Broadband Cable Association of Pennsylvania

NewsClips

September 30, 2011

Is the cable industry starting to change its mind about the idea of letting consumers decide what channels they want? A recent story from Reuters (see Wednesday's NewsClips) says cable operators are working on a such a plan and that it "represents a complete reversal from cable operators' long-held opposition to what is known as 'a la carte' programming."

Don't get your hopes up. While there are a handful of small cable operators, including Mediacom, that have expressed interest in pursuing a different distribution system, the big boys - including Time Warner Cable and Comcast Corp. - are unlikely to advocate for an a la carte system. That's because both are in the programming business and want their channels in the homes of all their subscribers, not just the ones who want them. When Time Warner Cable launches its regional sports channel in Los Angeles next year, consumers will have to pay for both the English and Spanish language versions even if they only want one or - gasp - neither. It is a practice called bundling and all the big programmers engage in it.

The Reuters story tries to imply that the entire industry is willing to go down the a la carte road, but the only executives quoted are from Mediacom and Suddenlink, both of which only have a little more than a million subscribers and no substantial programming interests. For the distributors that own content, a la carte is a sticky issue they want to avoid like the plague.

One of the arguments against a la carte is that while it sounds good on paper, it would not actually lower cable bills. For example, if 40 million homes were suddenly given the choice to decide for themselves if they wanted ESPN and all said no thanks, than the other 40 million would see their bills go up to pick up the slack. That would be true for any channel under an a la carte system. There are also still technological issues as the 20 channels you want may not be the same as what your neighbor wants and figuring out how to deliver two extremely different packages of channels out of the same headend is no small task.

Of course, the networks, particularly the sports channels, could try to use a la carte as a way to drive down their programming costs. ESPN could go to the NFL and say that because it was now only in half of the homes it used to be in, it needs rights fees to come down. Then the NFL would have to tell the owners and the players that the TV gravy train is over. It's a nice dream, but highly unlikely to ever happen.

Time Warner Cable has made some headlines with its plans to offer a low-cost cable package. While some see this as a sign as testing the waters for an a la carte package, given that several of the most popular networks including TNT, Comedy Central and Fox News are not expected to be offered, it probably will only have appeal to those truly looking to save some money. Los Angeles Times

For television programmers, one screen is no longer enough.

The biggest broadcast and cable-television channels are racing to launch tablet apps linked to their broadcasts and used simultaneously with the TV shows. The hope is that viewers will tune in live and interact. The offerings include apps from NBCUniversal's Bravo and News Corp.'s Fox that present material such as photos, quotes, polls or background about particular scenes as a show plays. Viacom Inc. and CBS Corp. have apps that display updates about shows from Twitter or Facebook in real time.

USA Network's TV comedy-mystery series "Psych" has an app that asks users to enter keywords that flash during the show's graphics to unlock content like behind-the-scenes footage and games. The efforts aim to preserve the economic pillars of the TV business that are eroding: loyalty and live viewership.

As channels and ways to watch them proliferate, fewer viewers are tuning in live. Among viewers aged 18-to-49, 17% fewer watched a commercial on a major broadcast network last TV season compared to the 2007-2008 season. That is a financial risk to networks, which generally get paid by advertisers based on how many people watch their commercials live or within three days on DVR. "Anything we can do to make live viewing a little better, we'll do it," says Hardie Tankersley, vice president of innovation and social media for Fox Broadcasting Co. "Financially it is much better to have a live viewer rather than a delayed viewer."

Fox recently launched companion apps for its "Terra Nova" and "Bones" series, offering, among other things, explanatory content to go with the shows. Fox, like The Wall Street Journal, is owned by News Corp. With the apps, networks are trying to co-opt the same gadgets that have been siphoning off viewers and target multitaskers who thrive on being bombarded with information and chatter. Sixty percent of television viewers are distracted by a mobile phone while watching TV, according to a recent facial tracking study by IPG Media Lab, a unit of Interpublic Group of Cos., and video ad technology company YuMe Inc.

Programmers have turned to technology to make TV more interactive before, often in vain. Internet-ready TVs ushered in an age where additional, accessible information could be could run alongside a TV program on the screen. But that created an eyesore and such services aren't widely used. Now, programmers are migrating the related content to tablets like the iPad, allowing consumers to decide whether they want to engage with the extra content or simply watch TV.

Engagement comes at a cost. Some networks say they have seen proposals for apps that cost more than $1 million. Other can be done for tens of thousands. They also generally say it's too early to see how the apps might affect ratings but Lisa Hsia, Bravo's executive vice president of digital media, said an app that allowed users to chat and interact with characters live during the "Real Housewives of New York" boosted the show's ratings by 10% compared to earlier in the season. Advertisers will need to determine whether viewers with one eye on the TV and one eye on a tablet computer are engaged or merely distracted.

For now, the app experiments haven't achieved the scale necessary to pitch advertisers on the idea in any kind of broad way. Still, a few are testing the waters. Intuit Inc.'s TurboTax is among the advertisers that have bought ads that run in Bravo's "Bravo Now" iPad app the moment their commercials run on TV. While the Turbo Tax ad isn't related to the content in the program, the ads could help reach the viewer wherever he or she is focused-that is, the TV or the smaller screen.

While media executives say they are determined to create their own experiences that complement story lines and deepen engagement with their shows, some are experimenting with small companies whose social-media technologies tout viewer engagement through second screens. Shazam Entertainment Ltd. sends users content related to a TV show, such as a music download, when a user "tags" a show by pressing a button on the phone or iPad when prompted during an episode.

The company, which is using audio-detection technology to determine what the person is watching, has joined forces with some NBCU cable networks and Walt Disney Co.'s ABC. NBCU is owned by Comcast Corp. GetGlue and Miso gives users virtual rewards for sharing what they are watching with their friends. GetGlue is owned by AdaptiveBlue Inc. Miso is owned by GoMiso Inc. While both have ambitions to offer more custom content for individual shows, networks still see plenty of room for their own efforts.

Viacom's MTV, which has built second-screen apps for following live events like its Video Music Awards, has a new "WatchWith" app that intersperses actor commentary and items like photos with chatter about the shows on Twitter and Facebook for shows including "Teen Wolf" and "Jersey Shore." Kristin Frank, general manager of MTV and VH1 digital, says the company aims to boost engagement with its shows by "turning every episode into an event." Wall Street Journal

Dish Network Corp. in recent weeks has been pressing the Federal Communications Commission to bring AT&T Inc. before a judge over its proposed $39 billion buyout of Deutsche Telekom AG's T-Mobile USA unit. "Timing is critical, and delay only benefits AT&T," Douglas County-based Dish said in a letter to the FCC, summarizing a meeting Wednesday with the staff of Commissioner Mignon Clyburn. Dish said a protracted merger approval process threatened to delay the company's efforts to build a wireless network. Dish is seeking FCC approval to use airwaves reserved for satellites for a terrestrial wireless network. Dow Jones

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