Content And TV Everywhere

The challenge facing TV networks and their distribution efforts is having the best content that many people want to watch.  When you have a hit, it makes money from advertising and syndication through different windows; when you have a dud, it is a write-off.  But for networks that negotiate with production companies for content, deciding what rights to buy is a gamble.  Some networks buy the linear and on demand rights but may not also buy the streaming rights.  Some buy domestic distribution but stay away from international.  Depending on what the license rights are for content determines how much of a networks' content can be offered to a cable operator to carry with streaming media rights.  Thus TV Everywhere may not be everywhere.

AMC Network certainly had two major content hits with Mad Men and Breaking Bad.  But their deal with Lions Gate was for cable carriage; Lions Gate retained other distribution rights.  So as AMC  moves forward in its content strategy, it has evolved from a buyer of content to an owner of content.  According to the Wall Street Journal, "At a time when more people are binge-watching shows on streaming services like Netflix NFLX -0.10% and Amazon Prime, ownership could pay off handsomely with future streaming deals, as it has already done for AMC with "The Walking Dead," the first show it owned. But it also brings higher risks and more upfront costs, which have lately been spooking some investors."  Welcome to the world of risk and reward.  And should AMC find another breakout hit, it is well positioned to succeed in the new world of TV Everywhere. 

Is There Room For Another Cable News Network?

Newsmax Media has announced their plans to launch a new, conservative - skewed news network next month with its first distributor, DirecTv.  And with a 20 mm subscriber base, expected to grow with its merger with AT&T, it's not a bad place to start.  It will instantly make them bigger then a lot of other stand alone cable networks.  That depends on where the network is positioned, assuming it is to the largest tier base.  " Newsmax also plans to launch an OTT channel later in the summer offering a live feed of the network as well as content from  Newsmax’s websites Newsmax.com, Newsmaxhealth.com, and Moneynews.com which draw close to 14 million unique monthly visitors."  Not a bad way to start and promote itself.  

But can Newsmax survive when others before it have not.  Fox News was very successful when it launched but it had powerful synergies with lots of other cable and print media to support them.  Current TV could not find an audience although it did get distribution.  It ended up selling its business to Al Jazeera to rebrand and compete.  But they too have had difficulty.  After spending a ton of money on anchors, staff, and content, they have squeezed shut the cash flow, layed off dozens of employees, and have done little new marketing to expand its viewership.  

Ratings continue to be a challenge to MSNBC and CNN while Fox News has done a modest business.  The broadcast news teams still get the biggest share and when the big stories appear, get the first look.  It is during election time when the news networks appear to get the biggest traction.  And all these linear networks must now compete with online alternatives, even in the video streaming space.  Is there room for one more cable news network, especially one with a conservative approach?  If you are willing to go after Fox News and have the dollars to invest, anything is possible, but success will be difficult.  

Newsmax also plans to launch an OTT channel later in the summer offering a live feed of the network as well as content from  Newsmax’s websites Newsmax.com, Newsmaxhealth.com, and Moneynews.com which draw close to 14 million unique monthly visitors. - See more at: http://www.multichannel.com/news/content/newsmax-launch-tv-network/374807#sthash.70GQJecB.dpuf

Driverless Cars, How About Solar Roadways

As much talk about Google building driverless cars, I am more impressed by the idea of solar roadways.  The video may be a little silly, but the ideas are fantastic.



The information that it enables, the future savings it offers, the positive impact on the environment, could be enormous.  Of course the cost to rebuild every road in America would be enormous and take a lifetime to complete.  But ultimately it would make driverless cars a much more realistic next step.  So sit back and enjoy. 

Darwin Asks Why Stop Acquisitions

The NY Times Editorial, A Cable Merger Too Far, worries that allowing Comcast to buy Time Warner Cable would create a too powerful entity with a huge controlling stake in cable and broadband service.  I say, so what?  Isn't this exactly what Darwin discovered in the animal kingdom that big animals eat little ones; we either conquer or adapt to survive.  It works the same way in business.  We have seen acquisitions and mergers across every industry as they grow from entrepreneurial to mature.  The big eight accounting firms are no more, the airline industry has fewer and fewer competitors, the auto makers almost died out from bankruptcy if not for the help of the US Government.  So why should the cable industry be any different.

While it would be nice to have more competition for cable service; frankly, we never really did.  Cable operators bought franchises to gain exclusivity and as a result, Comcast never competed head to head with Time Warner cable.  As a consumer, we were lucky to have the choice of a cable operator, telco, or satellite provider.  That choice doesn't go away with a Comcast acquisition. 

What should the FCC do?  Darwin still remains relevant.  The FCC should be encouraging new innovation, technology and new types of connectivity.  Adapt, change, or be eaten.  The future of content connectivity lies with new entrants with new technologies that can topple old technology off the mountain.  You can't stop the natural instinct to grow through acquisition but there are other means.

TiVo Strategic Shift To MSO Working

As a standalone set top box, TiVo worked hard to build a market and attract consumers willing to buy their DVR recorder.  The need for CableCards and costs to own limited the interest and appeal.  It was the Porsche of set top boxes but for a business seeking growth, a slow road.  The decision to attract cable MSO partnerships to offer a TiVo rental box to households has enabled TiVo to grow much faster.  " TiVo swung to a first quarter profit as the DVR pioneer and video software company set a record by signing on 341,000 subscribers through partnerships with pay-TV partnerships, enough to nudge its total sub base past 4.5 million for the first time."  As a result, TiVo has over 3.5 million cable subscribers through this partnership and less than a million subscribers through direct purchase.  

Unfortunately, the top cable MSOs have been reluctant to offer TiVO set top boxes.  Currently, "

TiVo is only about 5% penetrated with its current batch of U.S. cable partners."Should TiVo start to do deals with Comcast, Time Warner Cable, Cablevision, and others, future growth of TiVO could be enormous.  

TiVo swung to a first quarter profit as the DVR pioneer and video software company set a record by signing on 341,000 subscribers through partnerships with pay-TV partnerships, enough to nudge its total sub base past 4.5 million for the first time. - See more at: http://www.multichannel.com/news/technology/tivo-adds-record-341000-mso-subs-q1/374733#sthash.G4sFsn1j.dpuf

Media Merger Mania - What Will Dish Do

Talk about being left out in the cold.  Comcast wants Time Warner Cable and AT&T wants DirecTv.  Charter gets more subscribers from the Comcast merger and ownership in a newly created cable Spinco company.  Some hope that a Sprint and T-Mobile merger will drive more wireless competition to the industry leaders.  And let's not forget Verizon who recently purchased the remainder of its wireless business from former partner Vodafone.  So what about Dish Network?

Certainly Dish tried to merge with DirecTv a decade or more ago but was denied by the FCC.  Different times indeed.  And while they would have loved to do a deal with AT&T, Dish's spectrum business seemed to produce a conflict.  Some hoped that Verizon would respond to say they were interested in Dish, but they were quick to vehemently deny those rumors. So with all the media merger mania occurring, Dish sits like a wallflower on the sidelines.

So what comes next for Dish?  There has been speculation that Dish could make a play for the NFL Sunday Ticket package and wrestle it from DirecTv.  That could both hurt subscribers and give an out to AT&T to terminate their acquisition efforts.  Perhaps other cable companies might be interested in acquiring Dish.  Should Charter have enough access to capital, they might consider making a run at Dish.  Whether the FCC thinks fondly of that deal is unclear.  Cablevision, who once tried their hands at satellite with Voom, might consider a Dish purchase as a means to augment their subscriber numbers as well.  That would certainly propel them into double digit subscriber numbers.  And then there are the hedge fund guys who see future value in picking up Dish for the time being.

For now, Dish sits idly by as the FCC ponders two huge acquisition issues.  But I doubt very much that Dish is being idle.  We shall wait and see what is up their sleeve. 

Success Of Linear TV: Eventize

With so much shows to watch on broadcast and cable, on demand, DVR,  and streaming, its a wonder we get any sleep at all.  In the golden age of TV, choice was limited to broadcast and every show was special.  But today we go through TV shows quickly and if they don't show any chance for audience share, they are thrown away and replaced with the next show.  Just look at the list of cancelled shows that are quickly buried.

To adjust to a very competitive landscape of content choice, networks have embraced live programming.  From baseball and football to Olympics, sports promises good audiences and linear viewing.  NBC has bought all three of the Triple Crown horse races and audiences are tuning in.  Reality shows with live voting and results from shows like American Idol, Dancing With The Stars,  and The Voice have helped as well.  Saturday Night Live has been live for years, although not in prime time.  And NBC with its Broadway push through Sound Of Music last year and Music Man this year are meant to excite audiences to tune in.  Fox is copying this strategy with their production of Grease.  The term for all these big live events, eventize, which could arguably be both a noun and a verb. 

I expect that we will see all the networks eventize their programming schedule.  Perhaps one day, one sitcom will be programmed live every week and not as a special event, as was done a couple times by 30 Rock.  Unfortunately, like all good things, the notion of live programming will get so overdone by all the networks that the viewer will grow tired of this too and move on to the next new thing. 

The Decline Of Physical Media

We used to pride ourselves on our collection of media.  Whether it was books on the shelf, our music collection, whether tape cassette, album or cd, even our video collection of VHS movies or DVDs.  Friends that would enter our homes could marvel at the books we read, music we listened to, or movies we watched.  And these collections became our hobbies and our passions.  

We still pride ourselves on these collections but now use social media to share our latest media connections.  We simply no longer need the physical clutter; all of this content is accessible through cloud streaming or digital storage.  And so the devices we use, especially for music and movies have changed.  For example, "Streaming media players, for the first time ever, outnumber Blu-ray players in U.S. households, and have become the new tip of the spear connecting consumers to the Internet and online video."  Devices like Apple TV, Roku, and Google Chromecast, as well XBox and Playstation, become the more preferred devices for our digital collections.  

We have seen for a while this decline in physical media occurring.  Fewer sales of cds and dvds, fewer books too as our tablets and e-readers become a more acceptable substitute for carrying around heavy books.  But because our collections are no longer easier to be seen, we can't peek at the cover of the book being read on the subway and we can't look through the latest album covers of newly purchased music.  We must proactively share our playlists and reading lists and comment on our latest interests.  The landscape continues to change and we are changing with it. 

Streaming media players, for the first time ever, outnumber Blu-ray players in U.S. households, and have become the new tip of the spear connecting consumers to the Internet and online video. - See more at: http://videomind.ooyala.com/blog/researcher-streaming-stbs-leading-drive-connect-consumers-content#sthash.SZNRYJva.dpuf

Unbundling Cable Not A Cost Savings

If you ever thought that your cable bill would drop if your provider let you just buy the networks you watched should read today's New York Times' article on Unbundling Cable.  In it, the writer Josh Barro provides a clear understanding of the cause and effect of a la carte pricing for cable programming.  The conclusion, overall costs would not go down and consumers would eventually pay more for less programming.  Cable bundling overall has helped to keep prices lower.

The only problem is that the article doesn't address the fact that cable subscription costs are still increasing and that lately the cost of bundled cable has led to decisions by some households to cut the cable cord entirely.  So if the solution to lower cable bills isn't unbundling and a la carte pricing, then how else can a household lower their bills? 

For many, a strategy has been to switch providers.  In some markets, like NY and LA, a telco overbuilder like AT&T U-Verse or Verizon FIOS, competes head to head with the incumbent cable provider, Comcast or Time Warner.  Deals are offered to switch and savings mount until the promotional pricing ends and consumers seek new deals to switch back.  Other households look at satellite providers like DirecTv and Dish for cheaper cable programming. But as you can see, the cable industry is monopolistic with few alternatives.  It is the same problem facing broadband access as well.

The challenge of cutting the cord completely to cable and relying on broadband for streaming access to platforms like Netflix, Amazon Prime and You Tube, is that broadband providers want to switch from an all you can eat model to usage based pricing.  Given the heavy load of video streaming, and discussions regarding the demise of net neutrality, costs to stream will rise and so will subscriptions to broadband services.  And frankly, most users want all the content they can get, cable and streaming, and cord cutting doesn't serve that purpose.

So great explanation Mr. Barro on why unbundling cable doesn't work.  But you left out the most important question, how can cable customers save money and still enjoy their programming. 

Early Adopters Beware, Google Glass May Not Be Worth It

According to reports, Google might finally be moving ahead to sell their Google Glass product to consumers.  The retail price tag appears to be $1,500 which would make it a very expensive toy.  Cost wise, reports indicate that it may be way overpriced.  But if you have the money burning in your pocket, you may not care.

I just wonder if it really will deliver the value that you expect from the product.  You may in fact see signs popping up in places telling you that Google Glasses are prohibited.  These places could include movie houses, Broadway theaters, and every bathroom. And hopefully no one will be driving while wearing a pair of Google Glasses either.  "There are a lot of reasons not to buy Google Glass. It's super weird looking. It might get stolen off your face. People might think you're a creep." 

So will a Google Glass release become a hit.  Over time, prices will come down and hopefully it will demonstrate more capabilities that uniquely make it a must have product.  For now, it looks questionable. 

Cable Distribution Becoming A Chess Game

The result of the potential Comcast and Time Warner Cable merger has led to the cable industry becoming a chess board for strategic moves to level the playing field.  AT&T has decided to extend its reach through acquisition and has targeted DirecTv as the means to expand its footprint domestically as well as internationally.  This combined entity would nearly match the size of a larger Comcast.  And for DirecTv, provide them with an important component, namely an integrated broadband and communication arm to support its video business.  How will the FCC react and will it make a decision to enable Comcast to move forward with Time Warner Cable an easier one to approve.  I think so.  But I also wonder what the next piece will be that moves on the chess board.  Is it time for Charter to also make a play for Cablevision or Cox to expand its footprint beyond what Comcast would sell to them.  The board is in play and I suspect more moves are coming.

Apple Beats The Wearables But Needs More Acquisitions

Of all the talk about Apple releasing a wearable product like an iWatch, perhaps the planned acquisition of Beats and their headphones could count, too.  The more I think about a "connected" watch, the less excited I seem to get.  For those of us who are watch wearers, I am not sure I would want to replace it on my wrist.  So I would have to think it would occupy my opposite wrist should I ever consider buying one.  And for those who use their smartphones as their timepiece, I wonder if they would finally succumb to a smart wrist watch.  And lastly, I think I would get aggravated plugging in my watch every evening, next to my iPad and iPhone.  So now I would need a third outlet and cord.  Yes, the more I think about an iWatch, the less enamored I become.

At the same time, the news that Apple wants to acquire Beats, their hardwear and streaming subscription service, seems like a logical fit to the Apple music model and a natural extension to its own line of iPod, iPhone, and iPad products.  For those seeking a better set of speakers and headphones, Beats is a good fit.  Plus the talent of its owners could play well in the Apple sandbox. 

Perhaps Apple should also consider more synergistic business opportunities to extend its brand across more platforms.  And with that in mind, why not look to acquire Sirius Radio as a means to truly be mobile, as in the automobile space.  Use its satellite technology to drive Apple usage for radio and subscription product.  Need another acquisition target, Apple should look at TiVo.  It is the ultimate cable and OTT set top box and could be a great big step into the cable infrastructure.  In the payment space, Apple could look at PayPal or even Square, a product that already fits well with Apple's devices.   They may not be wearables, but each of these companies offer subscription or usage based revenue to grow. 

Unless Apple can make an iWatch a must have product, something others have yet to figure out, its efforts may best be served in acquiring more companies in the streaming and digital space.  For me, a Beats acquisition makes great sense for Apple.  But we all want to know, what's next. 

Time Inc To Spin Off Time Warner In June

Come next month, Time Warner, home of HBO, TNT, TBS, CNN, Warner Bros, and more, is formally separating itself from Time, Inc., its magazine publishing company.  And while this is no longer fresh news, it does make me revisit the question of why separate.  Is it a purely financial decision designed to unlock shareholder value or could management not find synergy between these content and distribution segments? 

Does Time Warner believe that the magazine business is so mature that it drives little growth to the bottom line?  And could they not reach across the business segments to build a stronger fit of content and a multi-platform distribution world.  One could argue they tried.  Many years ago CNN and Sports Illustrated attempted to build a cable network, CNNSI, to compete against ESPN.  It never found its footing.  But the idea behind it was sound. 

As print magazines make the crossover to tablet, they require even more video content to sustain themselves.  Couldn't Time Magazine create that with a CNN relationships; couldn't Entertainment Weekly expand its value with the WB?  I can only surmise that the silos between each business segment was so strong and so independent to not enable these possible internal partnerships to grow.  Perhaps as independent companies, the opportunity to partner with brands regardless of whether they competed internally with other brands will no longer be a factor.  If this split of Time Inc. and Time Warner creates more growth for both, then it will be deemed a good thing.  But if it is meant to cast off Time Inc. so it can whither away without impacting the Time Warner bottom line, than that is a shame. 

Cable Consolidation Affect On Programmers

The planned acquisition of Time Warner Cable by Comcast enables the combined entity to prosper more efficiently.  Overlapping jobs can be eliminated and programming savings can be achieved with networks who provide better licensing fees based on subscriber size based MSOs.  So if Time Warner is paying 10 cents per sub for network X, Comcast might be paying only 8 cents.  Comcast would see a 2 cent improvement on their rates on those acquired subs.  The discussions between AT&T and DirecTv would yield the same outcome.  Good news for the cable operators who likely will enjoy the better profit margins without reducing its own fees to subscribers.

Bad news however for the cable programmers.  Companies like AMC Networks, Discovery Networks, Disney, Scripps and others who count a portion of their revenues from cable subscription.  Not so bad for NBC's networks who as a company can leverage that loss against its parent's (Comcast) gain.  How significant is that loss depends on who you ask.  Most of these networks are fully penetrated so they will see little sub growth though consolidation; other networks might lose per sub revenue but gain more subscribers as systems merge.  And unfortunately, the possibility exists that some networks could simply be dropped off all the cable line-ups. 

So while it is not a zero sum game, it seems likely that the networks are watching these merger efforts very carefully and predicting financially how they will be affected by such outcomes.  Ad revenue growth may help some but that also depends on hit shows after hit shows, something that is never easy to predict.  For now, we can only watch the cable landscape consolidate and examine the fallout from these changes. 

Another Cable Operator Says Yes To Netflix

It seems that cable operators are slowly learning that OTT platforms can co-exist with cable TV and not hurt subscription revenue.  The latest cable operator is Suddenlink, a 1.2 mm cable operator, who has agreed to offering Netflix access through its leased TiVo cable boxes.  This marks the fourth cable operator to open their doors to the OTT content platform.  It also is the largest of the four which include RCN, Atlantic Broadband, and Grande Communications and more than doubles the number of cable subscribers that can access the Netflix service on a cable TiVo device.  How soon before others follow?  And will Comcast offer the same access on their proprietary X1 box?  It seems the winds are moving in a favorable direction.

Was Cord Cutting Overblown

DirecTv dealt another blow against cord cutting in the US with another quarter of subscriber growth.  At 12,000 net additions, the number may not be large but it certainly indicates that households still want their cable television.  Consumers not happy with their cable service may be just as willing to shift from cord to satellite as long as they can continue to get their TV programming. 

Also part of the discussion continues to be whether AT&T will make a serious bid for DirecTv or perhaps Dish Network to enhance and grow its cable platform.   A combined AT&T DirecTv venture would reach 26 mm households, almost as large as a post Comcast Time Warner Cable merger.  With John Malone's interests in DirecTv and Charter, this becomes a very interesting scenario to watch. 

The Value Of Online Advertising

The online advertising marketplace continues to be a growing business, with metrics and analytics galore to assure that the right advertisements are being targeted to the right audience.  Yet with all this data, are ads even being seen at all.  "By many estimates, more than half of online video ads are not seen, either because they are buried low on web pages or run in tiny, easily ignored video players on those pages, or run simultaneously with other ads."  Sure CPMs for some of these ads may only be pennies, it is likely that the total dollars of these media buys are significantly wasted.  This weekend's NY Times article should have ad agencies and media buyers in an uproar. 

The truth is that there is a ton of online content out there, literally, and the number of pages and videos are growing exponentially.  On each page and with each video, space exists for ad insertion.  The supply seems endless, perhaps even approaching infinity.  And while some tier one content has great value, most occupy the endlessly long tail of niche viewership.  It is a field day as buyers and sellers use automated exchanges to target and place ads across all these sites.  "When there is unoccupied ad space, a computer starts a sort of Dutch auction with a number of ad networks."  But the space that is being filled could be "below the fold" on the page, or automatically run a pre-roll even if it is barely visible.  And in some cases, quality "family" products may find themselves placed on less than desirable web pages, as noted in the article. 

So is anyone angry?  Does there seem to be a noticeable uproar or is this digital world deemed acceptable as is? Perhaps in exchange for such high quantity of online ads at low CPM prices, the percentage that is waste is manageable.  I hope not given that the percentage calculated called 57% of online ads unwatchable.  The online world has become so fragmented that many of these ads have lost their value entirely.  And it is why sponsored and native content may have the best opportunity to deliver ROI for advertisers seeking results from their online ad budgets. 

As far as this article is concerned, I hope it is a wake-up call to the digital community to tighten up their act.  Otherwise, budgets may soon be leaving this piece of the business. 

Is DirecTv and AT&T The Next Cable Merger?

With all the talk centered around Comcast's proposed acquisition of Time Warner Cable, the news that AT&T might be interested in DirecTv may have come as no surprise.  Given that a larger Comcast would cover more than 30 mm subscribers, another competitive presence would be needed to keep them in check.  Some wondered if a DirecTv and Dish Network merger would be the possible solution.  The problem is that they lack a broadband business to match the size of Comcast.  With AT&T and DirecTV, more synergy occurs, enabling this possible new entity to better sell a triple play of services.  And perhaps it may get Verizon itching to do something similar.  Could a FIOS and Dish Network business model be the next possibility?

Whether any of this happens remains to be seen.  How real an AT&T and DirecTv deal is remains to be seen.  Some even think that AT&T would prefer to hook up with Dish.  The idea for either is valid.  To compete with Comcast and a post Time Warner Cable acquisition, the need to get bigger quickly seems of utmost importance.

Broadband Usage Looking Like A Los Angeles Freeway

The FCC is hard pressed to maintain net neutrality, equal access for all content, large and small, across the broadband pipeline.  But companies like Netflix are hedging their bets by paying for faster routes with providers like Comcast and Verizon FIOS.  As a result, broadband pipelines are looking like LA freeways in that they have regular lanes and HOV lanes.  These high occupancy lanes give special treatment to multi-passenger vehicles and; in fact, LA is selling express passes for solo drivers that also want to use these lanes.  Unfortunately, the remainder of the lanes become more congested with other drivers either unwilling to pay extra for HOV or carpooling. 

The loss of net neutrality simply turns highways from equal access to all into freeways like the 110 or the 10 in Los Angeles.  While good for bigger companies like Netflix, it hurts the rest of the content field seeking to avoid traffic jams but unable to pay the "convenience fee"  And like always, consumers will eventually pay more to cover these content streaming costs. 

Until technological innovation comes along to reduce the size of content streams or improve the speeds of transport, the fast rise of digital content consumption by consumers will only continue to clog the broadband pipes.  Net neutrality sounds like a good idea but it doesn't solve the underlying problems of broadband congestion.  I believe the FCC should do more to encourage additional broadband competition; open more airwaves, encourage new players to enter, and allow competition for platforms to be best for consumers.