Is it finally going to happen? And which two networks will it be?

[michael hagerty]

Networks are also regulated by the FCC. They aren't going to turn it into a subscription service w/o approval.

You mean the FCC that's entertaining every spectrum buy-back plan this side of Eminent Domain?

Look at it this way:

If...when...the tipping point comes and OTA viewing is in the minority (I'm already watching 75% of my TV via online services), do you want to be the CEO who explains to the shareholders why you held onto brick-and-mortar stations until they were worth a fraction of what you paid for them?

As with AM radio 30 years ago, there are types of TV where the audience hasn't begun cord-cutting and may not for a while (religion, foreign language). Selling to them or working out a sell off of spectrum to the Feds in exchange for tax breaks and/or other useful legislation is going to make that shareholder meeting a whole lot easier.

Well, technically OTA viewing already is the minority. The other way to look at it is, if the tipping point comes and cord-cutting becomes a boon to OTA broadcasters instead of a threat, do you want to be the CEO who explains to the shareholders why you went all-in on cable when it was already past it's peak, and gave up on the infrastructure you already had in OTA broadcasting?

Not that OTA would be that strong a revenue stream, but I'm trying to prove a point here: the obsolescence of broadcast TV is far from inevitable, but several stakeholders are making decisions that will have a tremendous impact on the future of content for everyone.

I'd hold out hope for Congress to get involved, but considering they can't wait for the spectrum auction to be done with to pay off their own spending sprees...

Remember that "cable" isn't just cable anymore. It's Multi-platform, and a lot of that is online, which is only going to grow. So you're not justifying to the shareholders going all-in on cable past its peak (in fact, they need to start calling themselves something other than "cable networks").

The moment you can make more money selling a couple dozen TV stations and eliminating their staffing and operational costs from your balance sheet than you can from selling advertising over a reasonable period of time is the moment to call the broker. Otherwise, you're in the position some radio operators are now...holding stations they paid $100 million for 13 years ago that now would go for $20 million.

It's most critical for FOX. Most of the ABC, CBS and NBC O&Os are heritage stations they built in the 1940s and 50s...long since paid for. FOX, on the other hand, went on a multi-market shopping spree for signals and paid top dollar just 18 years ago. That's a lot fresher.

 

[TheBigA]

2. They never bring it up in stockholder meetings because no one has ridden billions of dollars worth of TV stations all the way into the ground. Yet.

Citadel was driven into the ground, and only one stockholder ever complained about it. And even then, he had to go to court. It wasn't discussed at a traditional meeting. The stock prospectus says very clearly that these companies deal in things that CAN lose money. These companies are multi-platform. They have already marginalized their OTA holdings. They do free TV so the FCC will overlook the billions they make in other areas. Pull the plug on the free thing, and they'll start looking into other things, trying to restrict all those extra charges.

3. Free OTA viewing is a minority compared to pay services

It really doesn't matter. The FCC isn't going to allow these companies to put the Super Bowl behind a pay wall. All this stuff is regulated, and they need to give a few things away to make the big money on the back side. That's how Washington works. Fox is making an empty threat.

The moment you can make more money selling a couple dozen TV stations and eliminating their staffing and operational costs from your balance sheet than you can from selling advertising over a reasonable period of time is the moment to call the broker.

These TV stations are content creation machines. You can't sell advertising without the content, and you don't have content without staffing. It doesn't matter if the station is OTA or on cable, they need to create the content, and they need the platform. The TV station is what gets them placement on the cable system. Otherwise, they go to the back of the line, like the Fox Business Channel. It's just a necessary expense.

Protection of copyright is basic to the American system. This is an issue for music, movies, publishing, and everything else this country creates.

 

[michael hagerty]

These TV stations are content creation machines. You can't sell advertising without the content, and you don't have content without staffing. It doesn't matter if the station is OTA or on cable, they need to create the content, and they need the platform. The TV station is what gets them placement on the cable system. Otherwise, they go to the back of the line, like the Fox Business Channel. It's just a necessary expense.

First, BigA, I want to say that although we disagree, you know your stuff, state your arguments clearly and I respect you.

As to stations being content creation machines...not really.

Network affiliates are made up of local newscasts, syndicated programming, network feeds and infomercials. Apart from Scripps, which is trying to get away from high-priced syndication by creating its own programming (The List and Let's Ask America), very little original content comes from the station side...and none of that really impacts the network (unless you're counting local news video from the O&Os and affiliates that make it into the network news shows).

At this moment, being the Big Four and saying you have The Simpsons, The Voice, NCIS, The Bachelor and all the other shows (Leno, Letterman, Kimmel...GMA, Today, 60 Minutes, SNL) would probably get you prime clearance on cable systems (okay, that and some of the bucks from selling off the stations).

The carriage dilemma really belongs to the abandoned stations. And there's a larger issue of what kind of model will exist for local television news.

 

[mgsports]

ESPN would be allowed to call Super Bowl/World Series and so on.

 

[Markxxx]

Perhaps we should do away with affiliates and let, at least the big four, go with national service.

For instance, label all Channel 14 stations as NBC, and just have NBC broadcast a relay on channel 14 nationwide

CBS can be channel 15, ABC channel 16, FOX channel 17 and so on.


If that's possible with digital broadcasting.

Then you could assign one or two independent stations in each market, provided they were LOCALLY owned and ran. This way you'd actually increase local service, in some markets.

Considering that the only local shows are really news and most of the news is the same stories told all on channels just by different anchors and in a different order, it is something worth looking at.

 

[cd637299]

^ Actually that is the case right now in the Dominican Republic. All channel 2's are the same programming, and possibly all ch 5's as well.

However, there are just too many TV stations right now to execute something like that in the USA.

cd

 

[PTBoardOp94]

I'm not buying BigA's argument about FCC regulation preventing this from coming to pass: There is absolutely nothing the FCC can do to prevent News Corp. from shutting down its "Fox Broadcasting Network." And then News Corp. can move the programs that formerly aired on "Fox Broadcasting Network" anywhere they choose, with consent of the producers of those programs.

 

[KeithE4]

The FCC NFL isn't going to allow these companies to put the Super Bowl behind a pay wall.

Fixed. The FCC can do nothing because it has no jurisdiction. The relationship between the NFL and its broadcast partners is a private contract; station licenses are not involved. Where the Super Bowl goes is between Fox, CBS, NBC (every 3 years each), and the league. If the NFL wanted it on ESPN, NFL Network, or another cable channel, it would be there. The NFL owns the content, not the networks.

Like I said earlier, even if Fox were to shut down its regular programming, it still has contracts to broadcast the NFL, MLB, NASCAR, college football, etc., over the air, that it has to honor. If they wanted to move those events to cable, they'd have to rework their contracts.

 

[KeithE4]

Fox has made their intentions pretty clear “If we can’t have our rights properly protected through legal and governmental solutions, we will pursue business solution. One solution would be to take the network and make it a subscription service. We’re not going to sit idly by and let people steal our content.” -- Fox's COO

By definition, Fox's OTA content cannot be "stolen" since they give it away to the public for free. Fox Sports Net, Fox Business Channel, etc. are not given away, but that's not what we're talking about here.

Now, if I were to connect to cable or satellite without paying for it, those companies could come after me with civil and/or criminal charges for theft of service. But Fox and the other networks couldn't, at least for viewing their broadcast networks.

 

[TheRob]

FOX's comments are just bluster in my opinion.

 

[TheBigA]

Network affiliates are made up of local newscasts, syndicated programming, network feeds and infomercials. Apart from Scripps, which is trying to get away from high-priced syndication by creating its own programming (The List and Let's Ask America), very little original content comes from the station side...

You're presenting the concept of selling O&Os as a money-saving idea. Sell the O&Os because they can cut all the personnel expenses. But those people you'd cut create and sell the local news. So you're saving money by shutting down the profit center. There's a reason why there is no Fox Network News on OTA TV. There's a reason why there's only two hours of prime time. Some of these Fox affiliates have 8 hours of live local news every day.

Meantime, so you've sold off OTA Channel 5. Where do you put The Simpsons on the cable box? You think the local cable company wants to help make you money? You move from a prefered spot on the box to some bottom tier location that may only be available in 20% of the homes. You go from something you own to a place on a system someone else owns. Not a good deal. The goal is to reach customers. Cable companies are gate keepers. They stand between you and your viewers. Far better to go direct to the people.

 

[TheBigA]

By definition, Fox's OTA content cannot be "stolen" since they give it away to the public for free.

But what Aereo is doing is taking your free OTA TV and RE-SELLING it. THAT is the problem. They are taking something available for free and attempting to make money from it. Where this really causes a problem is with content Fox doesn't own, like the NFL. They say in every game that no portion can be retransmitted without permission. Aereo is ignoring that. It's like a bar charging you to watch OTA local TV.

I'm not buying BigA's argument about FCC regulation preventing this from coming to pass: There is absolutely nothing the FCC can do to prevent News Corp. from shutting down its "Fox Broadcasting Network."

If they shut it down, as in go bankrupt, that's one thing. But what they're saying they will do is take it from a free service to putting a paywall on it. That changes the legal designation, and places it in front of the FCC for approval.

 

[kenglish]

I keep hearing this argument that, "once you give it away, there's nothing you can do......"

What about a local newspaper?
Let's say that "City Weekly", a free newspaper in Salt Lake City, publishes some pretty interesting investigative pieces each week.
(Actually, they DO.)
Now, let's say that the "Deseret News" or "Salt Lake Tribune" takes those stories and re-prints them in their own daily, paid newspaper, without paying or getting permission.

Are the paid papers doing the free paper a favor, by "extending it's reach"?
Are they just acting as a "go between", helping the reader by making it easier to "pick up" the City Weekly?

Or, are they using the City Weekly to enhance their own product?

 

[KeithE4]

By definition, Fox's OTA content cannot be "stolen" since they give it away to the public for free.

But what Aereo is doing is taking your free OTA TV and RE-SELLING it. THAT is the problem. They are taking something available for free and attempting to make money from it. Where this really causes a problem is with content Fox doesn't own, like the NFL. They say in every game that no portion can be retransmitted without permission. Aereo is ignoring that. It's like a bar charging you to watch OTA local TV.

That's different, but that's a copyright & content-ownership issue. The US Copyright Office, not the FCC, would handle such things, IIRC.

I'm not buying BigA's argument about FCC regulation preventing this from coming to pass: There is absolutely nothing the FCC can do to prevent News Corp. from shutting down its "Fox Broadcasting Network."

If they shut it down, as in go bankrupt, that's one thing. But what they're saying they will do is take it from a free service to putting a paywall on it. That changes the legal designation, and places it in front of the FCC for approval.

Why would Fox need the FCC's permission to move its network programming to cable? The only reason the FCC would get involved would be if they sold or shut down their O&O stations. They could move the network to cable and run their stations as independents or MyTV affiliates if they decided to do so.

 

[Casey]

If they dissolve the existing network and create a new one under a similar name, the FCC would undoubtedly approve it. Problem solved. News Corp has a tremendous pull on cable companies already. They would carry the network. News Corp has also made a $500 million bid for Hulu. That would put them in control of the #2 paid streaming service in the US. That would put Fox content on every streaming device on the market.

But what Aereo is doing is taking your free OTA TV and RE-SELLING it. THAT is the problem. They are taking something available for free and attempting to make money from it. Where this really causes a problem is with content Fox doesn't own, like the NFL. They say in every game that no portion can be retransmitted without permission. Aereo is ignoring that. It's like a bar charging you to watch OTA local TV.

It doesn't matter that they are reselling it. They could be giving it away for free and Fox would still be complaining. It removes Fox from the drivers seat and that is where Fox has a problem. They and their affiliates want to be able to push cable companies and consumers around and Aereo is stepping in and threatening all of that. Especially since Aereo is starting to cozy up to some providers like Dish. If Aereo steps in and provides OTA content to all of Dish's subscribers, there goes all the retransmission fees Fox was making. A tremendous amount of money. Fox might be able to threaten Dish, somehow, but it gives them leverage. Something they never had before and something Fox wants to make sure they don't get.

 

[KeithE4]

I keep hearing this argument that, "once you give it away, there's nothing you can do......"

What about a local newspaper?

Let's say that "City Weekly", a free newspaper in Salt Lake City, publishes some pretty interesting investigative pieces each week.
(Actually, they DO.)

Now, let's say that the "Deseret News" or "Salt Lake Tribune" takes those stories and re-prints them in their own daily, paid newspaper, without paying or getting permission.

Are the paid papers doing the free paper a favor, by "extending it's reach"?
Are they just acting as a "go between", helping the reader by making it easier to "pick up" the City Weekly?

Or, are they using the City Weekly to enhance their own product?

Again, that's a copyright issue, not a "retransmission" issue per-se. If I write something and put it on a website I own, that content is mine, even though I offer it free of charge. If the Arizona Republic wants to reprint it, they still need my permission to do so even though I wouldn't charge them for it.

 

[TheBigA]

Why would Fox need the FCC's permission to move its network programming to cable?

Both cable and networks are regulated by the FCC. The role of the FCC is to protect the consumer. What Fox has said publicly is they're taking free content and moving it behind a paywall. That is unfair to the consumer, and challenges the FCC to get involved.

If they dissolve the existing network and create a new one under a similar name, the FCC would undoubtedly approve it. Problem solved.

Not if the goal is to take free content and place it behind a forced paywall, and it could be positioned that way.

News Corp has a tremendous pull on cable companies already. They would carry the network.

I've already given the example of Fox Business, but there are several other Fox channels that are in the bottom tier. There is no reason for cable companies to move this network to a higher status if they don't have to. Right now, they have to. This threat is a temper tantrum. That's all.

 

[KeithE4]

Why would Fox need the FCC's permission to move its network programming to cable?

Both cable and networks are regulated by the FCC. The role of the FCC is to protect the consumer. What Fox has said publicly is they're taking free content and moving it behind a paywall. That is unfair to the consumer, and challenges the FCC to get involved.

Maybe this would be in the realm of the Federal Trade Commission, but I'll be surprised if the FCC has any jurisdiction unless station licenses are involved.

 

[TheBigA]

Maybe this would be in the realm of the Federal Trade Commission, but I'll be surprised if the FCC has any jurisdiction unless station licenses are involved.

Station licenses ARE involved, since there's no sense owning TV stations if you're pulling the plug on their network. That's why this is just bluster. The network president is saying something that affects the station president within the same company. But as I said, networks and cable companies are under FCC jurisdiction. But any agency can get involved if they want.

 

[KeithE4]

Maybe this would be in the realm of the Federal Trade Commission, but I'll be surprised if the FCC has any jurisdiction unless station licenses are involved.

Station licenses ARE involved, since there's no sense owning TV stations if you're pulling the plug on their network. That's why this is just bluster. The network president is saying something that affects the station president within the same company. But as I said, networks and cable companies are under FCC jurisdiction. But any agency can get involved if they want.

Exactly how would station licenses be involved? Let's say this does happen, and Fox goes strictly cable. That leaves 200 or so O&Os and affiliates without network programming. If Fox keeps its stations and runs them as independents as a result of this move, why does the FCC need to get involved? Non-owned affiliates can do the same, or try to snag CBS, NBC, or ABC away from other stations in their markets. I don't believe any station needs the FCC's permission to change or drop a network affiliation.