Networks Could Go Cable Only / No More Affiliates

[DirectMan]

"Fitch Ratings analyst Jamie Rizzo predicts that at least one of the four broadcast networks "could explore" becoming a cable channel as early as 2011. '

http://www.siliconvalley.com/ci_14086771?source=most_viewed

[convem24]

This would mean about 10 million house holds would have to get satellite or cable which is good for those companies but there are some households that would go without. It would be very interesting.

[Stuart Sweet]

This seems to be a very hot topic the last week or so. Of course, with Comcast buying NBC and Fox demanding a fee for carriage, it's not surprising.

The traditional network/affiliate model is already pretty much dead anyway. The days when a network affiliate made money on network programming are largely over. If they are lucky they can get a little bit from selling advertising, but today the affiliate is increasingly dependent on local news and syndicated programming anyway.

[Ira Lacher]

I have been predicting this for years. The technology certainly is there. But the rating and share figures of OTA continue to dwarf even the highest-rated cable shows. And advertisers would demand lower rates, which the nets aren't about to offer.

You might expect the nets to test the waters first over the next several years by introducing additional or complementary programming on one of their owned cable outlets first and see what kind of viewers and advertising it gets.

The other thing to consider is bandwidth. Right now there isn't enough available, either by satellite or cable, on a grand scale to offer programming to a large amount of viewers.

So for the near future, I don't expect the affiliate model to change in a big way. But it could change in a small way.

[gregjones]

You might expect the nets to test the waters first over the next several years by introducing additional or complementary programming on one of their owned cable outlets first and see what kind of viewers and advertising it gets.

I would argue that we already saw the beginning of this trend. NBC dumped an hour of programming each weeknight because it was cheaper to produce one Leno show instead of a scripted drama for each night. The advertisers, at the inflated rates of networks, were not making it attractive enough for NBC to pay for scripted shows.

Personally, I think it was a bad call to put Leno there. But I find him exceptionally unentertaining.

The other thing to consider is bandwidth. Right now there isn't enough available, either by satellite or cable, on a grand scale to offer programming to a large amount of viewers.

Any cable operator would gladly replace their current feeds for local network affiliates with a feed similar to every other network they receive. Affiliates have technical considerations that make them more expensive for any cable or satellite provider. Consider any cable company with a footprint that stretches across multiple markets. They currently have to deal with each network affiliate in each town. This would reduce their bandwidth coming into their network, allow them to centralize some equipment and not increase their bandwidth at individual locations.

Add to that the likelihood that this would allow for technology like MPEG4 to be more prevalent and it could end up saving bandwidth. Consistent picture quality to all the cable/satellite headends with less bandwidth. Hmmmm....

[Ira Lacher]

Left out one thing . . .

The enormous political pull of broadcast station owners. Remember how they persuaded Congress to keep distant signals off satellite for lo these many years? Do you think they will move idly by and let their bread and butter -- contracts with OTA nets -- evaporate?

[Stuart Sweet]

Except the bread is going stale (to use your metaphor.)

In by-gone days, networks paid affiliates as well as providing ample available spots for local advertising. Now, most affiliates agree to carry network programming at no charge or even pay a fee to the networks, and they have fewer spots available as well.

This, according to a highly placed source in the broadcast community. He says that network carriage is a net-zero proposition and the real revenue is in local news.

[RobertE]

Personally, I think they could kill off 60-70% of the affiliates. Just remap the DMAs into much larger "super" DMAs if you will. Maybe the market & natural selection will do that over the next few years on its own.

[Stuart Sweet]

From a point of view of network programs, I see that. But living in the Los Angeles DMA, which is much much larger than the OTA signal footprint already, I get almost no local news even when there is an emergency. Surely you have read some of my angry missives on this before.

I'd actually recommend much smaller DMAs but with super-regional networks, perhaps no more than 10-12 affiliates per network nationwide.

[joshjr]

From a point of view of network programs, I see that. But living in the Los Angeles DMA, which is much much larger than the OTA signal footprint already, I get almost no local news even when there is an emergency. Surely you have read some of my angry missives on this before.

I'd actually recommend much smaller DMAs but with super-regional networks, perhaps no more than 10-12 affiliates per network nationwide.

I would think it would be more then that. I think they could get away with only a few per state but that would be pushing it to say 10-12 for all 50 states. Who knows. Something has to happen though.

[ronwilts00]

This seems to be a very hot topic the last week or so. Of course, with Comcast buying NBC and Fox demanding a fee for carriage, it's not surprising.

The traditional network/affiliate model is already pretty much dead anyway. The days when a network affiliate made money on network programming are largely over. If they are lucky they can get a little bit from selling advertising, but today the affiliate is increasingly dependent on local news and syndicated programming anyway.

When OTA was invented, the people then said it would last 100 years at most (like the phony product life cycles marketers preach and use to get people to buy new stuff every so many years when most of the phased out tech or products are superior in many ways to the new ones) - non-tech examples are like all these new types of skillets and pots brought to market in the last 100 years - when the best were invented in the 1800's and before such as cast iron cookware and copper pots - tech examples are crt tv's that handle hd pictures better (display it better) and last longer (when not cheap stuff used in them) than lcd, plasma and led

This is why in the past 40 years or so you have seen things (wrongly) be invested in satellites and such, when no real investment has been made to increase and make better (or signals be able to travel further) on OTA.

I mean if we can build billion dollar satellites to transmit programming, we sure as heck have the knoweldge and ability to have improved OTA and kept it viable and used it for cable transmissions rather than huge satellites.

This is just another prime example of marketers running the show to make $$$ and common sense being thrown out the window because like any product, you give it away for essentially free for awhile (TV signals obviously cost more of acquiring a receiver to watch the free signals over say free samples of clothes etc) but the plan from start was to have it free (the signal) for around 100 years and then let OTA die, so then the addiction to TV is so ingrained they will be willing to pay almost any price to have it.

[pappy97]

I mean if we can build billion dollar satellites to transmit programming, we sure as heck have the knoweldge and ability to have improved OTA and kept it viable and used it for cable transmissions rather than huge satellites.

This is just another prime example of marketers running the show to make $$$ and common sense being thrown out the window because like any product, you give it away for essentially free for awhile (TV signals obviously cost more of acquiring a receiver to watch the free signals over say free samples of clothes etc) but the plan from start was to have it free (the signal) for around 100 years and then let OTA die, so then the addiction to TV is so ingrained they will be willing to pay almost any price to have it.

It's not just marketers, but lobbyists + politicians. For example, back in the 50's when the Interstate system was launch, there was a great time to set up infrastructure for mass public transportation, a grid of light rail, railroads, and then use that infrastructure for high speed rail later.

There is no reason that we shouldn't have an SF to LA "TGV" rail right now (like in France, or Japan) instead of politicians bickering over it just now.

It's because the automative lobby was powerful and stopped or shut down these mass public transportation efforts and thus most of the country today is car-dependent. Yes there are plenty of subways in NY/Chicago, BART in SF, but LA's light rail is fairly new. Dallas' light rail is a joke and will only finally get to both DFW and Love Field in the next 10 years. KC keeps voting down light rail proposals. Check out the documentary "The End of Suburbia" to hear more about this.

My guess here is that OTA could have been bigger but you have these evil corporations and their lobbyists who keep efforts at bay because expanded OTA is not in their best interest, even though it's in the public interest.

[ronwilts00]

It's not just marketers, but lobbyists + politicians. For example, back in the 50's when the Interstate system was launch, there was a great time to set up infrastructure for mass public transportation, a grid of light rail, railroads, and then use that infrastructure for high speed rail later.

There is no reason that we shouldn't have an SF to LA "TGV" rail right now (like in France, or Japan) instead of politicians bickering over it just now.

It's because the automative lobby was powerful and stopped or shut down these mass public transportation efforts and thus most of the country today is car-dependent. Yes there are plenty of subways in NY/Chicago, BART in SF, but LA's light rail is fairly new. Dallas' light rail is a joke and will only finally get to both DFW and Love Field in the next 10 years. KC keeps voting down light rail proposals. Check out the documentary "The End of Suburbia" to hear more about this.

My guess here is that OTA could have been bigger but you have these evil corporations and their lobbyists who keep efforts at bay because expanded OTA is not in their best interest, even though it's in the public interest.

that is because the interstate highway system was not built to help long term (100 year plus) transportation for americans, it was a way for the federal government to have a way to make states do what they want, any time in news if states do not cowtow to the feds desires, you always hear if its not our way, then you loose funding for highways and etc

[ndole]

It's too bad you'd need a hog of a transmitter to make OTA a 2 way communications platform. Imagine the possibilities!

[Shades228]

I still haven't figured out why there are still local affiliates. It seems like it would be cheaper to just have the national channel and then a local crew just for a "local news" which could give you 30-60 minutes of just local news and then have a national news that covers national stories. In the top 5 cities you could roll both into one show probably but for smaller DMA's this would be perfect.

[ronwilts00]

I still haven't figured out why there are still local affiliates. It seems like it would be cheaper to just have the national channel and then a local crew just for a "local news" which could give you 30-60 minutes of just local news and then have a national news that covers national stories. In the top 5 cities you could roll both into one show probably but for smaller DMA's this would be perfect.

and how would you transmit that ?

OTA is local and if digital had not been bungles, using sub-standard standards, that reduced the miles it can reach and lessons the terrain it can travel through (analog was superior) people prefer local stations, so decisions can be made locally not someone who has no idea of the local area

[ronwilts00]

It's too bad you'd need a hog of a transmitter to make OTA a 2 way communications platform. Imagine the possibilities!

IF people had intelligence and we would have invested the billions upon billions that was invested in satellites for tv, if that had went for OTA technology and for the wired way to get the stuff around (national stuff sent locally as an example) you would not need such a transmitter cause we would have figured a way to make OTA 2 way and very efficient

OTA (not the crap way they are doing it now) is and could be the best way to transmit not only local tv, but also national cable channels, but internet as well,

same way that cable came around and was not needed, because if companies had invested that money into telephone lines and tech, then you could have had telephone likes for cable tv since the 60's and 1 less wire on poles around the country + more rural people could have had cable sooner.

but that would be a moot point if money had been invested in OTA instead of being wasted on satellite


but the real reason, besides wasting money on satellite, satellite for tv was wanted over ota, cause ota was harder for people to be able to spy in on everyday people than is with satellite

[JoeTheDragon]

"Fitch Ratings analyst Jamie Rizzo predicts that at least one of the four broadcast networks "could explore" becoming a cable channel as early as 2011. '

http://www.siliconvalley.com/ci_14086771?source=most_viewed
How will that work for the NFL that has deals that say local games must be on OTA for free.

[Kheldar]

Interesting discussion here, folks.
But Mods: shouldn't this be in the "Local Reception" or "TV Show Talk" forum, not DirecTV?

As for the topic at hand, I don't see why the networks couldn't easily transition to cable channels. The only issues that I see off-hand would be: local news, locally-originated content (sports and otherwise), local advertisements, and access to the channel for viewers.

As it is, most of their content is identical nationwide, except for the East/West time difference.

Local News
If the networks were transitioned to cable outfits, the local affiliates would basically be reduced to a local news outfit. The national network feeds would still leave the same slots open for insertion of local news, and the production costs of the local news could be covered by sales of local ads during commercial breaks in the newscast.
The insertion into the national feed could be done by the cable and satellite providers.

Locally-Originated Content (Sports or Otherwise)
I'm basing this portion off a relatively small market (Boise, ID), but the local sports broadcasts (the ones not on national networks) are usually hosted by the same people that do the sports news on the evening news. The same people could still broadcast and host the games, which (like the news above) could be inserted into the national network feed or placed on an intermittent channel. Same with any other locally-originated content (like PBS pledge drives). Expenses could possibly be covered by sales of local ads during commercial breaks.

Local Advertisements
All the cable and satellite companies are already assigned commercial spots where they insert localized or national ads into the channel feeds. During national broadcasts on the "networks", the cable and satcos could insert the commercials into the "network" broadcasts just like they currently do on other channels.

Viewer Access
As it stands now, there are some people that can't get broadcast signals. How many people currently can get broadcast signals but can't (I didn't say won't) get cable or satellite TV service? I'd bet it is a small group, and a lot of those issues could be overcome with legislation requiring cable companies to expand their networks to those people. And maybe legislation requiring free cable or satellite access to local stations.

Benefits
Imagine what could be done with all that bandwidth?

[David MacLeod]

in my town there is no cable and MANY people cannot use satellite due to trees. guess they are screwed.
and 3mb dsl is the fastest service in the town to internet based content is out.

[Shades228]

and how would you transmit that ?

OTA is local and if digital had not been bungles, using sub-standard standards, that reduced the miles it can reach and lessons the terrain it can travel through (analog was superior) people prefer local stations, so decisions can be made locally not someone who has no idea of the local area

The uplinks are already built. The technology already exists. The only difference is that people who can't get locals now could then get the national feed and wouldn't have a "local" news but another markets news could be piped in.

[Ira Lacher]

As long as the broadcasting lobby remains strong -- and it will -- Congress will see to it that the affiliate model won't change.

[gregjones]

Again, people are largely arguing about why there is a reason not to divest local OTA. This is not the question. The question regards whether OTA should be a network afilliate.

If OTA stations got the same carriage on satellite and cable, would it matter if they were afilliates? Right now, towns are supporting three or more TV news organizations just because there are three or more networks in that town. This is artificially inflating the amount of resources dedicated to news in small markets. We are seeing the consolidation of overpopulated print media in these same markets now.

The markets could probably much better sustain a single OTA in most small markets with an adjacent OTA overlapping. This would provide 2-3 local channels for most viewers separate from the network programming. This consolidation (driven by the market) would be the biggest issue for most OTA stations. Comparatively, I think losing network programming would be less of an issue. As was stated, most are at or below a break-even point for network programming as is. When you consider the equipment requirements at each affiliate to support network programming, it could present a substantial cost savings.

If you feel this is unlikely, look at small markets more closely. Many are already sharing news teams between separate stations. Many markets have CW stations only as digital subchannels as it is.

For the networks there is a very substantial list of reasons to want to be a national channel. Their biggest hurdle in terms of distribution options always involves affiliate agreements. Cable channels show their new content in HD several times a week. Networks show it once. With the ubiquity of DVRs, this can mean a sizable increase in the number of viewers. If your show happens to run as the third most popular show in a given timeslot, its DVR audience dwindles. The extra airings each week could bolster viewership (ad revenues) for the network.

[Greg Bimson]

I still haven't figured out why there are still local affiliates.I'm not going through the history of television broadcasting, but it does need to be mentioned that radio was so strong and dominated by the big 3 in the 1940's that the FCC created rules not to allow the networks to run amok through television.

This discussion is centered around having "national networks", so it appears whatever the FCC put in place hasn't stopped any strong national networks.It seems like it would be cheaper to just have the national channel and then a local crew just for a "local news" which could give you 30-60 minutes of just local news and then have a national news that covers national stories.Think about it. Isn't that what we have now? I have local channels that provide an hour or an hour and a half of local news (the local crew) and then the national news provided by the network.In the top 5 cities you could roll both into one show probably but for smaller DMA's this would be perfect.In the top five markets I'd bet there is at least an hour of afternoon news plus the national network evening news on each of those channels.

And I note the above because in order to effect change, no matter how large or small, one must get the networks on board with making that change. After all, in the top five markets, the networks are the ones that own their local affiliates (except for Dallas ABC affilated WFAA, owned by Belo), and are the parties responsible for programming and hour or 90 minutes of local news.

[tvjay]

First let me say that I work for a local TV station so I am slightly bias but I know what I am talking about because I have seen this happen with my own eyes. Name a cable outlet that will give you information when there is a Tornado in your area? There isn't one. Name a cable outlet that will provide news of a shooting at your son or daughters school? There isn't one. Name a source of information that will be there REGARDLESS of the weather? There isn't one.

If you lose your dish because of a storm and are forced to run a generator, it is a safe bet that at least two or three LOCAL TV stations will be there providing information and programming. Some would argue that radio will work, but locally our radio stations SUCK and when I needed information about a possible tornado they had NOTHING but music playing. As a local TV station we have our own generators and can run for several days without power and that is at both the station and the transmitter site. We understand the importance of news and weather information, especially in a breaking news or severe weather situation. Yes, we do a lot of stuff that is annoying or stupid, but when it REALLY matters, I mean when it REALLY matters we'll be there. The internet, cable, and satellite can't say that.

[Stuart Sweet]

Interesting discussion here, folks.
But Mods: shouldn't this be in the "Local Reception" or "TV Show Talk" forum, not DirecTV?

Excellent thought. I'm moving it to TV Show Talk.

[phrelin]

Where did this thread come from? Should I just quote here all my rants from the past two years advocating this, Stuart? Or just this one:This could all be solved by having ABC, CBS, Fox, MyNetworkTV, NBC, PBS, and The CW become national cable channels with an East and West feed. The networks could get their pound of flesh and the cable and satellite companies could drop most of their costs associated with local station retransmission fees.

Of course, 1958 was probably a good year for John Kerry as he was 15. So he and all the other Senators and Representatives are preserving that fine business model for us to pay for and pay for and pay for....

[gregjones]

First let me say that I work for a local TV station so I am slightly bias but I know what I am talking about because I have seen this happen with my own eyes. Name a cable outlet that will give you information when there is a Tornado in your area? There isn't one. Name a cable outlet that will provide news of a shooting at your son or daughters school? There isn't one. Name a source of information that will be there REGARDLESS of the weather? There isn't one.

If you lose your dish because of a storm and are forced to run a generator, it is a safe bet that at least two or three LOCAL TV stations will be there providing information and programming. Some would argue that radio will work, but locally our radio stations SUCK and when I needed information about a possible tornado they had NOTHING but music playing. As a local TV station we have our own generators and can run for several days without power and that is at both the station and the transmitter site. We understand the importance of news and weather information, especially in a breaking news or severe weather situation. Yes, we do a lot of stuff that is annoying or stupid, but when it REALLY matters, I mean when it REALLY matters we'll be there. The internet, cable, and satellite can't say that.

I am not advocating a situation where we have no local stations. I am advocating a separation between networks and local stations. Right now, the number of stations is due almost entirely to the structure of network affiliation. Without that artificial (and somewhat detrimental, anti-market) influence, fewer stations would have more resources to better address the strong points you discuss. Right now, we have local stations that are trying to compete as a national outlet.

[SayWhat?]

Where did this thread come from?

Based on a post on page 1, it was in the Direct TV forum which I have hidden. Since it was just moved, I'm just now seeing it for the first time. I don't know if it can be merged with the other(s) or not.

[SayWhat?]

It'll be interesting though. Between the Time-Warner/Fox war and the Comcast/NBC issue, either Fox or NBC could be the first to make any major change.

[Greg Bimson]

I'd like to point out two separate issues with this line of thought:This could all be solved by having ABC, CBS, Fox, MyNetworkTV, NBC, PBS, and The CW become national cable channels with an East and West feed. The networks could get their pound of flesh and the cable and satellite companies could drop most of their costs associated with local station retransmission fees.First and foremost, if ABC, CBS, Fox, MyNetworkTV, NBC and The CW became national cable channels, tell me where they rank in popularity with the current crop of cable channels. I suspect they'd charge rates higher than the current crop of cable channels. So as ESPN is charging almost $4 a month for their suite of channels, I'd believe that the "networks", as they have the viewership, would charge much more.

So that throws the argument that "cable and satellite companies could drop most of their costs associated with local station retransmission fees" straight out the window. Costs would be much higher on a national level than on a local level.

Secondly, it would cost a lot of money to unwind the decades of evolution of the network-affilate agreement. It is that agreement that determines the fate of networks on free-TV. And let's not forget the networks themselves have a piece of that pie: they own many of their large-market affiliates, which in turn become almost worthless if there isn't any network television broadcast on their own affiliates.

[Stuart Sweet]

Mr. Bimson, you make some excellent points. That being said, I wouldn't worry too much about the owned-and-operated affiliates. They tend to be in large cities and could very likely stand on their own. Not only that, but I do wonder if the O&O arrangement will survive a Comcast purchase of NBC. That would put Comcast in control of a bit too much in several markets. The City of Los Angeles proper is Time Warner territory, but many of the outlying areas in the massive Los Angeles DMA are Comcast territory.

[Greg Bimson]

Not only that, but I do wonder if the O&O arrangement will survive a Comcast purchase of NBC.The O&O arrangement survived a Fox purchase of DirecTV.

The actual question is what happens if Comcast controls NBC the network and the O&O affiliates? We certainly know that Comcast likes to make sure their content is "must see TV", so I feel they'll attempt to beef up NBC, not tear it down.

[Stewart Vernon]

Keep in mind also that while network programming might be a "wash" for a local affiliate (i.e. they pay the same to have it as they make for having it)... it's also a form of one-stop shopping that ensures their livelihood.

Consider...

Specialty stores have a harder time than multi-product stores, in terms of keeping a large customer base. Also, even a specialty store must carry tangential-related products to keep their clientele.

If I go to a stereo store, I expect that store to have all things stereo... not just the receiver. They need to have cables, stands, speakers, and all related peripherals. IF I have to go elsewhere for some parts, then I'm likely to shop elsewhere for everything... so no motivation to stick there.

That's how the locally produced content works with OTA. At least part of why you watch a station's local news is because you watch other things on that channel. IF they have no network programming, then you're less likely to tune in for the local content on a reliable basis.

Also... without the different networks OTA, it would be unlikely to have multiple OTA channels in a market. Likely only a couple would be able to survive + PBS, if all the networks went cable-only.

Now, this might be a good thing in some people's minds... but I'm not sure it is.

Plus as others have noted... there are still quite a LOT of OTA viewers who either cannot or do not want cable/satellite... and I'm not sure the networks are willing to just throw that audience away.

[phrelin]

I'd like to point out two separate issues with this line of thought:First and foremost, if ABC, CBS, Fox, MyNetworkTV, NBC and The CW became national cable channels, tell me where they rank in popularity with the current crop of cable channels. I suspect they'd charge rates higher than the current crop of cable channels. So as ESPN is charging almost $4 a month for their suite of channels, I'd believe that the "networks", as they have the viewership, would charge much more.

So that throws the argument that "cable and satellite companies could drop most of their costs associated with local station retransmission fees" straight out the window. Costs would be much higher on a national level than on a local level.Sigh. Would you care to guess how many local stations currently charge retransmission fees to DirecTV and Dish and the national cable companies? But that isn't the real cost. The equipment to gather and transmit 150-200 local Fox stations could disappear including the costs of operation and maintenance. In the long run it would save a bundle, and right now Fox wants $1 and CBS wants 50¢.Secondly, it would cost a lot of money to unwind the decades of evolution of the network-affilate agreement. It is that agreement that determines the fate of networks on free-TV. And let's not forget the networks themselves have a piece of that pie: they own many of their large-market affiliates, which in turn become almost worthless if there isn't any network television broadcast on their own affiliates.Take a look at the list of network-owned stations and you'll find that it is predominantly in large metropolitan areas. The reality as they unwind those agreements is that with national feeds they'd be losing access to less than 15% of households in smaller DMA's. And they could continue to service OTA through their own stations in large DMA's even as they expand their web presence.

It's a 1958 technology and economic model that is being subsidized by viewers because of federal law. There is no logical reason in 2010 to do it this way.

[SayWhat?]

And don't forget the local advertisers that could never, would never advertise on national TV or cable/sat. There could be a trickle down effect of killing off more local businesses if the OTA stations start to fail.

[Kheldar]

And don't forget the local advertisers that could never, would never advertise on national TV or cable/sat. There could be a trickle down effect of killing off more local businesses if the OTA stations start to fail.

The ads wouldn't have to go national. Cable/satellite companies can insert the ads into individual local markets just like they do now.

[phrelin]

The ads wouldn't have to go national. Cable/satellite companies can insert the ads into individual local markets just like they do now.Not to mention the fact that local stations are seeing advertising revenue dry up which is why they started charging and upping retransmission fees.

[dewzan]

if it were to be Fox or CBS how would it effect contracts with college sports not to mention the nba or nfl. i'm pretty sure the nfl would claim breach of contract. and to lose the nfl would relegate a network that turns cable to tbs status, which is total irrelevance.

[phrelin]

In November 2008 I wrote that it looked to me like 1948 when home entertainment started a ten year transition from radio to TV ending up with what I call the 1958 model. Nothing about these kinds of transitions are easy, but it might be nice if Congress could get the federal government out of protecting that model so we could have a new ten year transition ending in the 2018 model that really will be personal entertainment rather than home entertainment.

[Stewart Vernon]

The ads wouldn't have to go national. Cable/satellite companies can insert the ads into individual local markets just like they do now.

Minor correction... Cable does insert localized ads... but Satellite only inserts national ads.

The only way Satellite has local ads is because of unique local feeds of the local stations... IF those local stations were dropped in favor of a national feed... then current Satellite technology has no way to insert a localized ad into a CONUS feed.

IF satellite used spotbeams in order to insert localized feeds, then that wouldn't save them any bandwidth/money... so I sincerely doubt Satellite companies like Dish & DirecTV would continue to use spotbeams for "locals" if the networks went cable/satellite exclusive.

[Greg Bimson]

Nothing about these kinds of transitions are easy, but it might be nice if Congress could get the federal government out of protecting that model so we could have a new ten year transition ending in the 2018 model that really will be personal entertainment rather than home entertainment.So let's play devil's advocate...

Get rid of the SHVIRA (or whatever just recently passed), including all of its precursor legislation all the way back to the SHVA of 1988. Also get rid of all legislation and case law back to 1958 such as the Cable Act of 1992 and any precursor and successor legislation.

Question: What networks would then be on satellite or cable? None.

How many people would then dump cable or satellite? Many.

Be careful what you wish for...

[phrelin]

So let's play devil's advocate...

Get rid of the SHVIRA (or whatever just recently passed), including all of its precursor legislation all the way back to the SHVA of 1988. Also get rid of all legislation and case law back to 1958 such as the Cable Act of 1992 and any precursor and successor legislation.

Question: What networks would then be on satellite or cable? None.

How many people would then dump cable or satellite? Many.

Be careful what you wish for...You do know that less than 18% of TV homes are not connected to cable or satellite? Why do you think the ad-based networks would not want that 80%+ of the audience? I have a vision for the 2018 model (this is only the cable/satellite side of my vision).

I see packages including the old broadcast networks sold to cable and satellite just like now. NBCU would just add NBC to USA, Syfy, Bravo, etc. Disney would just add ABC to ABC Family, Disney Channel, etc. CBS might have to cut a deal with Viacom but they could just as easily package with Showtime. Fox would be packaged with the News Corp channels like FX, SPEED, etc. The CW could be packaged with the Time Warner channels like TNT, TBS, CNN, etc.

To me, the 21 broadcast stations carried by Dish from the Bay Area DMA are a waste of bandwidth. If a station created local programming that stimulated demand - say KTVU without Fox, for instance - then Comcast, Dish and Direct might pay because enough customers want to pay.

I'd be happy to pay Fox for an East and West feed. I have no burning desire to give my money to Cox Enterprises which owns KTVU so they can downlink from a satellite the national Fox programming, process it and transmit it to Dish, have Dish process it and uplink that heavily processed signal to satellite, from which it can be downlinked to me and processed by my receiver so I can watch it. If it weren't for the federal regulations, Cox Enterprises, as it now operates in 11 DMA's creating little if any real marketable value, would be out of business because the Rupert Murdoch's would cut out the worthless middlemen.

That's just my vision. Others see a shift to more on-demand which could bring content directly from the content creators bypassing the whole TV industry. Many variations are possible. My alternative is to have NBCU and the rest sell their cable channel signals to be broadcast on subchannels as technology improves. In that scenario I could see those 21 Bay Area broadcasters offering 84 channels OTA with local ads, but using pay boxes to descramble the signal. That could cut into cable and satellite.

What I don't see is the current 1958 model of 7 national networks delivered to our homes via cable and satellite from different broadcast stations in 200+ DMA's. That's 1400 channels reselling the same 7 signals. It makes no sense. So, of course, it's the law.

[SamC]

IMHO,

- Broadcasting has been out-of-date for a very long time. Dating back to the days of SHVA and all of the constranation about distant locals "by the wink" in the days of BUD and early in DBS, people simply wanted the networks. NBC, ABC, etc. A genericized feed was just as good as "their" locals to many, and I think most people.

- Most cable companies and DBS do not even pick up the signals OTA. These get a feed direct from the station. Most stations toss up a signal that pretty much nobody is actually receiving.

- Local news is amateur hour after about DMA #75. Above DMA #50, state specific or city specific cable news channels exist. And, simply put, many people simply do not care about local news. And most local news, while the stations make claims to vast rural territiories, never cover anything more than five miles from the transmitter.

- Most of the people who get TV OTA are not "poor". They are, rather, people for whom TV is unimportant. Intelectuals, non-English speakers, religious minorities, etc.

- 212 DMAs are rediculious. The reality is that, at least as a part of the transition, a situation similar to what exists in several western states, such as New Mexico, where the entire state is aggrigated into a legitimate sized market, will exist. Just as an example in my state, the outer DMAs could easily be aggregated into the primary one, making the DMA 20 spots higher, with no loss to anybody but the station owners in the small towns.

- In sports, which is what I really care about, part of the transition, is going to be from getting big money from an OTA network which show commercials, to a viewer pay situation, with lots of ad inserts into player uniforms, etc. The sport with the largest transition to make is the NFL.

- The "1948-58" comment above is very profound. And, hey, AM radio, without government interference, transitioned from the primary entertainment medium to a music medium when TV took the primary entertainment role and then to a news, service, niche languages and niche music, and talk medium when FM took the music role. OTA TV will find something to do.

[scooper]

I'm sorry you have such poor local TV news operations.

The stations I have do far more than a "5 mile radius from their transmitters" for local news, weather etc.

[SayWhat?]

- Local news is amateur hour after about DMA #75. Above DMA #50, state specific or city specific cable news channels exist. And, simply put, many people simply do not care about local news. And most local news, while the stations make claims to vast rural territiories, never cover anything more than five miles from the transmitter.

- Most of the people who get TV OTA are not "poor". They are, rather, people for whom TV is unimportant. Intelectuals, non-English speakers, religious minorities, etc.

-- Huh?

-- Double Huh?

[lwilli201]

The ads wouldn't have to go national. Cable/satellite companies can insert the ads into individual local markets just like they do now.

That would work for cable but not satellite. If they were to go to a national channels, they would eleminate the spot beams and go to a national beam. Inserting local ads would not be an option.

[phrelin]

That would work for cable but not satellite. If they were to go to a national channels, they would eleminate the spot beams and go to a national beam. Inserting local ads would not be an option.If local ads actually generated a lot of money - and in many, many DMA's the locals are going under because they don't - there would be nothing to stop Dish and Direct from using spot beams to localize the networks or FX or anything else if the spot beams were not used up by worthless locals.I'm sorry you have such poor local TV news operations.

The stations I have do far more than a "5 mile radius from their transmitters" for local news, weather etc.In the Bay Area the digital OTA boundary is greater than 5 miles. In fact, based on discussion on a Yahoo forum devoted to this subject, I can roughly draw this map:

http://www.phrelin.com/Dish/DMAcov.jpg

As indicated, about half of the Bay Area DMA can get OTA if more than 30 miles from Sutro Tower, the home north of San Francisco is not located on a North facing canyon slope (about half are) or the home south of San Francisco is not located on a South facing canyon slope. If you find a topo map of California, you'll note that the Coast Range is nothing but canyons.

The way things are working people in El Dorado County to the East across the Sacramento Valley are getting great Bay Area channel signals as well as their DNA's Sacramento channels.

For the most part, people in Mendocino, Lake, and significant parts of Sonoma and Napa counties, a geographic area larger than many states and a population larger than a few states, can't and will never be able to get Bay Area stations OTA.

News and weather coverage?

News coverage in these areas is rare and normally not relevant to us specifically. If someone shot Arnold in Lakeport, you'd see news vans from Sacramento, LA, and, oh yeah, Bay Area stations. Otherwise we don't know what a news van looks like.

Weather? When I had to drop my "distant" Sacramento stations which provided weather coverage in our area, I wrote KGO (the Bay Area ABC affiliate) complaining about us not even being on their map. They responded that they had to cover Monterey County even though it's not in their DMA because ABC had no affiliate there. They didn't explain that there's more people with more money there which was the truth. But they agreed they'd try. We now appear on the map as do many places in the Sacramento DMA. And once in a blue moon, the weather person actually mentions a temperature in nearby Ukiah. Oh, and they frequently have a weather reporter up in the Sierras even in areas in the Reno, Nevada DMA. We wouldn't know what one looked like.

Why would we care if the Bay Area stations disappeared if we could get the 7 national networks on an East and West feed via cable and satellite? And we aren't unique, in the West at least.

[Stewart Vernon]

I think everyone should just work for big companies like GM, AT&T, and Microsoft. Why do we need small businesses? They don't generate as much profit as a big business.

I want Wal-Mart to replace all small business stores... so all I will have left in town are Wal-Marts... and then no choice of where to buy from.

Note sarcasm above...

It's not unlike the argument to "get rid" of local stations in favor of one network feed on cable/satellite.

There would be a big loss of jobs, and loss of choice if that ever happens.

[sorentodd45]

I like Phrelin's idea about the East and West feeds. If I could get both on my cable system (actually Verizon), then I would have no problem with the OTA networks transitioning to cable channels.

That's really my only complaint about network Prime Time, you only get one chance to see a program (I'm going to take summer reruns out of the equation for now). So why should I have to invest money in extra recording devices and tuners if I have a 3-way conflict?

I rarely watch local news; that's what the internet is for.

[SayWhat?]

I rarely watch local news; that's what the internet is for.

Other way around. I never go to any local websites for local news. I use local TV news or papers. I only visit websites of distant TV stations where watching their newscast isn't possible.

[phrelin]

I think everyone should just work for big companies like GM, AT&T, and Microsoft. Why do we need small businesses? They don't generate as much profit as a big business.

I want Wal-Mart to replace all small business stores... so all I will have left in town are Wal-Marts... and then no choice of where to buy from.

Note sarcasm above...

It's not unlike the argument to "get rid" of local stations in favor of one network feed on cable/satellite.

There would be a big loss of jobs, and loss of choice if that ever happens.You are agreeing then that most locals have no value other than to use my money to employ people. The choices of network programming would remain the same. You are right though, I'd lose the choice of deciding which local news fluff piece presented by weird anchor persons and "reporters" I didn't want to watch.

[phrelin]

Other way around. I never go to any local websites for local news. I use local TV news or papers. I only visit websites of distant TV stations where watching their newscast isn't possible.I avoid TV news like the plague that it is. The following screenshot is of a web page on our web site that I go to most days twice a day to browse news:

http://www.phrelin.com/Dish/ournews.jpg

Sometimes I go to the KPIX web site as admittedly they tend to have the best video of Bay Area news. And if I want to see different perspectives I use Google News Search.

But last night in between the two Dick Clark New Year's shows, I sat through KGO news. I was in despair for the news business at the end.

[Glen_D]

[QUOTE=SamC;2318225]- Most of the people who get TV OTA are not "poor". They are, rather, people for whom TV is unimportant. Intelectuals, non-English speakers, religious minorities, etc.

I think I've met some of the intellectual types you are referring to. They usually only have one TV - something like a 13" CRT with rabbit ears. They pretty much only watch an occasional program on their local PBS station. :rolleyes:

[dodge boy]

This seems to be a very hot topic the last week or so. Of course, with Comcast buying NBC and Fox demanding a fee for carriage, it's not surprising.

The traditional network/affiliate model is already pretty much dead anyway. The days when a network affiliate made money on network programming are largely over. If they are lucky they can get a little bit from selling advertising, but today the affiliate is increasingly dependent on local news and syndicated programming anyway.

This is a bad deal and shoul dbe illegal. We are getting ever smaller points of view when it comes to news and info. This will pretty much insure a corporate bias. in everything.

[Kansas Zephyr]

As long as the broadcasting lobby remains strong -- and it will -- Congress will see to it that the affiliate model won't change.
The days of the nets paying local stations have long gone...locals PAY the nets now to carry its programming.

As more eyes shift away from local OTA to cable/sat, the local revenue will continue to drop. It already is.

Expect more local newsrooms to close, smaller DMAs may have no local news at all...larger cities may have only one or two choices. Remember that multiple news sources helps keep "the media" a more honest broker, since one outlet can expose another's sloppy/unethical reporting.

Who do you think provides some of the video/stories to the nets for their national newscasts? The local affiliates.

The marketplace will decide free local OTA TV's fate, of course. But, after local information starts to dry up...some people may wonder where it went and why.

[Greg Bimson]

I gave it a rest for a while, to gather my thoughts on some very salient points:You do know that less than 18% of TV homes are not connected to cable or satellite? Why do you think the ad-based networks would not want that 80%+ of the audience? I have a vision for the 2018 model (this is only the cable/satellite side of my vision).But the ad-based networks do get the 80%+ of the audience, through payments from the local station to the network. Sure, it may not be the cable or satellite company paying for the $1 a month to Fox, but to an affiliate which then pays Fox for the network programming.I'd be happy to pay Fox for an East and West feed. I have no burning desire to give my money to Cox Enterprises which owns KTVU so they can downlink from a satellite the national Fox programming, process it and transmit it to Dish, have Dish process it and uplink that heavily processed signal to satellite, from which it can be downlinked to me and processed by my receiver so I can watch it. If it weren't for the federal regulations, Cox Enterprises, as it now operates in 11 DMA's creating little if any real marketable value, would be out of business because the Rupert Murdoch's would cut out the worthless middlemen.Because of these "regulations", Fox has not been allowed to own many of these channels. When Fox started in 1986, they owned seven stations in substantial markets, because that is all they could own. It was because of station ownership regulations that forced Fox to go to a heavy affiliate model. Those regulations were relaxed, and Fox and CBS own just over 20 stations each. However, that still requires "worthless middlemen" to reach more of the country.

And specifically regarding KTVU: it is the largest market where Fox does not own their own affiliate. Cox is paying Fox handsomely for 49ers games and other Fox programming. How would Fox show the 49ers games? If Fox goes cable-only in San Fran, does one think the NFL will have something to say about it? There is one network that receives one game a week, and they pay the most money to the NFL. It is because it is not the ad-supported network; ESPN has a national game a week, just like NBC, but ESPN pays the NFL almost 40 percent more for Monday games that tend to get lesser ratings than the Sunday games on NBC.

Cause and effect must be addressed.What I don't see is the current 1958 model of 7 national networks delivered to our homes via cable and satellite from different broadcast stations in 200+ DMA's. That's 1400 channels reselling the same 7 signals. It makes no sense. So, of course, it's the law.It is a bit simplistic to glaze over how McDonald's, Wendy's, Domino's and Papa John's make money, too, right? I mean, there is no need of the model where there are thousands of restaurants selling the same food, yet some stores are company-owned and others are franchised.

It is the networks that picked this form of distribution, and it will be the networks that will end it if it is no longer profitable.

Just for the record: I really thought the smartest thing the networks could have done was during this digital transition. They could have offered SD multicast so that one subchannel was local news and programming, etc. However, the networks should have retained the rights to HD feeds and sold those nationally. All cable and satellite providers are charging a premium for HD, and the networks should have been in on that deal by offering HD exclusively to the distributors.

[phrelin]

Cause and effect must be addressed.It is a bit simplistic to glaze over how McDonald's, Wendy's, Domino's and Papa John's make money, too, right? I mean, there is no need of the model where there are thousands of restaurants selling the same food, yet some stores are company-owned and others are franchised.If I could get a Big Mac delivered directly into my home through the air, the stores would never hear my footsteps. My local McDonald's adds essentially no value to the Big Mac beyond what I can get at any other McDonald's, even less than the network affiliated local broadcast stations. It is the networks that picked this form of distribution, and it will be the networks that will end it if it is no longer profitable.I wish it were that simple. Five of the networks are part of media conglomerates that dominate content production of scripted programming and own the cable channel competition. More and more they are buying content from themselves, hiring a stable of producer/creators, a world of executives talking to executives. For the actors and writers, this isn't like the 1930's studio stables of actors who were paid a salary. The actors and writers in our new model are "independent contractors" who are the ones asked to forgo any semblance of economic security. Even the union trades are losing out as the production is moved to Canada or non-union parts of the U.S. That might be OK if this is all wasn't occurring within the framework of a U.S. Government guarantee - an FCC license. I don't remember any "conversation" in Congress about how this is working out for the workers or the viewers in 2008.

Syndicated scripted programming choices are few and far between compared to 20 years ago. Local broadcasters would have been the logical outlet for syndicated programming or self-produced programming in a truly competitive market. The federal government has literally facilitated the delay in restructuring of broadcast TV to the benefit of the conglomerates and to the detriment of the public and the local broadcasting industry, IMHO.Just for the record: I really thought the smartest thing the networks could have done was during this digital transition. They could have offered SD multicast so that one subchannel was local news and programming, etc. However, the networks should have retained the rights to HD feeds and sold those nationally. All cable and satellite providers are charging a premium for HD, and the networks should have been in on that deal by offering HD exclusively to the distributors.That is one vision that could have "played out" in a market where the networks and the locals were not protected. It would have been as good as any vision for an alternative I have.

There will come a time when the structure of home entertainment will be totally different from the way it was in 2008, comparable to the changes that occurred in the period between 1948-1958. I just think that the change would have been more rapid in the 21st Century, comparable to the speed technology changes, if it hadn't been for the legal structure favoring the 1958 economic model.

As I see it, if it hadn't been for Apple somehow having the fortitude to push the conglomerates around, we'd still be waiting for a government guaranteed GE (NBCU) equivalent to the whole revolution going on right now.

[Greg Bimson]

We aren't necessarily that far apart in our lines of thinking...Just for the record: I really thought the smartest thing the networks could have done was during this digital transition. They could have offered SD multicast so that one subchannel was local news and programming, etc. However, the networks should have retained the rights to HD feeds and sold those nationally. All cable and satellite providers are charging a premium for HD, and the networks should have been in on that deal by offering HD exclusively to the distributors. That is one vision that could have "played out" in a market where the networks and the locals were not protected. It would have been as good as any vision for an alternative I have.But that had less to do with protection from some regulation, and more to do with existing partnerships.

It was the affiliates that howled five years ago when series such as Monk and Law and Order: SVU were setup as an exclusive viewing for first run, then two weeks later shown on a cable outlet. And technically, it was the affiliates' right to be upset, as the networks gave the affiliates that right.

It is business considerations that stopped the plan I suggest from being implemented, not regulations.

Other case in point: Because the networks and the affiliate boards sued DirecTV for violations of the SHVA back in 1998, DirecTV was forced to terminate in early 1999 many network feeds from people that should not have received them. DirecTV saw hit a bump when it came to subscriptions that year. So DirecTV negotiated with the NAB to start some kind of fair way to keep all involved happy. It wouldn't be hard to simply copy the legislation used for cable TV and apply it to satellite, and thus the SHVIA of 1999 was born.

However, the networks did question why DirecTV didn't discuss network programming carriage with them.

The former was the easy, conservative way out. The latter would have been revolutionary, as it would have made DirecTV a defacto affiliate of the network, bypassing all local distribution.

When it comes to hard choices, networks have generally kicked the can down the road, to deal with the issue later. At some point, the CORE issue will surface and be dealt with.

The big one I'm waiting for? NBC to dump Leno and give back 10PM to the affiliates, to compete with Fox in the 10PM news slot. I am more apt to believe that NBC as it is so bad right now and has a handful of O&O's that they may be the first to consider dropping much of their programming on a wholesale basis. If it weren't for the Olympics and the NFL, they'd have pretty much nothing.

[Alan Gordon]

And don't forget the local advertisers that could never, would never advertise on national TV or cable/sat. There could be a trickle down effect of killing off more local businesses if the OTA stations start to fail.

Where I live, the majority of local advertisers are car dealerships. I don't know about you, but I don't know ANYONE who has ever saw a car dealership commercial and decided to buy a car as an impulse item.

Another favorite around here are lawyer ads... mostly of the ambulance-chasing breed... informing me how of much money they can get me if I'm in an accident at work, or injured in a car crash.

I've also seen multiple other ads for national spots with local franchises addresses added onto the ad.

I've seen multiple commercials that appear as though they are aired nationally, but appear to inserted via the local stations.

Outside of that, I can think of maybe less than 10 local businesses I've seen advertise TV spots on the local affiliates... and that's usually only during the news or late at night.

On the other hand, WSST-DT, a local independent station which airs a considerable amount of local-originated programming often airs nothing but local advertising. I'm sure they charge less, but unlike the affiliates, they are able to air more.

~Alan

[phrelin]

The big one I'm waiting for? NBC to dump Leno and give back 10PM to the affiliates, to compete with Fox in the 10PM news slot. I am more apt to believe that NBC as it is so bad right now and has a handful of O&O's that they may be the first to consider dropping much of their programming on a wholesale basis. If it weren't for the Olympics and the NFL, they'd have pretty much nothing.That is the big one!

I don't know if NBC will do anything until the Comcast/GE deal is either completed or blocked by federal regulatory agencies. The terms of regulatory approvals will be interesting. What will the regulators do with the fact that in the San Francisco Bay Area KNTV is an NBC-owned affiliate while the largest cable company in the region is Comcast?

When one looks at this map (http://www.comcastspotlight.com/sites/Default.aspx?siteid=62&pageid=2466&subnav=1) of the Comcast service area, I really think regulators will have to deal with the inherent conflict-of-interest. And I don't think Comcast wants an NBCU-Comcast division that's in the broadcast station business anyway. The real question is will they sell a package of stations plus the NBC national network?

The final outcome of that deal could go far towards initiating a different trend in local broadcasting. Or not.

[Greg Bimson]

I don't know if NBC will do anything until the Comcast/GE deal is either completed or blocked by federal regulatory agencies.I think it depends on the Leno situation. The NBC affiliates are probably up in arms over Leno, which has seen the ratings for 11PM newscasts on NBC drop in many markets. I'm waiting for the guy to stand up and scuttle Leno.The terms of regulatory approvals will be interesting. What will the regulators do with the fact that in the San Francisco Bay Area KNTV is an NBC-owned affiliate while the largest cable company in the region is Comcast?Probably the same thing that regulators did when Fox bought DirecTV: require non-discriminatory access to all programming. I have to believe that where Comcast has competition from DirecTV, Dish Network and the local fiber CLEC, that the market is being served with vigorous competition for pay-TV services.

Personally, I think Comcast is into NBC for the long-haul. While Comcast can absorb USA, MSNBC and CNBC into the fold with E!, G4TV, Versus and the Comcast Sports Nets, the real gems in this deal are the ones Comcast could never court: the NFL and the Olympics. So, to me, the big deal here is to watch the contract status of the NFL on NBC. If Comcast is able to punt the Sunday Night NFL package from NBC to, say, Versus, NBC is done. If Comcast is able to get real programming on NBC, then NBC might just be a keeper.

[Kheldar]

Probably the same thing that regulators did when Fox bought DirecTV: require non-discriminatory access to all programming.

Finally access to CSN Philadelphia on satellite? :D

[Greg Bimson]

Yes, I personally believe that open access to CSN in Philly will be a requirement. The regulators forced that provision to all Comcast-owned programming except CSN Philadelphia when Comcast took over Adelphia. The controlling ownership of NBC Universal is a much larger issue.

[jadebox]

First let me say that I work for a local TV station so I am slightly bias but I know what I am talking about because I have seen this happen with my own eyes. Name a cable outlet that will give you information when there is a Tornado in your area? There isn't one. Name a cable outlet that will provide news of a shooting at your son or daughters school? There isn't one. Name a source of information that will be there REGARDLESS of the weather? There isn't one.

Those are all good reasons why local stations should carry local programming and not retransmit a national feed.

It's also the reason local stations are given a license to transmit over the air. If the "networks" move to cable it might force local stations to better fulfill their commitment to support the local community.

Local stations are losing viewers partially because they are not offering anything of unique interest to their local viewers. I think local stations could do well by offering programming of local interest instead of airing "CSI: Miami" or repeats of "Everyone Loves Raymond."

-- Roger

[Nick]

Those are all good reasons why local stations should carry local programming and not retransmit a national feed...There is so much wrong with your post I hardly know where to begin.

While a certain amount of "local" programming, i.e., local news, weather and sports is essential, in many markets there isn't enough local material to fill a broadcast day, nor does a broadcaster's economics allow for much locally produced programming which, by its nature, tends to be inferior to network programming.

I receive affiliate broadcasts via cable from two DMAs, being Savannah and Jacksonville. Certain broadcasters run local news programs for 1.5 - 2 hours each during the local evening news block. For the most part, they average about 30 minutes worth of news, wx and sports, repeated 3-4 times.It's also the reason local stations are given a license to transmit over the air. If the "networks" move to cable it might force local stations to better fulfill their commitment to support the local community.To the contrary, loss of their network affiliations, local broadcasters would not be able to do a "better" job due to the loss of network revenue sharing.Local stations are losing viewers partially because they are not offering anything of unique interest to their local viewers. I think local stations could do well by offering programming of local interest instead of airing "CSI: Miami" or repeats of "Everyone Loves Raymond."See above -- locals are losing viewers because of the splintering of audience due to the proliferation of non-broadcast channels. There is just not that much of local interest to fill a broadcast day. Remember the days of cable's 'Community Interest' channel? How'd that work out?

[Stuart Sweet]

To the contrary, loss of their network affiliations, local broadcasters would not be able to do a "better" job due to the loss of network revenue sharing.

Sadly, many new affiliate agreements eliminate payments from the network to the affiliate. The only benefit is the ability to sell a paltry amount of inventory in network programming.

I've been told by an industry insider repeatedly that payments from networks to affiliates are a thing of the past and that he's simply glad he doesn't have to pay the networks very much!

[phrelin]

I've been told by an industry insider repeatedly that payments from networks to affiliates are a thing of the past and that he's simply glad he doesn't have to pay the networks very much!That's the thing most viewers aren't aware of - "pay the networks very much."

Not so many years ago the networks sent money to their local affiliates. In the past five years, things have reversed. The networks are starting to charge the affiliates for the content provided. The local affiliates have started charging cable and satellite companies. Cable and satellite companies paid those additional charges out of shareholder donations ...oh, that's wrong... they charge us and pass the money through to the local stations who pass some of it through to the networks and keep the rest.

The networks have decided to reduce the quantity and quality of their content and for that, they will now charge the cable and satellite companies directly in addition to charging the local affiliates. Cable and satellite companies paid those additional charges out of shareholder donations ...oh, that's wrong... they charge us and pass the money through to the networks.

What I don't get is why the cable and satellite companies don't "unpackage" the locals so that the locals and the networks get to see the impact of their fees by risking losing viewers. Oh, that's right. They are protected by the federal government which assures that if we want to watch CBS we'll have to pay for "Jay Leno" on NBC and "Gossip Girl" on The CW and additionally for the worthless local content (also known as reruns of "Friend") on both.

Now how do I get the federal government to make others pay me for my posts here in order to get the popular content provided by CBS and Fox? You've got to love the depth of the media's belief in "the invisible hand of the market.":mad:

[Nick]

...of Broadcast TVABC Seeks Half of Affiliates' Retrans Take

From TVNEWSCHECK.com
By Linda Moss
TVNewsCheck, Jan 6 2010

Even as broadcast networks are bitterly fighting over retransmission consent fees from cable operators — witness the recent flare-up between Time Warner Cable and News Corp. — they also are gearing up to grab a share of the retrans fees that their station affiliates are collecting. And the most aggressive network on that front appears to be ABC, which is drawing the ire of its affiliates.

ABC has made getting a piece of its affiliates' retransmission consent revenue — or extracting comparable programming fees — a major deal point in affiliation renewals. And it is taking a hard line, demanding that affiliates either fork over 50% of their retransmission consent payments or pay a flat license fee, whichever is greater, according to affiliates. ...

More @ TVNEWSCHECK.com (http://www.tvnewscheck.com/articles/2010/01/06/daily.2/)

[bidger]

Thanks Nick.

From the article:
Other affiliates point to declining ratings and say that the networks aren't what they used to be. ABC affiliates are critical of the network's loss of marquee sports programming.

"So we get and less superior product," said the small-market affiliate. "We have almost no sports to sell. We have a few basketball games, that nobody really watches, and NASCAR."

When ABC dumped the NFL, they lost a great deal of relevancy with me. The NBA only matters to me come playoff time and not until it's fairly deep in the rounds and NASCAR holds very little appeal. CBS and NBC learned their lesson, but because ABC and ESPN are joined at the hip they could care less how lack of NFL affects their affiliates.

I find it interesting that in one of the sidebars in the linked article that NBC won the overnight ratings among their desired 18-49 yo market, with CBS 2nd, and FOX 3rd. ABC is in 4th sandwiched between UNI and CW. That's pretty bad.

[Stewart Vernon]

When ABC dumped the NFL, they lost a great deal of relevancy with me.

I don't disagree with the general sentiment... but ABC only had one game a week, that being Monday Night Football.

And technically, ABC didn't "drop" it... Disney/ABC decided (for some unfathomable reason) that they'd get more viewers on ESPN than on an OTA channel. That continues to confuse me.

[BobaBird]

ESPN doesn't really need viewers. By demanding placement in entry-level packages, they are getting revenue from nearly all pay-TV subscribers. And since there is a sizable and vocal group of viewers who watch it, any attempt to seriously change that is shot down and those who will never watch get to pay whatever price ESPN names. Broadcast channels are limited by the amount advertisers are willing to pay for actual eyeballs. Pay-TV channels in a package get to collect from all possible eyeballs.

[Nick]

ESPN doesn't really need viewers. By demanding placement in entry-level packages, they are getting revenue from nearly all pay-TV subscribers...Problem is, advertisers don't pay programmers for subscribers, they pay for viewers...actual eyeballs on the screen.

[BobaBird]

I'm saying that getting more from subscribers gets around the problem of getting less from advertisers. Why rely on viewer counts and keeping expenses under control when you can enhance revenue by taking from those who don't watch at all?

Any more on this and we'll veer off into a la carte.

If networks were no longer distributed by affiliates, would they maintain their non-OTA viewership levels? IOW, is the existence of the local distribution point a factor in the viewer's choice to watch? For me and many here it's not, but do the masses see it that way?

[jadebox]

There is so much wrong with your post I hardly know where to begin.


Sorry, but there is nothing wrong with my post. :-)

Things are changing and broadcasters will have to adapt. You may not be happy about that, but there's nothing that's going to stop it. Local stations cannot continue to air the same stuff that's available on several cable channels and expect viewers to watch.

They are going to have to do something different if they wish to survive. I suggested that producing programming of local interest is something they can do.

It's much the same as small businesses reacting to a new Wal-Mart in town. You either figure out how to offer something Wal-Mart doesn't, or you go out of business.

-- Roger

[Greg Bimson]

It's much the same as small businesses reacting to a new Wal-Mart in town. You either figure out how to offer something Wal-Mart doesn't, or you go out of business.But at that point I'd say it is a bad analogy, as many "mom-and-pops" have gone out of business because of a new Wal-mart in town.

Let's face it. After decades of slow growth and "57 channels and nothing on", the cable channels have found enough of their niche to erode ad-based OTA network programming. Early in the 2000's the networks decided to compete with reality programming; the outlays of cash to develop shows and their larger budgets dried up as the network model was under attack. One can argue that reality programming itself was a niche product, which in turn drove away many from network programming.

The "interesting" original programming of today is now on cable channels. The networks still manage to pull in bigger numbers, but that demographic is eroding.

[bidger]

I don't disagree with the general sentiment... but ABC only had one game a week, that being Monday Night Football.

True, one game a week, but it was in prime time with no other NFL games to compete against. Plus they were usually marquee games. And their contract allowed for Wild Card weekend Saturday games exclusively and the Super Bowl every third year. None of that transferred over to ESPN. Just ask CBS and NBC, that's a lot to give up.

[phrelin]

While a certain amount of "local" programming, i.e., local news, weather and sports is essential, in many markets there isn't enough local material to fill a broadcast day, nor does a broadcaster's economics allow for much locally produced programming which, by its nature, tends to be inferior to network programming.Well, Nick, there is so much wrong with that....

Look, most regions have colleges and universities, local theater groups, interesting people for shows like the old Charles Kuralt's "On The Road", some kind of wildlife oriented folks, etc. There's always a budding screen writer around. And sometimes high schools have decent entertainment (consider a real "Glee".) It's tough to imagine finding ways to use local resources to produce programming inferior to a lot of network programming.

No financial incentives exist to get the local broadcast station owners to invest in developing local programming. In an unprotected environment, a wise non-absentee owner ten years ago would have put together a long-term plan for local programming resource development and a well designed advertising sales/sponsorship plan. Instead, they'll keep milking the old cow 'till she dries up and probably ask for a federal bailout because they're "so important to public safety.":rolleyes:

[Stewart Vernon]

True, one game a week, but it was in prime time with no other NFL games to compete against. Plus they were usually marquee games. And their contract allowed for Wild Card weekend Saturday games exclusively and the Super Bowl every third year. None of that transferred over to ESPN. Just ask CBS and NBC, that's a lot to give up.

In this one specific case, though... "ABC" didn't really give up anything. Disney/ABC/ESPN is all the same company... so they just moved the game from one channel to another.

They did, in my opinion, give up viewers who could have watched OTA but not ESPN on cable... but in terms of "ABC losing football"... that's not really what happened from a technical perspective.

[bidger]

In this one specific case, though... "ABC" didn't really give up anything. Disney/ABC/ESPN is all the same company... so they just moved the game from one channel to another.

Stewart, of course it doesn't affect the parent company, but the discussion we're having is about the impact on the ABC affiliates. Certainly Disney/ABC/ESPN is fine with the fact because to them the audience didn't really go anywhere. To the local ABC affiliates, millions of pairs of eyes the would have tuned to their local broadcast Monday nights are elsewhere.

[phrelin]

Stewart, of course it doesn't affect the parent company, but the discussion we're having is about the impact on the ABC affiliates. Certainly Disney/ABC/ESPN is fine with the fact because to them the audience didn't really go anywhere. To the local ABC affiliates, millions of pairs of eyes the would have tuned to their local broadcast Monday nights are elsewhere.And, of course, Disney gets much more profit per cable subscriber from cable and satellite companies for ESPN than even half the retrans fee from its local affiliates.;)

And somewhere along the way, the broadcast networks will realize that cable subscriber revenues don't vary much compared to the "eyes on" rates for advertising. Whatever they get for the ESPN family being in my Dish Package they get without me ever turning an ESPN channel on.

[Nick]

While a certain amount of "local" programming, i.e., local news, weather and sports is essential, in many markets there isn't enough local material to fill a broadcast day, nor does a broadcaster's economics allow for much locally produced programming which, by its nature, tends to be inferior to network programming.Well, Nick, there is so much wrong with that....

Look, most regions have colleges and universities, local theater groups, interesting people for shows like the old Charles Kuralt's "On The Road", some kind of wildlife oriented folks, etc. There's always a budding screen writer around. And sometimes high schools have decent entertainment (consider a real "Glee".) It's tough to imagine finding ways to use local resources to produce programming inferior to a lot of network programming.

No financial incentives exist to get the local broadcast station owners to invest in developing local programming. In an unprotected environment, a wise non-absentee owner ten years ago would have put together a long-term plan for local programming resource development and a well designed advertising sales/sponsorship plan. Instead, they'll keep milking the old cow 'till she dries up and probably ask for a federal bailout because they're "so important to public safety.":rolleyes:Thanks, Phrelin...you make my case very nicely. I'm sorry, but If you believe people are going to be content watching locally produced squirrel & robin redbreast shows, little theatre and high school glee clubs for very long, I think you're going to be sadly disappointed. As long as there are network and cable/satellite channels (and there always will be), locally produced amateur programming won't stand a chance.

[phrelin]

Thanks, Phrelin...you make my case very nicely. I'm sorry, but If you believe people are going to be content watching locally produced squirrel & robin redbreast shows, little theatre and high school glee clubs for very long, I think you're going to be sadly disappointed. As long as there are network and cable/satellite channels (and there always will be), locally produced amateur programming won't stand a chance.You may be right, but when I said "would have put together a long-term plan for local programming resource development and a well designed advertising sales/sponsorship plan" I meant nurturing locals to become professional and paid.

Keep in mind that Canada only has 33 million people who produce some decent programming of their own, most not seen in the U.S. My state, California, has about the same population, but if programming produced here isn't successful with the remaining 300 million, there are no outlets keeping a funding stream going.

And IMHO the death of independent syndication of American scripted programming is on the heads of the FCC and Congress, not the protected multi-national cartels media conglomerates.:D

[Stewart Vernon]

Stewart, of course it doesn't affect the parent company, but the discussion we're having is about the impact on the ABC affiliates. Certainly Disney/ABC/ESPN is fine with the fact because to them the audience didn't really go anywhere. To the local ABC affiliates, millions of pairs of eyes the would have tuned to their local broadcast Monday nights are elsewhere.

I think we're really just having a semantic debate here... as I think we're seeing the same thing.

ABC didn't give up anything. In fact, "ABC Sports" was rebranded as "ESPN on ABC"...

BUT, you are 100% correct that ABC did take something away from their local affiliates.

My point was just meant to emphasize that Disney/ABC apparently didn't care, thus the switch to ESPN for Monday Night Football.

I think we are kinda on the same page, just using a different turn of the phrase.

[phrelin]

Last year we had this report (http://www.marketwatch.com/story/tv-station-revenue-drops-7-in-2008-study) about 2008: BIA Advisory Services said TV stations will generate $20.1 billion in 2008, the lowest total in seven years. Revenue will decline by 8.5% in 2009, BIA predicted.

This year's numbers reflect an 8.2% revenue drop at East Coast stations, a 7.6% decline at stations in the West and a 5.8% fall at Midwestern outlets.BIA apparently isn't very good a predicting, as the good news for local broadcasting just keeps coming forth. From Advertising Age (http://adage.com/mediaworks/article?article_id=141374):...TV stations were expected to end 2009 with lower-than-expected revenue of $15.6 billion, a 22.4% decline from 2008, according to BIA/Kelsey, an adviser to local media companies.Overall, for local TV stations a 30% decline in advertising revenue in two years.