Comcast customers returning to OTA president says

[tardiscaptain]

Even the president of Comcast, Neil Smit, admits that more and more consumers are dropping cable to return to free digital Over-the-Air TV. Shows what happens when you over-price a crappy product.

I just read the news in separate article that another OTA network started up for digital sub-channels.

newteevee.com/2010/10/27/comcast-subs-flee-as-cable-bills-increase/

[kenglish]

That must be why the FCC and the competition is so keen on eliminating free, OTA television. Their latest thing is, let some broadcasters sell back their licenses, move all remaining stations to VHF band, and have us all bunk together...several SDTV-only programming channels per 6 MHz channel.

The FCC Chairman said, last week, that UHF is just "too valuable" for broadcasting. Farmville is OK, though.

[CAwasinNJ]

And in the meantime, Fox is making a lot of noise about getting more from their retransmission consent agreements. They've been off Cablevision in New York and Philly for almost 2 weeks now. They're threatening to pull off Dish Network in the SLC market on Monday. You can read the Salt Lake press release here:

media.trb.com/media/acrobat/2010-10/57045488.pdf

There are a few problems with their arguments. One, Fox13 is actually looking for *3* revenue streams. They sell local advertising, national advertising plus retransmission consent fees. So that's not quite right. It's also irrelevant. The nail in their coffin is that they give away their signal FOR FREE. Why is it that one group should pay to receive a signal that another is getting for nothing? It's the exact same signal. That's why I've never been able to understand retransmission consent and why their arguments leak like a sieve.

[tardiscaptain]

I had posted a comment on the Fox13 website article warning people about the disruption from the satellite provider. I commented how nice it was to enjoy watching Fox13 over-the-air. The comment was removed (or never allowed to post) in the comments section.

With more and more people going to streaming (see Netflix) for those rare shows that are actually worth watching on cable (Mythbusters, etc.), you would think that some of the local stations would welcome this market that is returning to them. I want to watch OTA so I can support my local stations. I watch more local advertising this way.

[kenglish]

Retransmission fees are just a way for the programming provider ("station" or "network") to get a small piece of the money that the re-sellers ("cable" or "satellite") are making by having locals in their packages.
Satellite found out, many years ago, that most people won't purchase programming that doesn't include the local stations and network affiliates. That's why they began doing "local-in-to-local".

Including locals adds value to the provider, and makes their programming packages more valuable....so, more people subscribe. I don't know what the current rates are, but (several years ago) stations like KSL charged 17 cents per month, per (local in to local) subscriber, for DISH and DirecTV. Comcast was involved in "in-kind" remuneration, meaning that they participated in many promotional and public service events with the local stations, in lieu of cash.

As far as the "if it's free OTA......" argument, why can't a taco cart owner, parked in front of McDonald's, go inside and load up on utensils, napkins, ketchup, salt and pepper, and take them out to his stand? After all, McDonald's isn't charging customers directly for those items, so technically they are "free". He's using them to enhance his own business, but, "if the utensils have McD's logos on them, he's helping them advertise".
It doesn't work.

Cable and satellite providers are in direct competition with OTA broadcasters, and they use material provided by (and, paid for, by) broadcasters. It's only right that they get a bit of money for the material, just like all those other (commercial carrying) networks (ESPN, etc).

[CAwasinNJ]

You're right that the McD's model you mention doesn't work, but that isn't what's happening. In the retransmission game, the end user gets the same end product at two different price points. The closest example I can think of is if you go inside to the counter you pay 79 cents for a hamburger. Or if you go through the drive-thru you get charged 99 cents. Same end product; two price points depending on how you get it.

[kenglish]

The end user isn't necessarily the one being charged. The Cable and satellite companies are the ones getting charged for use of the broadcast product, to enhance their programming lineup. So, they should be eating the cost of retransmission. Instead, they choose to pass it through.

Now, I'd be happy to let them give local TV away for free to anyone who wants it. Just charge the customer a one-time installation fee for running wire to the home, or let people buy a FTA receiver and get it off satellite for free. Then, it would be "free". But, not when it's added to their lineup and sold. That's when it's an enhancement, for them.
They don't get HBO for free, or TNT, or any of the other channels.

[kenglish]

BTW...ever been to Maryland? They had a restaurant tax when I was there. If you ate inside, they had to charge extra. If you took it away, it wasn't taxed. People would always buy at the drive-thru, then slide down to the floor of their car to eat in the parking lot, so nobody could see them. If the manager saw you eating on their property, he was supposed to come get the tax, or run you off, or he'd get fined.

[CAwasinNJ]

If there's a cost to doing business the business is going to include that charge in what they charge to consumers. Eating the cost makes no sense. In any case that doesn't matter. In the cable/sat distribution method *somebody* is going to pay while in the OTA method *nobody* pays. That just doesn't make sense. Remember that even without programming costs it still costs a not insignificant amount of money to send a signal to the end user. With cable there are hundreds of miles of cable, plus the distribution amplifiers and the power they use, plus all the headend equipment, AND they can't make any money from retransmitting local signals which they can from cable networks. The same is true with the satellite providers. The problem is that there is an uneven playing field. The broadcast stations expect to get paid in one direction but not the other. The argument that HBO and TNT and whatever other cable networks you want to name get paid is an apples to oranges comparison. There's no way to get any of those for free. Time Warner or Disney or whomever is always getting paid for those no matter what. I don't have a problem with that. The problem is when things are uneven. If you could get HBO for free with Comcast but had to pay $15/month through DirecTV, I would have the same problem. It's the double standard that's the issue.

I guess we just disagree.

[kenglish]

Broadcasters should, maybe, ask that the networks not charge for the programming that goes to Cable and satellite customers? Just charge us by the number of antenna viewers.

Cable and satellite companies make LOTS of money from carrying local stations and affiliates. And, stations have expenses, just like any other business. Cable TV and DBS infrastructure costs can be distributed over the hundreds of channels that carry, but broadcast infrastructure costs are over only one to three channels (generally), with only the main channel really making any real money at all.

[tardiscaptain]

Another article on viewers cutting the cord and returning to digital Over-the-Air television.

www.deseretnews.com/article/700078825/Cable-subscribers-flee-but-is-Internet-to-blame.html

[CAwasinNJ]

The article has been rewritten a little if anyone cares. There's a newer version at news.yahoo.com/s/ap/20101105/ap_on_hi_te/us_tec_internet_vs_pay_tv

Everybody better hope that people aren't getting used to free TV shows online and cheap DVDs. The model isn't sustainable in my opinion. Right now the producers can afford it because the over-air/cable/satellite distribution pays for everything. A primetime show with good ratings can pull in $15 million an hour in ad revenue. They aren't just going to give that up. They aren't stupid. You can pay by watching commercials, paying for it, or both. With little money coming in you won't get anything resembling a quality product. Ever see "Star Trek The New Voyages"? Even that has a lot of people donating their time and (with all due respect) it's awful. Awful in a fun way, but still awful.

[tardiscaptain]

I've actually enjoyed Star Trek New Voyages. Producer Many Coto was able to take New Voyages to CBS to prove his point of needing to put more original series links in Star Trek Enterprise. One of the props made it to Enterprise as well. What I thought was interesting is that fan series that they did non-profit led to a production contract for a Buck Rogers web series that they are getting paid for.

I don't know what the new business model is going to be. But a lot of people I talk to now believe that cable is not a value for the money any more. I'm certain there will be some sort of pay model used (possibly like Netflix streaming or ala carte channels) and different delivery methods. In the end there may be some cable channels that don't survive. Do we really need X number of ESPNs or X number of MTVs, etc.

I don't think (nor do I want) the local OTA channels to go away because they provide local public services that National Geographic Channel or CMT will not provide. In fact I've been excited about more OTA digital sub-nets that have been launching.