Comcast sets the rates for its own content in terms of the rates that their programming arm charges their cable arm. It is no secret that MFNs for the largest players in the distribution game often dictate higher rates for smaller operators, including competitors. This often leaves smaller companies feeling like they are subsidizing the larger players. A scenario where a programming entity setting their rates based on what their affiliated distribution company (which, by the way, is the largest in the market) agrees pays for that content justifiably raises concerns about the unfairness of an “out of one pocket in into another” arrangement. There is sure to be even more concern now that retransmission consent is involved.
Curiously absent from list of witnesses at tomorrow’s hearings is anyone from the satellite or telephone company community. The NBC broadcast affiliate group has already suggested strings, and there is no doubt that other parties will be joining in as the regulatory approval process proceeds. There may be little doubt that the merger will ultimately be approved. However, the larger question may well be what strings will be attached and, if one is to look at the merged Comcast/GE as Jonathon Swift’s Gulliver, whether the strings will be strong enough to hold the new media giant down for long.
In a world where the big keep getting bigger in order to “gain scale”, there is no question that it has become increasingly difficult for the small guys to compete. Comcast has been quite public in stating that the reason they are doing the merger is to gain scale in the programming realm. Content is still king, and those who own the content and access to it are in a position to reap the greatest profits.
Perhaps of greatest concern to WOW and other competitors like RCN and Knology, not to mention Dish Network and DirecTV, is how Comcast sets the rates for its own content in terms of the rates that their programming arm charges their cable arm. It is no secret that MFNs for the largest players in the distribution game often dictate higher rates for smaller operators, including competitors. This often leaves smaller companies feeling like they are subsidizing the larger players. A scenario where a programming entity setting their rates based on what their affiliated distribution company (which, by the way, is the largest in the market) agrees pays for that content justifiably raises concerns about the unfairness of an “out of one pocket in into another” arrangement. There is sure to be even more concern now that retransmission consent is involved.
Curiously absent from list of witnesses at tomorrow’s hearings is anyone from the satellite or telephone company community. The NBC broadcast affiliate group has already suggested strings, and there is no doubt that other parties will be joining in as the regulatory approval process proceeds. There may be little doubt that the merger will ultimately be approved. However, the larger question may well be what strings will be attached and, if one is to look at the merged Comcast/GE as Jonathon Swift’s Gulliver, whether the strings will be strong enough to hold the new media giant down for long.
Friday, January 22, 2010
SNI vs. CVC Follow-up
OK. So hours after I predicted the Cablevision-SNI battle would be likely to be protracted, the two sides settled and Scripps programming was reinstated to Cablevision subscribers. I was wrong. I thought that if Cablevision had denied Yankees fans the YES network for over a year, they would have no problem stringing Long Island foodies along for a few months. Maybe there should be a seven day waiting period for bloggers too!
One of my readers raised an interesting question. As Scripps was airing their programming on broadcast TV, what was the reaction from other affiliates? I’m sure calls were placed to Knoxville about this by other cable ops in the NY DMA. Also, you probably recall that last week Cablevision CEO James Dolan was making some very public statements that maybe the bundled programming model was outmoded. Almost certainly it was a public statement made to illustrate and protest the carriage requirements in the SNI Agreement. Chances are that Food Network and HGTV will likely to continue to be carried on Expanded Basic. Cable operators are no closer to a la carte or themed tiers than they were before. As far as the big question, “Did Scripps get the “fair value” they were seeking; the 200% increase that CVC said that SNI wanted?” All the press statements say are that the “terms of the deal were not disclosed”.
While I’ve made notes to deal with programming bundling in a later post, I’m not even going to touch the question of whether New York’s foodies scare CVC more than Yankees fans. I guess all I can say is, “Hey Comcast, want me to do a post on the stalemate between Versus and DirecTV?”
One of my readers raised an interesting question. As Scripps was airing their programming on broadcast TV, what was the reaction from other affiliates? I’m sure calls were placed to Knoxville about this by other cable ops in the NY DMA. Also, you probably recall that last week Cablevision CEO James Dolan was making some very public statements that maybe the bundled programming model was outmoded. Almost certainly it was a public statement made to illustrate and protest the carriage requirements in the SNI Agreement. Chances are that Food Network and HGTV will likely to continue to be carried on Expanded Basic. Cable operators are no closer to a la carte or themed tiers than they were before. As far as the big question, “Did Scripps get the “fair value” they were seeking; the 200% increase that CVC said that SNI wanted?” All the press statements say are that the “terms of the deal were not disclosed”.
While I’ve made notes to deal with programming bundling in a later post, I’m not even going to touch the question of whether New York’s foodies scare CVC more than Yankees fans. I guess all I can say is, “Hey Comcast, want me to do a post on the stalemate between Versus and DirecTV?”
Thursday, January 21, 2010
Are Food Network’s Moves Getting Hard for Cablevision to Digest?
The carriage dispute between Cablevision and Scripps Networks Interactive (SNI) is continuing into its third week. Food Network and HGTV went dark on Cablevision’s systems on New Years Day when the carriage agreement expired. Since then, the battle has gone public. Cablevision is accusing SNI of being the ones that pulled the plug on the programming and asking for a 200% increase in license fees upon renewal. For its part, SNI maintains they are asking for “fair value” for their programming.
Since going dark on the Cablevision systems, SNI has been making some of their popular programming, like Food Network’s Iron Chef America, available on local NY stations WWOR and WPIX. Is seems that Cablevision is little impressed by SNI’s recent moves. Cablevision CEO James Dolan has proved to have an iron stomach when it comes to his appetite for tough, drawn out programming negotiations. Consider that Cablevision was the last cable operator in the New York market to launch the YES Network – and that when he was dealing with Yankees fans! Dolan’s critics (and the public posture of SNI) will say that the second generation cable mogul cares little about his customers and is just trying to cut the best business deal possible, while holding those customers hostage in the negotiations. Well, yes and no.
It may be sour table grapes on SNI’s part and the unwillingness of Dolan’s critics to forgive cable operators in general for years of rate increases in excess of inflation, but one must consider that one of the primary goals for the operator in driving the best business deal is to keep their costs low, enabling them to keep the rates to the consumer at a competitive level while still making a profit acceptable to its shareholders. You see, the free market is much more complicated than the simplistic public “he says, she says” finger pointing that often accompany these types of carriage battles. Dolan is taking a “get tough” stance, as a majority of Time Warner Cable subscribers encouraged their cable operator to do in its year end retransmission consent negotiations with FOX. The thing is, Jimmy Dolan is doing it without a website. It is likely that we will see many more of these battles as cable operators look to maintain a reasonable level of programming costs in the face of retransmission consent payments to broadcasters, but that’s a subject for another post. Unfortunately, it is the customer/viewer that invariably gets caught in the middle of these battles. Cablevision does not necessarily mean to “hold them hostage”. It’s just that cable subscribers happen to be part of the currency that video distributors trade in when negotiating with programmers.
While one would think that there is a propensity for consumer to switch to another provider (Verizon, DirecTV, Echostar’s Dish Network, etc.), such thinking ignores the power of the bundle. When a consumer is locked into a bundle of services that includes voice, video and data, the attraction of the “all for one low price” proposition makes each individual channel less important, especially the marginal “niche” channels. This is even more difficult if the customer is locked into a contract.
Chances are that MFNs (so called “most favored nations” clause that requires a programmer to offer lower rates to larger operators if they are give to smaller operators) are standing in the way of Cablevision getting the rates they want for the services. That being the case, Cablevision customers can expect the negotiations to drag on for some time unless both parties can find a creative solution to work around the MFNs. Until then, many CVC subscribers who are Food Network fans are going to wish they had packed a lunch.
Since going dark on the Cablevision systems, SNI has been making some of their popular programming, like Food Network’s Iron Chef America, available on local NY stations WWOR and WPIX. Is seems that Cablevision is little impressed by SNI’s recent moves. Cablevision CEO James Dolan has proved to have an iron stomach when it comes to his appetite for tough, drawn out programming negotiations. Consider that Cablevision was the last cable operator in the New York market to launch the YES Network – and that when he was dealing with Yankees fans! Dolan’s critics (and the public posture of SNI) will say that the second generation cable mogul cares little about his customers and is just trying to cut the best business deal possible, while holding those customers hostage in the negotiations. Well, yes and no.
It may be sour table grapes on SNI’s part and the unwillingness of Dolan’s critics to forgive cable operators in general for years of rate increases in excess of inflation, but one must consider that one of the primary goals for the operator in driving the best business deal is to keep their costs low, enabling them to keep the rates to the consumer at a competitive level while still making a profit acceptable to its shareholders. You see, the free market is much more complicated than the simplistic public “he says, she says” finger pointing that often accompany these types of carriage battles. Dolan is taking a “get tough” stance, as a majority of Time Warner Cable subscribers encouraged their cable operator to do in its year end retransmission consent negotiations with FOX. The thing is, Jimmy Dolan is doing it without a website. It is likely that we will see many more of these battles as cable operators look to maintain a reasonable level of programming costs in the face of retransmission consent payments to broadcasters, but that’s a subject for another post. Unfortunately, it is the customer/viewer that invariably gets caught in the middle of these battles. Cablevision does not necessarily mean to “hold them hostage”. It’s just that cable subscribers happen to be part of the currency that video distributors trade in when negotiating with programmers.
While one would think that there is a propensity for consumer to switch to another provider (Verizon, DirecTV, Echostar’s Dish Network, etc.), such thinking ignores the power of the bundle. When a consumer is locked into a bundle of services that includes voice, video and data, the attraction of the “all for one low price” proposition makes each individual channel less important, especially the marginal “niche” channels. This is even more difficult if the customer is locked into a contract.
Chances are that MFNs (so called “most favored nations” clause that requires a programmer to offer lower rates to larger operators if they are give to smaller operators) are standing in the way of Cablevision getting the rates they want for the services. That being the case, Cablevision customers can expect the negotiations to drag on for some time unless both parties can find a creative solution to work around the MFNs. Until then, many CVC subscribers who are Food Network fans are going to wish they had packed a lunch.
Thursday, January 14, 2010
Epix’s Epic Struggle
Officially announced in March of 2009 on the heels of a dispute with Viacom sibling’s CBS owned Showtime, Epix boasted $150 million in studio backing. The service initially made its content available online and officially launched its linear HD feed this past October. Take-up by cable operators has been slow, even if the service changed its business model from wanting to be part of a basic or digital tier at a cost of about $1.50 per subscriber the operator to being a premium service, with a premium online component only available to customers of its affiliates – making for a service with the potential to be a new revenue generator for cable operators. Until this week, the only provider that has signed on to carry the service is Verizon. This week, two more operators (Cox Communications, and Mediacomm) signed on the dotted line – both committing to an April 2010 launch.
One would think that a premium service model would be attractive to the operator, but the difficulty comes in selling a new service to subscribers on top of their existing bundle and the risk of the new service cannibalizing other premium services like HBO (owned by Time-Warner Inc.), Starz and the aforementioned Showtime. In part the need for an additional premium service in the market is why many cable and satellite operators like DirecTV and Cablevision indicated no interest in carrying the service when it was announced last spring. This is compounded by the fact that the service is made up of movies that have already been shown in their theatrical, hospitality, home video and VOD windows. Even so, revenue is revenue, and the lack of interest by major MSOs may have been more of a starting point in the negotiations than a definitive statement.
At the end of the day, unless EPIX can sign four of the top five 5 MSOs, they will struggle to become profitable and the three partner studios will be pressured to pull the plug on the service. Even though Comcast is focused on getting the NBC deal done and launching their Xfinity (TV Everywhere) service, and Time-Warner making rumblings that they are considering a rebranding, the multiplatform nature of Epix fits into Comcast’s strategic emphasis on on-demand and online video. Frankly, It’s surprising that they did not move quicker. Could it be that the Epix partners are unwilling to offer equity for carriage or is Comcast pushing for earlier VOD windows from the three partner studios as part of the deal?
On the flip side of the multiplatform aspect of the service, the online portion leaves the satellite providers out in the cold. Even if they could come up with the bandwidth to offer the linear service, DirecTV and Dish Network don’t have any local servers on the ground to cache the online HD service. Particularly telling is that, aside from Verizon, the wireline competitors like AT&T and RCN Corp. have yet to sign on. Ten months after an announcement, Epix has only announced three deals. Without the big guys in the tent, unless a whole lot more come soon, Epix could be history by the end of this year.
One would think that a premium service model would be attractive to the operator, but the difficulty comes in selling a new service to subscribers on top of their existing bundle and the risk of the new service cannibalizing other premium services like HBO (owned by Time-Warner Inc.), Starz and the aforementioned Showtime. In part the need for an additional premium service in the market is why many cable and satellite operators like DirecTV and Cablevision indicated no interest in carrying the service when it was announced last spring. This is compounded by the fact that the service is made up of movies that have already been shown in their theatrical, hospitality, home video and VOD windows. Even so, revenue is revenue, and the lack of interest by major MSOs may have been more of a starting point in the negotiations than a definitive statement.
At the end of the day, unless EPIX can sign four of the top five 5 MSOs, they will struggle to become profitable and the three partner studios will be pressured to pull the plug on the service. Even though Comcast is focused on getting the NBC deal done and launching their Xfinity (TV Everywhere) service, and Time-Warner making rumblings that they are considering a rebranding, the multiplatform nature of Epix fits into Comcast’s strategic emphasis on on-demand and online video. Frankly, It’s surprising that they did not move quicker. Could it be that the Epix partners are unwilling to offer equity for carriage or is Comcast pushing for earlier VOD windows from the three partner studios as part of the deal?
On the flip side of the multiplatform aspect of the service, the online portion leaves the satellite providers out in the cold. Even if they could come up with the bandwidth to offer the linear service, DirecTV and Dish Network don’t have any local servers on the ground to cache the online HD service. Particularly telling is that, aside from Verizon, the wireline competitors like AT&T and RCN Corp. have yet to sign on. Ten months after an announcement, Epix has only announced three deals. Without the big guys in the tent, unless a whole lot more come soon, Epix could be history by the end of this year.
Monday, January 11, 2010
Retransmission Consent Battles Are Over But the War Rages On
OK, so Time Warner Cable, Inc. cut a retransmission consent deal with FOX (News Corp.) just in time for the Sugar Bowl on New Years Day and Medicomm got their deal done with Sinclair Broadcasting before their extension ran out. Both deals got done without cable subscribers having their broadcast feeds cut off. With no more high profile deals pending you might believe the claims from the broadcasting camp that the market for retransmission consent in functioning efficiently and the cable operators should just go away quietly and lick their wounds. Not so.
Before the ink was even dry on the Sinclair deal, Mediacomm CEO Rocco Commisso had a letter on its way to Senator John Kerry (D. Mass) asserting that the retransmission consent system is broken. While some may dismiss this as a sign of a sore loser and broadcasters may argue that Medicomm would not have signed a deal they didn’t like, one should ask whether Mr. Commisso and his cable brethren have a point.
It seems that every time broadcasters lobby on the Hill it is done in the name of protecting “free” television. The recent broadcaster backlash to spectrum reallocation is just the latest opportunity for broadcasters to wave this flag. But in fact, doesn’t retransmission consent prove that there really is no such thing as “free” television. Of course, there are costs involved with producing and broadcasting content, and there is certainly value to the broadcast content. But isn’t it the broadcasters who chose to enter and remain in a business, the backbone of which is providing free over the air television on an advertiser supported basis?
Of course, the argument is always made that when compared to cable services like Walt Disney Co.’s ESPN, the broadcasters generate ratings far in excess of cable networks. As such, the argument goes, if broadcaster ratings are four times that of ESPN, then the broadcaster should be entitled to four times the license fee that ESPN collects. If the broadcasters are willing to step up to the plate and offer distributors VOD content, local ad avails and affiliate marketing support the same way cable networks traditionally do, then maybe there is a conversation to be had, but until then a game of “apples and oranges” is being played.
In the end, Retransmission Consent is a consumer issue. It easier for the Consumers Union and politicians to demonize cable operators then to dig in and see that what is actually driving the cost of multichannel video up – the ever escalating license fees paid to broadcasters and cable networks. While FOX may not have gotten the $1.00 out of Time Warner that it was looking for, they certainly did get some cash. Likewise, Sinclair has extracted their “pound of flesh” from Mediacomm and will be back at them for another portion at the end of this year when the deal expires. These are the stories of two of the bigger fish in the pond. Every year there are hundreds of smaller operators and telcos with similar stories that are even worse given their smaller size and limited, if any, negotiating leverage. For them, retransmission consent is yet another transfer of wealth out of their communities and local economies.
To be sure, cable operators like Comcast Corp. and Cablevision are reporting growth in free cash flow. However, once you dig deeper and find out where the growth is coming from you find it is not from traditional basic video services. The real growth is coming from DVR and bundled services relying on voice and data services where the only costs are those of running the physical network itself and content costs are virtually non-existent. As far as the linear video business goes, it seem that operators have become little more than collection agencies for cable networks and broadcasters.
If the cable operators can effectively turn Retransmission Consent into a consumer issue (especially in the midst of a recession) then they may actually have a chance of getting someone’s ear in Washington. Until then, expect the politicians to take credit for pushing operators to keep broadcast signals from going dark, but don’t expect them to get involved in really addressing what’s at the heart of the matter.
Before the ink was even dry on the Sinclair deal, Mediacomm CEO Rocco Commisso had a letter on its way to Senator John Kerry (D. Mass) asserting that the retransmission consent system is broken. While some may dismiss this as a sign of a sore loser and broadcasters may argue that Medicomm would not have signed a deal they didn’t like, one should ask whether Mr. Commisso and his cable brethren have a point.
It seems that every time broadcasters lobby on the Hill it is done in the name of protecting “free” television. The recent broadcaster backlash to spectrum reallocation is just the latest opportunity for broadcasters to wave this flag. But in fact, doesn’t retransmission consent prove that there really is no such thing as “free” television. Of course, there are costs involved with producing and broadcasting content, and there is certainly value to the broadcast content. But isn’t it the broadcasters who chose to enter and remain in a business, the backbone of which is providing free over the air television on an advertiser supported basis?
Of course, the argument is always made that when compared to cable services like Walt Disney Co.’s ESPN, the broadcasters generate ratings far in excess of cable networks. As such, the argument goes, if broadcaster ratings are four times that of ESPN, then the broadcaster should be entitled to four times the license fee that ESPN collects. If the broadcasters are willing to step up to the plate and offer distributors VOD content, local ad avails and affiliate marketing support the same way cable networks traditionally do, then maybe there is a conversation to be had, but until then a game of “apples and oranges” is being played.
In the end, Retransmission Consent is a consumer issue. It easier for the Consumers Union and politicians to demonize cable operators then to dig in and see that what is actually driving the cost of multichannel video up – the ever escalating license fees paid to broadcasters and cable networks. While FOX may not have gotten the $1.00 out of Time Warner that it was looking for, they certainly did get some cash. Likewise, Sinclair has extracted their “pound of flesh” from Mediacomm and will be back at them for another portion at the end of this year when the deal expires. These are the stories of two of the bigger fish in the pond. Every year there are hundreds of smaller operators and telcos with similar stories that are even worse given their smaller size and limited, if any, negotiating leverage. For them, retransmission consent is yet another transfer of wealth out of their communities and local economies.
To be sure, cable operators like Comcast Corp. and Cablevision are reporting growth in free cash flow. However, once you dig deeper and find out where the growth is coming from you find it is not from traditional basic video services. The real growth is coming from DVR and bundled services relying on voice and data services where the only costs are those of running the physical network itself and content costs are virtually non-existent. As far as the linear video business goes, it seem that operators have become little more than collection agencies for cable networks and broadcasters.
If the cable operators can effectively turn Retransmission Consent into a consumer issue (especially in the midst of a recession) then they may actually have a chance of getting someone’s ear in Washington. Until then, expect the politicians to take credit for pushing operators to keep broadcast signals from going dark, but don’t expect them to get involved in really addressing what’s at the heart of the matter.
Friday, January 8, 2010
3DTV: Is it Really Coming at You, Or Does it Just Look That Way?
Announcements are coming fast and furious about new 3DTV technologies for the home as many TV manufacturers at this week’s CES in Las Vegas are showcasing their latest efforts to make in home TV viewing more realistic. The question that many have yet to ask is whether 3DTV is ready for prime time. To answer the question it may be helpful to draw parallels to the growth of HDTV.
Current statistics state that nearly 50% of US homes have at least one high definition TV set, indicating that HDTVs, once the domain of videophiles early adopters, have become a mass market consumer good. That said high income households ($75,000+ annually) still over-index while lower income homes lag. This trend has been helped along by the HD wars that have been brewing between cable distributors, telcos and satellite providers. Early on, there were only a few HD channels available. In recent years, the number has ballooned to the point where 100 HD channels has become the standard offering with cable providers touting even more “HD choices” on their On Demand platforms.
To be sure, the adoption of HDTV has been impressive, given that it has been only ten years since the introduction of early consumer sets. However, one would be wise to consider the “chicken and egg” nature of new TV technologies. Adoption tends to follow rather than lead content availability. In recent years, programmers like NBC-Universal, Discovery Communications, Disney and MTV Networks have been aggressively rolling out HDTV simulcast channels. By converting their popular programming to HDTV they are in essence acting as arms dealers in the HD wars between multichannel providers. For the most part those channels have been provided to the consumer for little or no incremental cost. For the cable and satellite operators and programmers, plant and studio upgrades to provide HDTV has been seen as a cost of doing business to attract and maintain the growing legion of HDTV set owners. The availability of top rated programming (particularly sports) in HDTV has certainly spurred the growth of HDTV adoption.
Enter 3DTV. While 3D programming on TV has been presented from time to time as a gimmick to attract viewers (e.g. the 1997 Third Rock from the Sun two part “Nightmare on Dick Street” episode) or in an effort to heighten awareness for commercial products (e.g., the combined “Monsters vs. Aliens” trailer/SoBe commercial aired during Super Bowl XLIII in 2009), the jury is still out on whether 3DTV has a true future. Like HDTV (and DVD) a large deal of the growth potential for 3DTV rests on a three legged stool: 1.) the adoption of industry standards, 2.) the speed at which content is provided in the new format, and 3.) the ability for distributors to carry enough 3DTV signals to make adoption compelling for subscribers.
When considering standards, it is important to consider whether the goal is to present 3D images with the use of eyewear or headwear (i.e., traditional red-cyan glasses, polarized glasses, or synchronized shutter glasses) or without eyewear using an autostereoscopic display. In large part this is a matter of the consumers’ willingness to use eyewear. There is certainly a willingness to do so in a movie theater or theme park setting where the image is projected on a large screen and viewer immersion is near total. Where offered, 3D versions of movies generate on and a half times the revenue of the standard 2D version. However, there is doubt as to whether consumers are willing to don eyewear in home for extended periods of time for content presented on a smaller screen. One thing is for sure, consumer will not stand for multiple formats delivered on the same screen, constantly having to switch between different sets of glasses. The inconvenience and confusion will undoubtedly lead to high rates of dissatisfaction which will be communicated at lightning speed via online blogs and word of mouth, dooming 3DTV immediately. By far, the most impressive technology from a viewer standpoint does not rely on the use of eyewear, so called autostereoscopic display.
From a standards perspective, little is needed to display images that require eyewear. Most of those technologies have already been used on existing networks and TV sets. As far as the more impressive autostereoscopic display, last February SCTE (Society of Cable Telecommunications Engineers) announced a committee to work on standards for the provision of 3DTV over cable networks. When formed, they announced that standards like these typically take 12-18 months to be created. So far there is no word out of this group. Likewise the MPEG (Motion Pictures Experts Group) Industry Forum has recently formed the 3DTV Working Group which will be meeting for the first time CES on Saturday, Jan. 9. The purpose of the group is to coordinate 3D standards activities between mastering and display technologies. That means that 3DTV are being showcased at CES before the industry has even met to discuss standards!
Until these standards are developed and costs to produce or upconvert content to 3D is known, it is difficult to say at what rate programmers will deploy full time HDTV channels. Suffice it to say that if recent HDTV history is any indication, it will be a matter of programmers and distributors working together taking the lead in making content available to viewers. From the programmers’ standpoint, their involvement will be driven by the operators pressuring them to provide 3D content as the operators see the demand from their customers and the distributors have the bandwidth on their plant to make the content available. As with HDTV, once/if 3DTV sets reach a critical mass, the floodgates will open and all of the programmers will want to jump into the pool. However, the bottleneck will remain in the distribution plants. From the operators viewpoint, the provision of additional feeds of programming (whether in HD or 3D - requiring eyewear or not) will require the use of additional bandwidth, which is an already precious and scarce commodity. How operators deal with this dilemma, either by expensive rebuilds, further division of plant by pushing fiber further out, through the deployment of IPTV technologies, or improved compression technologies, will determine how quickly 3DTV is deployed.
At the end of the day, for all of the talk about 3DTV at CES, the consumer electronics side of the equation - which has yet to even set standards - is at the mercy of the programmers and distributors when it comes to the future of the sales of 3DTV sets. For now it seems that the future of 3DTV is best viewed using eyewear of the rose colored variety.
Current statistics state that nearly 50% of US homes have at least one high definition TV set, indicating that HDTVs, once the domain of videophiles early adopters, have become a mass market consumer good. That said high income households ($75,000+ annually) still over-index while lower income homes lag. This trend has been helped along by the HD wars that have been brewing between cable distributors, telcos and satellite providers. Early on, there were only a few HD channels available. In recent years, the number has ballooned to the point where 100 HD channels has become the standard offering with cable providers touting even more “HD choices” on their On Demand platforms.
To be sure, the adoption of HDTV has been impressive, given that it has been only ten years since the introduction of early consumer sets. However, one would be wise to consider the “chicken and egg” nature of new TV technologies. Adoption tends to follow rather than lead content availability. In recent years, programmers like NBC-Universal, Discovery Communications, Disney and MTV Networks have been aggressively rolling out HDTV simulcast channels. By converting their popular programming to HDTV they are in essence acting as arms dealers in the HD wars between multichannel providers. For the most part those channels have been provided to the consumer for little or no incremental cost. For the cable and satellite operators and programmers, plant and studio upgrades to provide HDTV has been seen as a cost of doing business to attract and maintain the growing legion of HDTV set owners. The availability of top rated programming (particularly sports) in HDTV has certainly spurred the growth of HDTV adoption.
Enter 3DTV. While 3D programming on TV has been presented from time to time as a gimmick to attract viewers (e.g. the 1997 Third Rock from the Sun two part “Nightmare on Dick Street” episode) or in an effort to heighten awareness for commercial products (e.g., the combined “Monsters vs. Aliens” trailer/SoBe commercial aired during Super Bowl XLIII in 2009), the jury is still out on whether 3DTV has a true future. Like HDTV (and DVD) a large deal of the growth potential for 3DTV rests on a three legged stool: 1.) the adoption of industry standards, 2.) the speed at which content is provided in the new format, and 3.) the ability for distributors to carry enough 3DTV signals to make adoption compelling for subscribers.
When considering standards, it is important to consider whether the goal is to present 3D images with the use of eyewear or headwear (i.e., traditional red-cyan glasses, polarized glasses, or synchronized shutter glasses) or without eyewear using an autostereoscopic display. In large part this is a matter of the consumers’ willingness to use eyewear. There is certainly a willingness to do so in a movie theater or theme park setting where the image is projected on a large screen and viewer immersion is near total. Where offered, 3D versions of movies generate on and a half times the revenue of the standard 2D version. However, there is doubt as to whether consumers are willing to don eyewear in home for extended periods of time for content presented on a smaller screen. One thing is for sure, consumer will not stand for multiple formats delivered on the same screen, constantly having to switch between different sets of glasses. The inconvenience and confusion will undoubtedly lead to high rates of dissatisfaction which will be communicated at lightning speed via online blogs and word of mouth, dooming 3DTV immediately. By far, the most impressive technology from a viewer standpoint does not rely on the use of eyewear, so called autostereoscopic display.
From a standards perspective, little is needed to display images that require eyewear. Most of those technologies have already been used on existing networks and TV sets. As far as the more impressive autostereoscopic display, last February SCTE (Society of Cable Telecommunications Engineers) announced a committee to work on standards for the provision of 3DTV over cable networks. When formed, they announced that standards like these typically take 12-18 months to be created. So far there is no word out of this group. Likewise the MPEG (Motion Pictures Experts Group) Industry Forum has recently formed the 3DTV Working Group which will be meeting for the first time CES on Saturday, Jan. 9. The purpose of the group is to coordinate 3D standards activities between mastering and display technologies. That means that 3DTV are being showcased at CES before the industry has even met to discuss standards!
Until these standards are developed and costs to produce or upconvert content to 3D is known, it is difficult to say at what rate programmers will deploy full time HDTV channels. Suffice it to say that if recent HDTV history is any indication, it will be a matter of programmers and distributors working together taking the lead in making content available to viewers. From the programmers’ standpoint, their involvement will be driven by the operators pressuring them to provide 3D content as the operators see the demand from their customers and the distributors have the bandwidth on their plant to make the content available. As with HDTV, once/if 3DTV sets reach a critical mass, the floodgates will open and all of the programmers will want to jump into the pool. However, the bottleneck will remain in the distribution plants. From the operators viewpoint, the provision of additional feeds of programming (whether in HD or 3D - requiring eyewear or not) will require the use of additional bandwidth, which is an already precious and scarce commodity. How operators deal with this dilemma, either by expensive rebuilds, further division of plant by pushing fiber further out, through the deployment of IPTV technologies, or improved compression technologies, will determine how quickly 3DTV is deployed.
At the end of the day, for all of the talk about 3DTV at CES, the consumer electronics side of the equation - which has yet to even set standards - is at the mercy of the programmers and distributors when it comes to the future of the sales of 3DTV sets. For now it seems that the future of 3DTV is best viewed using eyewear of the rose colored variety.
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