Since when are OTA viewers "freeloaders". I suspect you wrote this somewhat sarcastically but in a serious vein may I remind readers that we, "freeloaders", didn't mandate "free" OTA TV. That was done by the broadcasters following the lead of radio before it with funding by advertising.
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Local Stations' Cable/Satellite Subscription Fees
- Thread starter landtuna
- Start date
Since when are OTA viewers "freeloaders". I suspect you wrote this somewhat sarcastically but in a serious vein may I remind readers that we, "freeloaders", didn't mandate "free" OTA TV. That was done by the broadcasters following the lead of radio before it with funding by advertising.
I wonder what percentage of revenue the individual stations receive from carriage fees (received from 75-90% of viewers, depending on the market) compared to ad dollars (rates based on 100% of viewers, OTA, cable, or satellite). I'm talking about local stations, not ESPN, CNN, TNT, etc.
Me too. IMHO those carriage fees are nothing but free money to the TV stations. They already get a big benefit from not having OTA viewers submit trouble reports if the station drops the signal because most will automatically call the cable company first.
They're free money for the networks as well. In fact, they turned the network/affiliate relationship from the network paying the stations out of their ad revenue to what can only be called flat-out extortion (see: WISH-TV & CBS, 2014).
All very well and good and true, however it's glaringly apparent television broadcasters would rather keep people about their OTA options in the lurch.
For example, during every renegotiation squabble when the broadcasters and cable cos bombard the air with their own Panic Room version of "[Company X] wants to take away (Channel Y)/raise your cable rates!" the OTA solution is rarely if ever mentioned (lean more toward never). It's almost like a dirty little secret neither wants to let out of the bag. Both parties would rather the public remain ignorant that such things still exist in the 21st century. Obviously, on a website devoted to radio and television everyone here knows about OTA but we are still a minority by and large. I can't even count the number of times I've mentioned that I watch t.v. via the bunny ears and people look at me with a puzzled expression as if I'm speaking gibberish.
"I thought rabbit ears were useless when HDTV took over?"
"You mean those things my grandma hooked up to her set?"
"Don't you need a new digital antenna?" or HDTV antenna--- either wordings are interchangeable.
I'm not trying to prove a theory nor opinion as my original statement leans more towards a flippant statement to begin with. Millennials are cord-cutting en masse and the funny tidbit with that is they aren't interested in most of what is being aired to begin with outside of sports and that's debatable. That has to be somewhat alarming to the networks. The conduit is more important obviously. Verizon is getting out of the FiOS game full stop, AT&T is plugging DirectTV after that acquisition, Comcast gobbled up the Universal empire and more hits are bound to come. The US broadcasting landscape is looking more and more similar to Canada and that I feel, in my own opinion, isn't very rosy.
I'll leave it with that as this is straying from the original topic at hand which is more about engineering and I can add nothing of value or knowledge to that.
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Contrary to what you believe, broadcasters don't intentionally keep "people" (I assume you mean viewers) in the lurch. I've personally been in many meetings over the years where we have discussed the concept of promoting reception Over The Air, but there are many pitfalls involved that could backfire:
After many years of cable and satellite having 80% or more of TV viewing, where the company takes care of the technical process of getting a viewer TV, the variables for reliable OTA viewing are numerous by comparison. Even viewers that live close to the transmitter site(s), may become discouraged by the amount of work and planning involved in receiving OTA. With the increase in housing density from apartments and developments with HOA's, installing antennas is even more frustrating. This has the potential of reflecting (pardon the pun) badly on the station or stations in a market. TV stations haven't had to get involved with cable and satellite reception issues, nor are they staffed to do so.
Another issue that you're partially correct about; that TV stations do not want to alienate cable and satellite providers, mainly because of retrans revenue and that >80% of their viewers are already using cable or satellite. Bucking eighty or more percent to increase a much smaller percentage is a losing proposition.
Millennials consider cutting the cord as watching content on their smartphones, not OTA TV. That's why Comcast, Verizon, COX, Time Warner, DirecTV, Dish, etc., are doubling down on their streaming offerings.
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K
K.M. Richards
Guest
There are some markets -- I think someone mentioned Sacramento in another thread -- where the stations with more popular diginet coverage are promoting same on their primary channels, so there is some (I agree with you, not enough) education about that happening. So I don't think it's a desire on the part of the station owners to foster ignorance on the part of the viewers.
As for the well-named "Panic Room" announcements, I can think of one perfectly legitimate reason for the broadcasters to not mention the OTA option: Those retrans agreements are per-subscriber, and every cable or satellite viewer lost to the direct-reception method is one less viewer Time Warner, Comcast, DirecTV, and the rest have to include in the accounting when they write the checks. I think that's a more likely motivation to not remind viewers during the "panic" that they can always go back to off-air reception.
Actually the retrans fees partially level the playing field. Stay with me here for a second.
Assume, for a moment, that almost 100% of your viewing is on the local TV channels, via cable. (I know it's a ridiculously extreme example, but it makes the point perfectly.)
Without retrans fees, you're paying every other commercial channel on the cable dial, every month, but you're not paying a dime to the channels you actually watch.
Why's that a problem? Because suddenly, TNT has twice the money to buy or produce a new show and only needs half the ratings that a broadcast network needs to support that show. They're getting paid that monthly subscriber fee whether anyone watches the show or not.
So, the local TV stations are bringing in the cable viewers, but all the cable money is subsidizing the much-lesser-viewed cable networks.
HOWEVER, (from the TV station's standpoint), if you use an antenna or rabbit ears to get your local stations, they're FINE with not getting retrans fees from you. That's because you're NOT giving money to their competition.
I have to admit that is the most unique reasoning I have ever heard about competition (and not only in the broadcast industry). Obviously, I think it is a silly argument.
The broadcast stations have been in business for decades using the advertising method of paying the bills. It was not until someone figured out the retrans revenue stream that suddenly the advertising-only method was not substantial enough. AFAIK the broadcast stations do not suffer any significant costs from providing their signal to a cable head - therefore they are receiving revenue for no effort. This must be unique in American business....and unwarranted.
I am not a cable company proponent, far from it. But as I see it the cable companies are providing the broadcast stations with a free service - transmitting their signal to the broadcast station's viewers on their own dime. To have to pay to provide that service seems an egregious display of pure greed and back room politics.
The cable companies provide a service (and not a free one) to viewers, not to TV stations. Every station still has to run a transmitter.
For decades, cable existed exclusively to bring the signal into viewers' homes without the need for each home to have an antenna. TV stations were fine with that arrangement. But once cable essentially forced viewers to subsidize channels they never watch, TV stations needed a similar revenue stream to remain competitive.
The real question should be why cable subscribers have to pay for any commercial channel. That is the source of the problem.
Granted BUT as I stated before since the cable signal is what appears (or not) at a viewers house it takes away a certain responsibility from the TV station should the signal be substandard or lost. In other words, the TV station now has only to "service" its OTA viewers. All others can be referred to the cable company. I wouldn't ascertain to know just how much this is worth to the TV station (or costs the cable company) but it is a factor.
Thinking back to the origins of cable it seems to me the most common reason was lack of a watchable signal using an antenna. People who lived behind mountains, in valleys or too far away from the TV transmitter got cable because it was their only other choice (pre-satt). In those days the cable company was providing a free service to the TV station by bringing in viewers it would not normally have had.
I don't see how cable companies charging for channels not watched affects in any way the revenues of the TV station. I guess you could make the argument that a viewer now has more channels to choose from and would not necessarily watch the TV station but that was always true for cities that had more than one TV station (which has to be 100% of them). The cable company is offering a service (HBO, etc.) that the local TV station doesn't so it might as well be a tire store.
Totally agree with you on this point. The TV station is providing its service via a transmitter/repeater so it is irrelevant whether it is picked up and retransmitted by another service (assuming, of course, no costs are associated to the TV station). In fact, you could make the argument that total coverage is enhanced by the cable signal reaching viewers that normally wouldn't watch due to the above conditions. It has occurred to me many times that the TV station management might just save itself some costs by authorizing distant cable companies to carry its signals (free) instead of operating a repeater. Since most distant small towns on the fringes of reception already have local cable companies it seems a win-win for both parties.
Because the FCC allows it and the stations demand it. And the networks demand their cut from the stations.
The old way is never coming back. Let's say the FCC (might require an act of Congress) required all cable/satellite companies to carry all local stations for free (must-carry), and the old network/affiliate business model of the networks paying the stations were to return by law:
1. No fees from the cable/satellite companies would cut stations' revenues severely (by 1/2 or more?).
2. The networks could just start their own separate channels, cutting out the affiliates completely. They already own several channels each for other programming, so no extra space would be required. ABC, for example, could directly replace ESPN News.
3. Since the carriage money would no longer be there, stations couldn't buy the syndicated programming they've been running. Nor could they afford to pay for those oversized news departments that couldn't exist under the old business model. For those stations that could survive as indies, it'd be back to 2 or 3 newscasts per day, with the rest being whatever they could air on the cheap.
Great issue. I tried to explain earlier, but maybe I didn't make the point well.
Basically, cable channels get paid whether anyone watches or not, because of subscriber fees. Without retransmission consent, if a broadcast station and a cable channel had identical ratings, the cable channel would make twice as much money. In time, it would get harder for broadcasters to compete with cable for programs.
I can't speak to every network, but in the case of Disney, owner of ABC, ESPN, etc, their annual report shows they earn more from subscriber fees than from advertising.
The logic isn't that hard to follow, in my opinion. If ESPN gets $6/month per subscriber, that's a HUGE pool of extra money it can use to outbid the networks (assuming they got $0 from the cable companies) for those sporting events. Similarly, someone like TNT gets $1.50/month per subscriber, meaning they have an extra pool of money they can use to outbid the networks (again, assuming they got $0 from the cable companies) for similar shows.
Eventually, the TV broadcasters would be priced out of the market as cable subscriber dollars bankroll the programming of the cable-only competition and networks have to operate solely on ad dollars. The networks would presumably start to bypass the affiliates and go cable-only in order to make up that money, or just move their programming to cable channels they already operate.
TV broadcasters would go out of business.
By contrast, if 90% of the market used OTA, then sporting events and hit TV shows would never get enough viewers on cable to justify airing there. Not having that revenue stream from the cable company wouldn't matter because the cable channels would be getting little or no money, and even if they did, content companies would want to be on the local stations in order to reach the viewers.
In any case, we are way off subject.
- Trip
Eventually, the TV broadcasters would be priced out of the market as cable subscriber dollars bankroll the programming of the cable-only competition and networks have to operate solely on ad dollars. The networks would presumably start to bypass the affiliates and go cable-only in order to make up that money, or just move their programming to cable channels they already operate.
TV broadcasters would go out of business.
By contrast, if 90% of the market used OTA, then sporting events and hit TV shows would never get enough viewers on cable to justify airing there. Not having that revenue stream from the cable company wouldn't matter because the cable channels would be getting little or no money, and even if they did, content companies would want to be on the local stations in order to reach the viewers.
In any case, we are way off subject.
- Trip
That scenario would only happen if the Commission also did away with "must carry" rules and the networks dropped station affiliations for cable-only. Considering how many O&O's there are in the larger markets, doubt that would occur. I believe that many local TV stations keep their transmission facilities going in order to feed distant cable systems and keep their must carry leverage with cable.
This is getting very interesting!
Do carriage fees make that much revenue for the stations? And, if so, where was the need for this revenue in year's past before the fee's were instigated? I assume that advertising revenue hasn't gone down by anywhere near 50% (but I may be wrong as I have no first hand knowledge). Although there have been some mergers recently I had not read that any TV stations (in major markets anyway) were under that much financial pressure.
Wasn't that always possible? I assumed there was some sort of gentleman's agreement that prevented a network setting up their own TV station as long as they had affiliates in the area.
I almost choked on this one. I have never really been a fan of TV news. A significant part of my (and yours) local broadcasts do nothing but repeat national stories (which seem to be no deeper than headlines). How much money does it take to rip the story off the Internet and have a news reader deliver it? I cannot think of any TV station anywhere I've ever lived that had a news organization similar to a newspaper (for instance) complete with multiple features and in-depth investigative reporting. Additionally, most newscasts are largely repeats of previous newscasts so the "news" for most stations is nothing more than time allocated for more commercials. It is possible my market is worse than others but it has been my experience that they are all very similar.
But speaking of news costs.....why do stations need four presenters? The standard set-up here seems to be two anchors, a sports guy and a weather/traffic girl. Then you have the live truck which has reporter(s) and camera/sound person(s) and perhaps even a chopper. In my market these are used for nothing more than vehicle crashes, fires or beauty shots. Totally unnecessary. Window dressing used mainly to dress up their presentation in comparison to other stations. Lots of costs could be cut in most news departments. Does having a crime report given in front of the court house or jail really add to the story's importance?
I have suspected for a long time that TV stations spend less on their "news" programs than they would by buying a syndicated show and that's why we have several virtually identical news presentations by each station daily.
Do carriage fees make that much revenue for the stations? And, if so, where was the need for this revenue in year's past before the fee's were instigated? I assume that advertising revenue hasn't gone down by anywhere near 50% (but I may be wrong as I have no first hand knowledge). Although there have been some mergers recently I had not read that any TV stations (in major markets anyway) were under that much financial pressure.
Wasn't that always possible? I assumed there was some sort of gentleman's agreement that prevented a network setting up their own TV station as long as they had affiliates in the area.
I almost choked on this one. I have never really been a fan of TV news. A significant part of my (and yours) local broadcasts do nothing but repeat national stories (which seem to be no deeper than headlines). How much money does it take to rip the story off the Internet and have a news reader deliver it? I cannot think of any TV station anywhere I've ever lived that had a news organization similar to a newspaper (for instance) complete with multiple features and in-depth investigative reporting. Additionally, most newscasts are largely repeats of previous newscasts so the "news" for most stations is nothing more than time allocated for more commercials. It is possible my market is worse than others but it has been my experience that they are all very similar.
But speaking of news costs.....why do stations need four presenters? The standard set-up here seems to be two anchors, a sports guy and a weather/traffic girl. Then you have the live truck which has reporter(s) and camera/sound person(s) and perhaps even a chopper. In my market these are used for nothing more than vehicle crashes, fires or beauty shots. Totally unnecessary. Window dressing used mainly to dress up their presentation in comparison to other stations. Lots of costs could be cut in most news departments. Does having a crime report given in front of the court house or jail really add to the story's importance?
I have suspected for a long time that TV stations spend less on their "news" programs than they would by buying a syndicated show and that's why we have several virtually identical news presentations by each station daily.
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Isn't that true of OTA TV stations as well? They get revenue (granted, it could be big or small numbers based upon ratings) whether anyone is watching. Over time, of course, their revenue could suffer if the ratings are too small to justify the commercial costs.
Do subscriber fees cover the entire cost of a cable company's carriage of that channel? Some are huge (like ESPN) but most are much, much smaller. Almost from the get-go the cable companies have broadcast commercials to augment their subscriber revenues.
This may be where you are losing me. I had always assumed (there's that word) that the revenue from advertisers would be much larger than subscriber fees (the notable exception being ESPN and the premium cable channels). Is that not true?
Without retrans, a local station's only revenue is advertising. No audience=no money (or very, very little).
The subscriber fees are passed on to customers, although you don't see the itemized bill for each channel. The subscriber fee IS the entire cost to the cable company, except for the equipment needed to receive and retransmit the channel, which they only have to buy every few years. The cable company also gets to sell time on most channels to raise additional revenue.
Cash for subscriber fees is huge. Business Insider reoprts there are currently 97 million cable/satellite subscribers in the U.S. The Wall Street Journal says the median subscriber fee is 14 cents/month. That's $13.6 million a MONTH before you've sold one spot. (Subscriber fees range from .01 to 6.04/month--although those might have gone up since that WSJ story was published.)
All the parties involved like to keep the numbers secret, so you don't see them published very often. Seeing the exact dollar figure for local station retrans is even more rare! Broadcasting & Cable and Multimedia reported retrans raging from .45 to 1.65/month/subscriber. There are stations that just elect for "must carry" status and get no retrans. In my market, those are religious broadcasters and one independent station that's not in a duopoly. Of course, the number of subscribers in any market is just a fraction of that 97 million.
That is something that needs to change. I pay x amount of dollars for DirecTV. I know how much I pay for ESPN and the other non-OTA networks. I think I have the right to know how much I pay for the rights to Meredith, Arizona State University, Fox, Tegna, Scripps, Univision, NBC/Telemundo, Ion, and Nexstar for the locals. And I should have the right to turn them off and use my antenna, but DirecTV no longer allows that AFAIK.
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