Cable TV outlook bright, but rising
costs a big problem, analysts say
By Meg James April 29, 2014, 5:42 p.m.
The emergence of Netflix, Google, Amazon.com and other technology firms also has served as a wake-up call for the industry.
Netflix's explosive growth -- and the high marks it gets from its customers -- has prodded cable TV operators to spend huge sums of money during the last two to three years to upgrade their networks, video-on-demand offerings and on-screen viewer guides.
The biggest threat to the industry appears to be coming from within. Growing programming costs and constantly rising cable TV bills appear to be a bigger challenge facing the industry than threats posed by powers from Silicon Valley.
"Cord-cutting is real. It's not much of a debate any longer," said Craig Moffett, senior analyst and partner of the research firm MoffettNathanson.
Although millions of people have not canceled their cable subscription, Moffett said, the rising cost of cable TV subscriptions is increasing the likelihood that more people will drop their pay-TV service.
And the more people that cancel their subscriptions, the larger the opportunity is for new companies to enter the space to target this growing group of consumers.
"The bigger the price gets for pay TV the bigger the opportunity is for alternatives," Moffett said.
by: Tom Wheeler, FCC Chairman
April 29, 2014 from the official FCC website blog
The idea of net neutrality (or the Open Internet) has been discussed for a decade with no lasting results. Today Internet Openness is being decided on an ad hoc basis by big companies. Further delay will only exacerbate this problem. The NPRM (Notice of Proposed Rulemaking) is seeking input on the best way to protect and promote the Open Internet. …
To Tom Wheeler, FCC Chairman
I am deeply disappointed that you are considering rules that would allow
deep-pocketed companies to pay for preferential access to Internet Service
Providers. Pay-to-play deals are an affront to net neutrality and have no place
in an online marketplace that values competition and openness. This proposal
would create an online ‘fast lane' for the highest bidder – shutting out small
businesses and increasing costs for consumers."
– Sen. Al Franken (D-Minn.)
Comcast/TWC Critics Unappeased By Charter Swap
Free Press suggests it is further divvying of sub spoils among giants
4/28/2014 11:25:00 AM Eastern By: John Eggerton
“We’ve known from the day that the Comcast-Time Warner Cable deal was announced that Comcast intended to divest some subscribers, so this doesn’t change anything,” Sen. Al Franken (D-Minn.), told B&C Monday. “The fact remains that Comcast will have unprecedented power in the television and broadband markets, and I’m very concerned that Comcast will use that power to squeeze competitors and consumers.”
Broadcast retrans not main culprit for high subs costs
Michelle Clancy 18-04-2014
However, rising retrans fees from broadcasters are only one reason why multichannel operators have experienced rising programming costs. Other major reasons given by operators for increasing programming costs include the additional expense of TV everywhere and multi-platform agreements, escalating costs for cable network programming, sports in particular, and additional channel launches.
Sports, especially, is a cost centre. "Much of the networks' retrans and reverse retrans revenues ultimately goes toward rising sports rights fees," the firm said. "For affiliates, a key issue is that their network partners will still demand rising reverse retrans fees even if their ability to obtain retrans fees more on par with network partners is impacted by regulatory moves."
The fees paid by multichannel operators to regional sports networks (RSNs) alone well exceed those we estimate are paid to broadcast stations. The fees paid to basic cable networks dwarf the fees paid for broadcast stations. Together, SNL Kagan figures show that broadcast retrans fees will be just 12.6% of the fees paid to basic cable networks and RSNs in 2017, although the growth rates for retrans feeds are higher than those paid for the larger pool of cable network and RSN fees.
Broadcast station owners still point to the disconnect between station ratings and carriage fees, with ESPN being the most glaring example.
"Although ESPN had much lower ratings than broadcast networks in 2012, we estimate that it collected $5.04 per sub per month on average in affiliate fees in 2012," SNL Kagan said. "TNT collected an average $1.20/month in affiliate fees in 2012 despite much lower ratings. Broadcast networks invest significant capital in sports rights and programming, which TV network affiliates help pay for, and retrans fees have become an important part of that economic picture. In general, broadcasters say they deliver 35% of a cable system's viewing but collect just 10% of the programming fees."
Read more: Broadcast retrans not main culprit for high subs costs | Rapid TV News http://rapidtvnews.com/index.php/2014041833285/broadcast-retrans-not-main-culprit-for-high-subs-costs.html#ixzz30OQXAaK1
North American pay-TV revenues peak as market to add 5Million subscribers
Joseph O'Halloran | 25-03-2014
The market may have cord-cutting, cord-shaving and a growing number of so-called 'cord-nevers', but the North American pay-TV arena is set to add five million subscribers by the end of 2020, says Digital TV Research.
In its Digital TV North America report the analyst calculates that the market will reverse a small decline reported in 2013 and grow solidly to 116.6 million by 2020, even though pay-TV penetration will drop from 87% in 2010 to 83.8% by 2020. Yet TV ARPU is at the same time being forced down.
Satellite TV is set to overtake cable to become the largest pay-TV platform revenue generator in 2015 but absolute revenues will likely climb by only $1.2 billion between 2013 and 2020 to $42.8 billion. By contrast, cable revenues are expected to fall by nearly $13 billion between 2013 and 2020 – dropping by $2.5 billion in 2014 alone. And despite although there has been a recent slowdown in subscriber growth for the platform, the number of homes paying for IPTV is set to climb by 47% between 2013 and 2020 to reach 18.2 million – or 13.1% of TV households. Digital TV Research also forecasts IPTV revenues to increase at a similar rate to achieve $9.85 billion by 2020.
Read more: North American pay-TV revs peak as market to add 5MN subs | Rapid TV News http://www.rapidtvnews.com/index.php/2014032532907/north-america-pay-tv-revs-peak-as-market-to-add-5mn-subs.html#ixzz30OLrakWB
Broadcasters Seek Consumer Group Help In Retrans Fight
Looking for allies in spotlighting what they say are 'abusive' cable billing practices
4/30/2014 10:28:00 AM Eastern By: John Eggerton
Broadcasters are hoping to enlist consumer groups in battling cable operators over what broadcaster group TVfreedom.org is calling abusive pay TV practices. At least one, Public Knowledge, signaled it would be happy to work with the group on the issue of MVPD billing practices.
TVfreedom was launched to push back on the retrans issue, given that cable and satellite operators have their own group, the American Television Alliance (ATVA), pushing for retrans reforms and branding the system a thumb on the scale for broadcasters.
Each side blames the other for rising cable prices, though cable operators also point out there has been a rise in services and channels along with the price increases.
In a letter to eight public interest groups, including at least one, Public Knowledge, which is actually a member of ATVA, TVFreedom called on them to "join the organization in developing an open and collaborative process that will place a public spotlight on the abusive billing and business practices being undertaken by the cable and satellite TV industry that are harming consumers."
“This letter from broadcasters is nothing more than a smokescreen to distract from skyrocketing retransmission consent fees and record number of TV blackouts. We’re confident consumer groups will continue to join us in wanting to put an end to blackouts and high fees,” said ATVA spokesman Brian Frederick.
"They’re calling for transparency, but they’ve resisted every effort to make the price of broadcast channels more transparent. They don’t want consumers to know fast rates are rising for broadcast TV stations or that they’re forced to pay for these stations by the government or that they tie carriage of cable networks to local TV stations.
“If they really cared about the price of cable bills, the NAB would talk to the four biggest TV networks, who control half of the top 50 most expensive cable networks.”
(GGD: ABC-Disney; CBS-National Amusements (Redstone); NBC-Comcast(Roberts); Fox-News Corp (Murdoch))