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?
Showing posts with label Glenn Britt. Show all posts
Showing posts with label Glenn Britt. Show all posts
Tuesday, December 21, 2010
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.
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