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July - August  2014 News

Research and Commentary from the Curated Next TV eNewslettter

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8 August 2014

Consumers Embrace Connected TV

According to a new study conducted for the Council for Research Excellence (CRE) by GfK, the most important determining factor among consumers in purchasing a new TV or video device is the ability for it to connect to the Internet and stream content.
Why This Matters: Smart TVs and/or OTT streaming devices were among the top devices selected by households participating in a 50-household qualitative study. The main consideration for these shoppers was the availability of content, whether in the form of streaming, live watching or casting from one device to another.
4 Takes: Media Post | Broadband TV News | RBR | Advanced Television


Netflix Surpasses HBO in Subscriber Revenue

Netflix CEO Reed Hastings posted on Facebook that the streaming service generated greater revenues than its premium cable network rival HBO in the most recent quarter.
Why This Matters: The streaming service reported $1.15 billion in subscriber revenue at the end of June, compared with $1.14 billion for HBO. Hastings called it a minor milestone, but acknowledged that, “They still kick our ass in profits and Emmys, but we are making progress.”
5 Takes: Video Ink | Quartz | Fierce Cable | Mashable | Venture Beat

7 Aug 2014

DirecTV and AT&T to Take Over Houston RSN

Under a reorganization plan filed yesterday in a federal bankruptcy court, AT&T and DirecTV will become the sole owners of Comcast SportsNet Houston.
Why This Matters: The channel, which carries the Houston Rockets and the Houston Astros, has been unable to secure carriage deals with any major TV providers in the Houston market, other than Comcast. Consequently, CSN Houston has had to declare bankruptcy and is now operating in Chapter 11.
4 Takes: Fierce Cable | TV Predictions | Houston Chronicle | Houston Business Journal




1 August 2014

DirecTV Struggles to Rein In Skyrocketing Content Costs

DirecTV CEO Mike White continued his ongoing war against rising programming costs, telling analysts Thursday that the second largest pay TV provider in the country is doing everything it can to slow down cost increases in sports programming and retrans.
Why This Matters: White said that Time Warner Cable has created “stratospheric pricing,” with SportsNet, which carries Los Angeles Lakers NBA games, and SportsNet LA, which is asking as much as $4 per subscriber per month in carriage fees for access to Dodgers games, adding that if those charges were extrapolated across all RSNs, DirecTV subscribers would be paying $26 per month just in RSN fees.
4 Takes: MCN | 89.3 KPCC | Fierce Cable | L.A. Times

Lackluster Q2 for Time Warner Cable

Time Warner Cable reported a mixed second quarter Thursday, with basic video subscriber and high-speed data customer additions beating year-over-year marks, but missing analysts’ estimates.
Why This Matters: TWC lost 147,000 basic video customers in the quarter, a 22% improvement over the same period last year, but far short of analysts’ estimates of a loss of 99,000 video customers. The company added 86,000 high-speed data customers in the period, a significant improvement over last year’s 21,000 additions, but again short of estimates of 105,000 additions.
5 Takes: MCN | Ad Age | L.A. Times | Home Media | Media Post

31 July 2014

Set-Top Box Market Stable Despite Streaming Media Player Influx

According to a new research report from Futuresource Consulting, despite competition from other devices such as smart TVs and digital media adaptors, the market trade value for set-top boxes (STBs) at the end of 2013 was $20 billion.
Why This Matters: While the domestic multichannel video program distribution market hovers around 100 million households, increasing numbers of MVPD distributors are migrating traditional STBs to Internet-connected devices with cloud-based storage and related features.
3 Takes: Home Media | Broadband TV News | Rapid TV News



Quote of the day 29 July 2014:

“Access to 54 million homes is going to be controlled by just a couple of program executives in major cities. That’s what concerns us.”
– Patrick Gottsch, founder and chairman of Rural Media Group, which owns RFD-TV and FamilyNet




29 July 2014 News summmaries

California Lawmakers Ask FCC to End SportsNet LA Standoff

A number of Democrat members of Congress from California have asked the FCC to step in and mediate the dispute between Time Warner Cable and various distributors over carriage of SportsNet LA, the television home of the Los Angeles Dodgers.
Why This Matters: TWC signed a 25-year, $8.35 billion deal with the Dodgers in January 2013 to launch a new RSN home for the team. However, with exceedingly high carriage fees reportedly in the range of more than $4 per subscriber, and unable to provide pay-TV operators TV Everywhere rights due to constraints mandated by Major League Baseball, TWC has been unable to strike deals with DirecTV, Cox Communications, Charter Communications and Verizon FiOS.
5 Takes: L.A. Times | MCN | Fierce Cable | Variety | RBR

Time Warner to Offer HBO Go to Cord Cutters

According to reports, Time Warner is looking to accelerate growth at HBO by expanding access to broadband customers who don’t subscribe to a traditional cable-TV package.
Why This Matters: The $49-a-month Internet Plus trial introduced last year with Comcast may be offered through additional cable and Internet providers. The package, which includes web access, a limited number of TV channels and the HBO premium cable network, is aimed at the 10 million U.S. broadband customers, many of them younger, who don’t buy traditional cable TV.
5 Takes: Bloomberg | Media Post | Fierce Cable | Ad Age | Re/code

Amazon to Spend $100 Million on Original Content in Q3 Amazon is planning significant growth in its original content spend, increasing its investment in Prime Instant Video productions to more than $100 million in Q3.
Why This Matters:
Amazon has been chasing Netflix' original programming strategy to keep its Prime Instant Video service competitive. Netflix execs last fall said the company would double spending on original content in 2014. But CFO David Wells said at the time, its investments in original content will represent less than 10% of overall global content spending.
5 Takes: Variety | Home Media | Tubefilter | Fierce Online Video | Cnet

23 July 2014

Netflix Passes 50 Million Subscribers In its earnings call yesterday, Netflix revealed that it had signed up an additional 1.69 million subscribers during the second quarter, extending its total to 50.05 million. The company also added 1.12 million international streaming subs, giving it a total of 13.8 million in that category.
Why This Matters:
Looking ahead, the company expects to add 3.69 million subs worldwide in the third quarter, including 2.36 million in its international markets – enough to push its subscriber base past 53.74 million.
5 Takes: MCN | L.A. Times | WSJ | Video Ink | The Wrap


Netflix Calls for Title II Reclassification of ISPs in FCC Comments

Netflix came out swinging in its submission to the FCC over proposed internet “fast lanes,” arguing Wednesday that this would be a bad idea and that the agency should instead focus on forcing broadband providers to deliver the speeds they promise to their customers.
Why This Matters: In a 28-page filing, Netflix called for Title II classification of ISPs, and reiterated its accusations that Comcast and Verizon are intentionally letting interconnection gates become congested, resulting in "nearly VHS quality" of Netflix video streams, unless, of course, Netflix pays an interconnection fee.
5 Takes: Gigaom | Variety | The Hill | DSL Reports | Quartz


NBA Wants to Double Licensing Fees

According to reports, the NBA is looking to double the TV-rights fees it receives from Walt Disney’s ESPN and Time Warner's Turner Broadcasting as the league finalizes deals for nationally televised games.
Why This Matters: Such an increase could have a major impact on pay TV providers and their relationship with their subscribers. Currently, ESPN is commanding average carriage fees of $5.54 per subscriber. TNT was listed as the second most expensive channel at $1.33 per subscriber.
4 Takes: Reuters | Bloomberg | Fierce Cable | THR


14 July 2014

Comment:– Moffett Nathanson principal analyst Michael Nathanson"… Smaller cable network groups have been hit the hardest as investors have been forced to think about four negative factors: 1) Like broadcast, cable nets are now facing a zero-sum ratings game; 2) Weak scatter and lighter volume in the upfronts point to a continuing slow cable ad market; 3) The fiercer battle for audiences are driving programming costs higher; and 4) The consolidation of distribution muscle will drive affiliate fee growth down into the future."

FCC Launches Comcast/TWC Review

On Thursday the FCC issued a public notice kicking off the official review of the Comcast/Time Warner Cable merger, starting an informal 180-day clock on vetting the deal.
Why This Matters:
The agency is asking for comments about the proposed $45 billion transaction (including Comcast’s spin-off deal with Charter Communications). Initial comments are due Aug. 25, with final comments due Oct. 8.
5 Takes: B&C | Re/code | L.A. Times | Deadline | Variety


American Community Television Joins TVFreedom.org .

TVFreedom.org announced Tuesday that American Community Television, (ACT) has become a member of the coalition, which includes network affiliate associations, the National Association of Broadcasters and others pushing back against calls for retrans reforms.
Why This Matters: ACT, which has been battling cable ops over PEG channel placement, is the 28th organization to join TVFreedom.org, and will work with coalition members to help push for legislation and policies that will preserve localism, while protecting affordable access to broadcast TV programming and PEG channels on cable TV systems for millions of low-income households, seniors, and minority communities across the nation.
2 Takes: B&C | RBR

FCC Names 'Merger Hawks' to Review Pay-TV Mega-Mergers

The Federal Communications Commission announced the members of the panel that will review two proposed mega-mergers – Comcast-Time Warner Cable and AT&T-DirecTV.
Why This Matters:
In a story headlined, "These are the merger hawks who will decide your cable future," the Washington Post noted, "From the looks of it, the companies will face a tough review."
4 Takes: Washington Post | Fierce Cable | CED | TVT

YouTube’s 2013 Revenue Estimated at $3.5 Billion. 

According to a report from The Information, YouTube generated $3.5 billion in revenue for Google in 2013, well below analyst estimates, which put YouTube’s 2013 revenue anywhere from $5 billion to $5.6 billion.
Why This Matters: These figures show that new CEO Susan Wojcicki has plenty of work ahead of her. When Wojcicki replaced Salar Kamangar in February, it was seen as a move geared toward increasing ad revenues, since Wojcicki came from Google’s ad department.

Netflix Maintains Lead over Amazon for Top Movies, TV Shows. 

Netflix continues to outpace Amazon.com’s subscription-video service in terms of content-licensing, delivering substantially more of the top 50 movies and top 75 TV shows from the last few years, according to an analysis by Piper Jaffray & Co.
Why This Matters: The report also suggested that online subscription video-on-demand (SVOD) services including Netflix, Amazon Prime and Hulu Plus are retreating from licensing movie content, but loading up on TV show rights.
3 Takes: Variety | Deadline | Fierce Cable