Broadcasters' woes could spell trouble for free TV

[John Picard]

The writing has been on the wall for quite some time, America.
http://news.yahoo.com/s/ap/20091229/...sters_in_peril

NEW YORK – For more than 60 years, TV stations have broadcast news, sports and entertainment for free and made their money by showing commercials. That might not work much longer.
The business model is unraveling at ABC, CBS, NBC and Fox and the local stations that carry the networks' programming. Cable TV and the Web have fractured the audience for free TV and siphoned its ad dollars. The recession has squeezed advertising further, forcing broadcasters to accelerate their push for new revenue to pay for programming.
That will play out in living rooms across the country. The changes could mean higher cable or satellite TV bills, as the networks and local stations squeeze more fees from pay-TV providers such as Comcast and DirecTV for the right to show broadcast TV channels in their lineups. The networks might even ditch free broadcast signals in the next few years. Instead, they could operate as cable channels — a move that could spell the end of free TV as Americans have known it since the 1940s.

Over time, the networks might be able to get even more money by abandoning the affiliate structure and undoing a key element of free TV.
Here's why: Pay-TV providers are paying the networks only for the stations the networks own. That amounts to a little less than a third of the TV audience, which means local affiliates recoup two-thirds of the fees. If a network operated purely as a cable channel and cut the affiliates out, the network could get the fees for the entire pay-TV audience.
If forced to go independent, affiliates would have to air their own programming, including local news and syndicated shows.
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.
Any shift would take years, as the networks untangle complicated affiliate contracts. At an analyst conference last year, CBS's Moonves called the idea an "a very interesting proposition." But he added that it "would really change the universe that we're in."

The entire article makes for an interesting read.

[Marc]

the same argument is taking place here in Canada. In fact our cable tv bill has just gone up 1.5% due a levy that now has to be paid that will funnel money to the free to air broadcasters to help them keep "local content".

And frankly I think it's a load of shit.

The only reason why people can see some of the FTA stations is because they are re-transmitted over cabled and satellite tv. Where I live, we get the local tv station and Global from Toronto (watchable if I get the antenna right).

So we watch them over from our cable provider so we still see their ads , they still get their ad revenue (where as with out the cable we wouldn't see them full stop).

Plus here in Canada they get government assistance.

[Temis the Vorta]

I would think that the broadcast model would have some life in it, as a venue for very mass-market stuff aimed at folks who simply refuse to pay a dime for TV (there are still some) or who aren't too fussy about what they watch.

But all the good stuff is on cable anyway. So if NBC or another network jumps into the cable foray, why the heck not? At least then they might show something decent.

This certainly has interesting implications for the whole Star Trek-back-on-TV problem. CBS owns the rights but the broadcast model is just totally wrong for a space opera series. However, if CBS were to become a cable channel...hmmm!

In fact our cable tv bill has just gone up 1.5% due a levy that now has to be paid that will funnel money to the free to air broadcasters to help them keep "local content".

And frankly I think it's a load of shit.

You're right - why should you have to pay more money for something that can't support itself? It's incumbent on broadcasters, who are allegedly in a for-profit business, to give people stuff they're willing to pay to see (and you pay for "free" TV via the ads). If it's not profitable, then too bad for that thing. You don't see the government paying Coca-Cola to make raspberry flavored Coke just because some bureaucrat likes raspberries, do you?

[Canadave]

Temis the Red-Nosed Vorta wrote:

---

You're right - why should you have to pay more money for something that can't support itself? It's incumbent on broadcasters, who are allegedly in a for-profit business, to give people stuff they're willing to pay to see (and you pay for "free" TV via the ads). If it's not profitable, then too bad for that thing. You don't see the government paying Coca-Cola to make raspberry flavored Coke just because some bureaucrat likes raspberries, do you?

Part of it, I think, has to do with our somewhat protectionist attitude towards Canadian culture. Since so much of our television is simulcast with the United States, the idea is we pay a little more to keep Canadian- and locally-produced content alive. You can agree or disagree with it as you like, but that's the logic.

Personally, I just avoid the whole thing by not having cable.

[Temis the Vorta]

Yeah Americans figure that American culture is sink or swim, baby. There's so much of it, why take sides? One show is cancelled, one movie bombs, there's a dozen more right behind it. Sure, we squall when a favorite goes under, and we see it here all the time (keep flying, Browncoats!), but there's always a new favorite to squall about.

If anyone dared subsidize an otherwise unprofitable show, squallers would vastly outnumber the fans who are pleased - which do you bring back, Dollhouse or Firefly? or why not another season of Jericho? and Chuck's gonna need some help pretty soon. But wait, doesn't ENT deserve another shot? Nobody with any sense is going to get into the middle of that mess.

Here's what the government should be doing - imposing a la carte cable TV pricing. According to the LA Times, it's not impossible - could even happen this year.

Don't be surprised if 2010 is finally the year that Washington forces cable operators to offer subscribers the option to choose the networks they want rather than pay for a bundle of channels they don't. The "a la carte" issue will upend the industry, especially for the owners of sports channels.

Yay! Let me finally drop kick ESPN and all the sports channels I have less than no interest in.

[Othello]

Come friday I KNOW I am gonna be royally ticked off. And sunday I'm gonna want to go postal not being able to get to watch my packers game on Sunday with the Time Warner - Fox standoff.

[C.E. Evans]

I just don't get the idea that TV advertising is drying up in the US when it comprises 40% of what's actually on the air. Some "hour-long" shows are actually only 38 minutes once you cut out the commercials and any intros/outros...

[Marc]

C.E. Evans wrote:

---

I just don't get the idea that TV advertising is drying up in the US when it comprises 40% of what's actually on the air. Some "hour-long" shows are actually only 38 minutes once you cut out the commercials and any intros/outros...

Not just in the U.S. Australian tv networks are pushing to be able to show more ads (currently capped at 15mins per hour) so they keep looking for loop holes (such as include a product placement as part of station self promotion).

Canada seems to be just as bad when it comes to ads.

My wife was watching Sound Of Music on CTV Sunday night. The run time for the move is 167 minutes or roughly 2 and 3/4 hours which would include credits. They took 4 hours to show the movie and that's without credits. So over 1/4 of the broadcast was ads.

Maybe the tv networks need to look at their own broadcasting practices to work out why views are turning away.

[Aragorn]

Problem solved:

SARAH: "I lost him!"
JOHN: "Where'd you see him last?"
SARAH: "I don't know! I think around the Nokia kiosk next to the Victoria's Secret!"
JOHN: "There he is! He switched jackets! He's in the Miami Dolphins Reebok hoodie!"
CHUCK: "He's heading into The Apple Store!"
SARAH: "I see him!"

[RoJoHen]

Aragorn wrote:

---

Problem solved:

SARAH: "I lost him!"
JOHN: "Where'd you see him last?"
SARAH: "I don't know! I think around the Nokia kiosk next to the Victoria's Secret!"
JOHN: "There he is! He switched jackets! He's in the Miami Dolphins Reebok hoodie!"
CHUCK: "He's heading into The Apple Store!"
SARAH: "I see him!"

They might as well. It's not like they aren't already a giant ad for Subway.

[Peach Wookiee]

They'll fight to keep the free signal on the air... And that will be because losing free TV discriminates against the poor.

[Marc]

Santa Wookiee wrote:

---

They'll fight to keep the free signal on the air... And that will be because losing free TV discriminates against the poor.

Or so they like to claim.

In Australian there's anti-syphoning law which requires that the free to air networks get first dibs on bids for major sporting events. The networks like this and claim that it must stay so that people can watch the sport for free.

Problem is that these networks sometimes take scorched earth approach. they'll buy the rights and then not show it but they've ensured that no-one else gets it.

Or they show the sports event but in a half arsed measure (delayed coverage that's presented as live, selected highlight packages, limited coverage etc).

[Mr Light]

You can't stop the signal, dammit!

[Peach Wookiee]

Well, that's the argument that's come up... even with our switchover to digital signals. The government handed out coupons so people would keep getting free tv.

[Starbreaker]

I don't think this will happen for many, many, many years.. but I keep cable around anyway.