Wednesday, March 3, 2010

ABC Cablevision Fight To Get Nasty

The contract negotiation between ABC and Cablevision is tuning nasty. Just months ago, Fox went through this same issue with Cablevision and only last minute negotiations saved them from being pulled off the air; Scripps Networks negotiations with Cablevision went from bad to worse and customers lost these networks for a couple weeks. Now it is ABC's turn. And they seem to be following the playbook. Open letters in newspapers, websites devoted to save the channel, and Facebook friends connecting under this same type of group. And Cablevision will hold the line till the very end until 12th hour negotiations on March 7 either save the channel or drop it from availability for Cablevision customers. Ultimately a no win scenario.

"The signal for ABC’s New York station, WABC, has been retransmitted, essentially free, by Cablevision for decades, but Cablevision said Tuesday that ABC now wanted $40 million a year, or about $1 a month for each subscriber." At the same time, ABC, and its owner Disney get tons of subscription revenue from its other networks - Disney, ESPN, Family, and others. But they are cable networks and ABC is broadcast. Both offered over the air and through cable lines, but a broadcast signal nonetheless. Does it or any broadcaster deserve a fee? This speaks to the heart of the argument.

It also points out the potential problem that faces the Comcast NBC merger. A distribution platform owning a broadcaster presents many problems of fair and equitable distribution; profit before public. It is the fundamental problem that should force the FCC to not approve the merger. Just imagine what might happen when it is NBC's turn to negotiate its "carriage" on Cablevision, Cox, or one of Comcast's rivals, Verizon, AT&T, et al. And what about pursuing new distribution platforms not beholden to a cable platform, like IP. Cablevision's negotiation with ABC is simply a precursor to the bigger problems that a Comcast NBC merger represents.

Viacom Programming To Leave Hulu

Viacom, he owner of Comedy Central, MTV and other networks, has decided not to renew its Comedy Central deal with Hulu. Despite its appeal and high usage on the Hulu platform, Comedy Central programming like The Daily Show, South Park, and others will cease being available as of March 9. I'm sure as other network deals expire they will not be renewed either. "Hulu said it was still talking to Comedy Central about “a number of opportunities.” A Comedy Central spokesman declined to say whether the channel would strike a distribution deal with one of Hulu’s competitors."

If I am to read between the lines, advertising revenue split between Comedy Central and Hulu was not enough to continue. It also has had the reverse effect of providing an alternative to cable, thus reducing cable subscription fees. The solution is obvious: a subscription model on Hulu so that Viacom captures a dual revenue stream. Hulu customers may not like that. The second is to do deals with cable companies that offer authentication to a cable subscription. Thus it would be more likely to keep Comedy Central on Fancast inside a walled garden and accessible only to Comcast customers.

Consider this a turning point for Hulu and one that seriously will impact their model. Content companies like the two stream model of subscription and advertising. Free does not fly in today's marketplace and ultimately the consumer will lose.