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DirecTV Disses Broadcasters

Discussion in 'DIRECTV General Discussion' started by Athlon646464, Jun 12, 2013.

  1. slice1900

    slice1900 Well-Known Member

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    They use each other for leverage because the contracts have different end dates. Directv's contract with local station A runs out on July 1 2013, Dish's on Feb 1, 2014, Comcast's on Oct 1, 2014. That's the way the stations want it, because they know it'll help them. If a station contract with everyone ran out on the same day, they could all decide to ignore the station's demands, knowing that their subscribers won't have another provider to run to.
     
  2. slice1900

    slice1900 Well-Known Member

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    I don't buy it. That's only true if you want to have a similar number of channels to what you have now. I think for most of us, there are anywhere from a handful to a couple dozen at most of the packaged channels we watch (that excludes stuff you pay extra for like HBO, additional RSNs or whatever)

    My cable company offers a basic tier with about two dozen channels, an expanded basic with about 100 (not including HD/SD duplicates or music) and a digital tier with about 200 or 250. I get the package with 100 even though the digital tier is only another $15/month or so, because when I looked through the channel list there was only one channel I knew for sure I'd watch (BBC America) and a few others that I might find something interesting on if I looked, but there are enough channels that already have "stuff I might find interesting if I looked" that I don't need more. If I could pick up and choose, I might grab 20 of them. If they tried to charge me the same for those 20 that I'm paying for 100 now, I'd trim the list further until I did save money.

    The big companies like Viacom and Disney are going to make less money in the future. That's just a fact they're going to have to get used to. There are all kinds of new places for people to spend their dollars that didn't exist a decade ago (smartphones, for example) but the average person isn't making any more money than they did a decade ago. Something's gotta give, and it has been music and TV - music first, due to people being able to buy single songs for 99 cents or $1.29 instead of entire $15 CDs, and now TV, as people decide $100 is ridiculous to spend on TV each month and cut the cord.

    They'll either lose money from a la carte and but still have contact with their audience (and have a much better idea what people really want to see, based on what people are willing to pay for) or they'll lose money due to people cutting the cord, and lose many of those customers, and their future families, forever. If they drag their feet on a la carte, it is only going to make their future look more bleak in the long run.
     
  3. Gloria_Chavez

    Gloria_Chavez Godfather

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    I agree. And the point of departure should be that all sports channels, including ESPN, be available on a separate, sports-tier.
     
  4. mystic7

    mystic7 Icon

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    I've said this for years. It doesn't make sense that providers expose broadcasters to millions of more people than they can reach on their own yet the providers have to pay for the privilege.
     
  5. joshjr

    joshjr Hall Of Fame

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    Not to mention that the satellite providers have to pay the cost to have the setup just to be able to air those channels. I don't think it should be free but my goodness show some appreciation.
     
  6. slice1900

    slice1900 Well-Known Member

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    The laws as written today are really one-sided towards broadcast TV stations. Cable and satellite providers who lose a local station that's holding out in negotiations can't make arrangements directly with the networks to carry their feeds, or offer stations from other areas.

    If providers were free to sub a network feed whenever there was a dispute that resulted in a station going off air that would seem to be a good middle ground. Some subscribers would be happy (the ones who just want to watch sports or Survivor) and some would still be unhappy (those who want that station for news or other local content) That way both sides would have some leverage, rather than the fairly one sided negotiations that happen now.
     
  7. inkahauts

    inkahauts Well-Known Member

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    You are dreaming if you think stockholders making less money is acceptable. They will go out of business before they give up their income. And TV is one place where Hollywood is just to strong at this time to simply go to a format that won't pay them nearly as much money. If you go strait a la cart, they would lose hundreds of millions if they didn't raise the costs of each channel exponentially. You just wont save money. And the further you shave your list the higher the prices would get. There is a min amount they'd need to keep all their shows. The amount of money they get from advertising would have to be made up for, and that's just so much more than people think.
     
  8. goinsleeper

    goinsleeper Godfather

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    100% agree! Having some form of base package, then adding channels to it would be a better bet than full a la carte.
     
  9. slice1900

    slice1900 Well-Known Member

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    I'm sure a lot of people said the same thing about the record labels, and look where their revenue & profit is now compared to 10 or 15 years ago. The same fate awaits the TV conglomerates. They can either embrace the change and control their future, or push to keep things the way they are now for as long as possible and have the future decided for them.

    The constant price increases for cable and satellite are starting to push more and more to cut the cord and create their own a la carte plan by buying access to stuff they want over the internet (Netflix, MLB TV and so on) Especially younger viewers. That's gotta scare the living crap out of these guys, the 18-30 market used to be their biggest target, now it is the one leaving behind traditional cable/satellite in the largest numbers. Why should anyone believe they'll be back when they get older, after they get used to life without traditional TV?
     
  10. goinsleeper

    goinsleeper Godfather

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    Because the price will only go up for internet content as well. The more TV conglomerates that go under, the more expensive everything becomes for those cord cutters. It would really need to be killed at the roots of it all, the content owners. But as long people are out to make money, this cycle will churn on.
     
  11. slice1900

    slice1900 Well-Known Member

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    People who cut the cord usually leave some content behind they wanted that was included in their cable/sat plan that they can't get once the cord is cut. Maybe they watched Game of Thrones and had to give it up, maybe they can't get their local NFL team so they go somewhere else to watch or decide their team wasn't going to win the Super Bowl anyway and do something else on Sunday afternoons. They make the decision to cut the cord despite losing access to a few things they'd like to keep. If the the price for accessing it on the Internet goes up too much as well, they'll just give it up entirely. There are very few people who must have Game of Thrones, or Honey Boo Boo, and even football can't sustain price increases forever.

    The content owners can continue to be out to make more and more money all they want, but with the average consumer not seeing any real increase in their income over the past decade, and with other expenses they give a high priority to increasing also (internet and cell phone) something has to give. The money has to come from somewhere. The 1% who are seeing big income increases aren't going to subsidize everyone else's TV habit. The content owners are going to be the losers, because people can't cut back on their mortgage/rent, utilities, car payments, insurance, food etc. as easily as they can cut back on TV. The more people that do it, and report to their friends that it wasn't as bad as they thought, the more that will do it and not feel like they're missing out.

    Twenty years ago my brother was that weirdo who doesn't own a TV. Now no one thinks that's weird anymore. If the content owners don't adjust to the future really damn quick, pretty soon people without TV will be no more odd than people without a landline telephone are today.
     
  12. jdspencer

    jdspencer Hall Of Fame

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    As was alluded to above, I think that the locals should PAY DirecTV to get their signals out to as many people as possible.
    Afterall, DirecTV is offering a service and therefore should be paid for that service.
     
  13. unixguru

    unixguru Godfather

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    I'm sorry but this is just mythology.

    It's very simple. Does anyone pay $10 a song on iTunes? $5? $3?

    No doubt there are people in the music supply chain that don't make as much money as they used to or possibly don't even exist anymore. And the problem with that is....? If one doesn't add value to something - value recognized by the consumer - then they shouldn't exist.

    Spare me any comments about the music industry being different. That has been argued on this forum over and over and over. Nobody has ever proven why it is different.
     
  14. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    OK. You're wrong and there is no reason to waste words proving it to you. :D

    As for the rest of the readers of this thread ... follow the money.

    How does a person in the music industry get paid? They get paid royalties based on what role they played in the production. The writers of the words and music get paid a royalty. The artist that recorded the track gets paid a royalty. The producers get their cut as well. They get paid via ASCAP, BMI and SESAC for public performances such as radio and Internet plus the Internet has it's own payment structure. Most of this payment structure has been in place for decades ... tracing back to when songs were only sold on albums and eight tracks. The main change in the process coming from new fees when someone discovered they were not getting paid for a distribution channel.

    How about video production and the movies? With linear distribution a channel is paying for rights to air based on the number of subscribers and expected audience. Subscribers are paying for the channels whether they watch or not. Someone who owns the rights to a production can make money simply by contracting with a channel to carry their content. Or they can create their own channel to sell to satellite and cable. In recent years content owners have been able to add this income by selling DVDs, BluRays, digital copies and streaming. But the backbone of their income is the linear channel.

    A la carte attacks the backbone. If people are able to pick and choose their linear channels it is a given that less people will choose certain channels than are currently forced to subscribe via the tier system. (If people would subscribe to every channel willingly there would be no call for a la carte.) Reduce the number of subscribers to a channel and one reduces the expected audience. Producers selling content to linear distribution end up making less money. They don't like making less money. In order to make up for the less money they need to either charge linear channels more (which translates to higher costs for the linear channels which will certainly be passed on to the subscribers) or they will need to charge non-linear customers more. Does anyone believe a mainstream video producer wants LESS money for their work?

    Anyone who thinks that a la carte can be put in place and magically all the prices remain the same per channel or per content is only deceiving themselves. And anyone who thinks a linear channel would go a la carte unless there was no other option is likewise deceived.

    But, as you note, we've had this discussion before.
     
  15. JoeTheDragon

    JoeTheDragon Hall Of Fame

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    What a part la carte system or at least spitting up the sports channels and the mainly non sports channels?

    Out of side of the usa sports is in it's own packs.
     
  16. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    Any channel that is in a tier would be foolish giving up its tier position to move to a higher tier or a la carte. It is the old adage, "a bird in the hand is worth two in the bush". Why would a channel like ESPN want to give up ~20 million DirecTV subscribers for a lesser unknown number? Some hope that ~20 million would still choose to subscribe? Some hope that the lesser number would be willing to pay more to have ESPN than they currently do just so ESPN can break even? It is too a big a risk.

    Staying in the lowest tier is best for ESPN ... and if DirecTV or some other company plays hardball and says "no, we will sell you a la carte or in a sports tier" ESPN has the clout to respond "no, lowest tier or no carriage".

    Every other sports channel wants to be ESPN. Pulling that off at a national level is difficult. For regional sports it is easier for DirecTV to push back and say "no, we'll place you in Choice regionally and the sports pack nationally" and DirecTV can live without any RSN who rejects that placement.

    Regardless of what the customers want or the carriers want, the control is in the hands of the channel provider. And they want as many subscribers as possible - even if they have to risk having no subscribers to get a better tier placement. ESPN in the lowest tier and local RSNs in the next tier has become the defacto standard. As long as all RSNs are treated equally others are unlikely to demand the lowest tier.

    Welcome to America. :)
     
  17. unixguru

    unixguru Godfather

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    This explains the process up to the point where the pile of bits comes out of the production company as finished product. Let's leave the distribution of the product out of it for a moment.

    Is this not essentially the same as a movie or TV series up to the same point?

    Lots of people contribute in various ways - one produces a pile of bits with nothing but sound; the other produces a pile of bits with sound and picture.

    It's the distribution channels that are currently different. One was recently disrupted and the other is still entrenched.


    TV channels buy content from a production company that it may or may not have a minority ownership in. Exclusive rights to distribute, at least in a geographic area (for example, US vs UK). Then bundle a bunch of this stuff to make a stream, often repeating over and over, called a channel. They then super bundle these channels and induce (to varying degrees) proxies/carriers to distribute to consumers.

    Very similar to music being bundled onto a CD, distributed through a label, packaged into super bundles, and pushed onto retail stores to distribute to consumers.

    Many hold the view that the TV supply chain has to be this way. I do not. No more than the music industry had to be the way it was. Most retail music stores are gone. Places still selling music do so as a minor part of their floor space as an incentive to get people in - and I'd wager that is fading quickly and won't be around much longer. Music labels are likewise becoming less and less useful as the artist/production company can just go straight to iTunes or whatever.


    A similar argument was made about music and it hasn't cost the consumer more. It's probably true some are making less money in music. It's also probably true that some are no longer working in that business (like retail music stores). Why is that a problem? Consumers voted on how they viewed the value of the product and it is what it is.

    Understandable that the TV biz doesn't want to kill it's cash cow. Too bad. The TV biz brought this on themselves with greed and waste. These trends won't be stopped. Adapt or die.

    Your argument just states the way it is - not the way it must be. It's nothing but speculation regarding what affect a change would cause. We have an example of a drastic change in the music industry that is a whole lot more convincing than speculation.
     
  18. pdxBeav

    pdxBeav Godfather

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    The price a programmer charges is what the market will bear. I don't know why so many people fail to comprehend this simple concept. It doesn't matter if it's an a la carte model or bundling. The market sets the price, not the programmer.
     
  19. unixguru

    unixguru Godfather

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    I'm assuming by programmer you mean something like the group of ESPN channels?

    Are you saying that the price ESPN could get would be the same if it was offered a la carte as it is bundled with a tier? How is that possible? Lots of people could care less about ESPN and surely wouldn't pay for it - via their tier - if they didn't have to. But if they don't have any choice - other than not having lots of other programming - then they will grudgingly pay for it. For now anyway.
     
  20. Gloria_Chavez

    Gloria_Chavez Godfather

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    That's not true. Look up Price Maker vs Price Taker.

    ESPN, by virtue of its dominance, is a price maker. It's extracting monopoly-like rents from the Pay-Tv consumer. In fact, over 50% of Disney's market value of 115B is attributable to ESPN.
     

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