Should Apple Buy A Content Company?

Given the power of content over distribution in the recent Aereo decision, other distribution companies might want to start to reconsider owning content to control the whole pipeline.  A unique scenario proposed in the Washington Post is that Apple should buy Disney.  With Amazon building original content to supply its own Amazon Prime subscribers, the idea might not seem entirely foolish.  Especially as its connection extends to its founder Steve Jobs.  But does Apple want to broaden itself so much away from its own closed architecture of products and media store?

Of course the odds against such a deal also seem overwhelming.  Apple tends to create, rather than acquire, and their acquisition strategy, until recently has been minor in size and scope.  An Apple-Disney combo could change the whole culture of both companies.  It could also cause Apple to lose vision on technical innovation as it worked to hard to find synergies of the content and distribution model.  Still, it is interesting to wonder what if. 

Aereo Loses Challenge In Supreme Court

In a strong majority decision, the Supreme Court ruled against Aereo today saying that their business violated copyright by stealing signals.  And I must admit that I am a bit shocked.  I saw the rental of the antenna through Aereo as a proper work around to forcing a homeowner to instal an antenna in the home.  And given that the signals are broadcast free over the air, I would argue that you can't steal what is free.  For those fans of the start up, cord cutters in particular, access to broadcaster signals through their service will be denied. 

So what is next for Aereo?  Shut down completely or start to negotiate individually with each broadcaster in each demographic for license fees to connect to the network.  And given the agreements these same broadcasters make for access to subscribers to Comcast, Charter, DirecTv and other, the license fees for a comparatively tiny subscriber base like Aereo will be too high to continue the business model. 

The other question that should be asked is how will content streaming and capture be treated based on this new ruling.  Will it have a notable effect or be limited to this specific ruling?  Content is king in this scenario and ownership enables content creators to negotiate those rights as they seem fit.  This ruling strengthens that position and places content ahead of distribution. 

Cable's Dirty Little Word...Leverage

For cable networks, the key to launch multiple channels is to let the most valuable channel help drive the launch of the smaller less desirable ones.  But don't dare say that the networks employed leverage to force the cable operator to negotiate an all or nothing approach to launch the stable of channels.  In the Viacom - Cablevision lawsuit, leverage is precisely what is being argued. And the courts have agreed to hear the case.  "Should the suit continue, and be decided in Cablevision’s favor, it would set a precedent restricting the ability of programmers to force MVPDs to accept bundles of ancillary – and usually unwanted – content in order to get access to premium channels." 

Historically, though always denied, this has been the case.  For Viacom, it has helped to launch offshoots like VH1 Classics and for Discovery, launches of Health and OWN.  Deals are constructed that bundle in such a way that better deals are constructed for line-up access.  What is ironic is that Cablevision once had its share of cable networks before spinning them off into separately traded public companies.  MSG and Fuse (which was just sold to NuvoTV) was once paired with AMC, Bravo (now an NBCU brand), IFC, Sundance, and WE.  Aggregating these brands enabled all to grow and prosper.  And while the leverage word is never used, the value of the bundle was certainly superior to a la carte when license fees were negotiated.

Not surprisingly, it is also the case on the cable operator side.  Networks are packaged together and offered to consumers; like the lawsuit, households do not have the option to subscribe to basic channels a la carte from their cable provider.  It is in essence the same issue that Cablevision is now suing Viacom over.  Ironic, indeed.  Should Cablevision prove victorious in this lawsuit against Viacom, it could open up a new set of lawsuits with consumers requiring cable operators to sell channels a la carte as well.  Perhaps Cablevision should be careful what they wish for. 

World Cup Offers No Ad Interruptions

Even as a casual fan, I am getting hooked on World Cup Soccer and I am not alone.  Ratings have hit records for both ESPN and Univision.  And yet I wonder, how does that translate into revenue for these two networks? 

Yesterdays match between the US and Portugal was over 95 minutes of non-stop action with only one break at halftime.  Each 45 minute plus half had exactly zero commercial interruptions.  Sure there was ad signage around the field and occasionally a small log appeared near the score, but at no point did announcers stop to send to an ad break or announce that the last score was sponsored by someone.  It was all game all the time.

And unlike the four major professional leagues in the USA, the NFL, MLB, NBA, and NHL, the game was non-stop, non-commercial, all-joy.  These other leagues would collapse without all those ad breaks.  Yet soccer has not been changed enough by commercialization to force stoppages in play for commercials. 

No doubt fans of the sport kept the channel on between halves so that the halftime stoppage was the only chance to air traditional commercials.  And not enough of a break to air too many either.  Great for the fans but revenue challenging for the broadcasters.

Is Vivendi A Content Buyer?

With all the talk of media mergers, Reuters thinks that Vivendi might just be the company to start acquiring content companies in order to become a major media player.  "Bankers are honing pitches to buy U.S.-based TV companies like AMC, Starz, and Scripps Network Interactive, or a movie studio such as Lionsgate, said two of the people."    Of course any potential of a deal could ramp up conversations by other US players to prepare their own competitive bids.  This summer could be the start of such announcements.

Aereo Decision Could Come Within Two Weeks

The Supreme Court of the United States has certainly had some time to review their notes and deliver a decision. Can Aereo continue its business model or do the broadcasters have the right to yank away free over the air signals from a company that leases antennas? " There are still two more Mondays in the session, and the court could add a Thursday session next week as it has done the previous two."  Or they could continue to wait till the next session this Fall although the expectation is that a decision will come shortly.

I have no inside track nor have I heard any of the testimony.  In fact, I am not even a customer of Aereo; rather, I still get triple play service from our cable provider.  Simply looking at the information that has played across the media, I am firmly of the belief that Aereo will be victorious and broadcasters will still be able to get license fees from cable operators.  Until a decision is rendered, we can only wait and watch. 

There are still two more Mondays in the session, and the court could add a Thursday session next week as it has done the previous two. - See more at: http://www.multichannel.com/news/technology/no-aereo-decision-yet/375250#sthash.j6P5j5OT.dpuf

Amazon Releases The Fire Phone

• 4.7-inch screen
• 13-megapixel camera with optical image stabilization
• 2.2-GHz processor with 2GB of RAM
• Gorilla Glass on both sides
• 3 D Effects
• One-handed shortcuts
• Firefly
• MayDay
• Starts at $199 on a two-year contract according to AT&T's website 
• Starts at $649 off-contract according to Amazon's website 
• Launches July 25
• Exclusive to AT&T

Apple Offering Lower Cost iMac Desktops

Timing is everything and perhaps today's Apple announcement that they are offering a lower cost iMac on the same day that Amazon is announcing its new smartphone is just that.  While it may not derail the Amazon PR efforts, it certainly tries to keep Apple in the news. 

Some news is already speculating that the exclusivity distribution for Amazon of its new smartphone on the AT&T platform will hurt them.  I don't tend to agree and think that exclusivity, especially if the product delivers unique value, will serve them well.  Still, until we hear the official news, we can only wait and see.

As to the Apple iMac announcement, it is limited to the desktop.  More and more people have found the power and flexibility of the laptop far more important.  It may just be a way to lower inventory while more future effort will be focused on a new line of laptop computers. 

Tomorrow's Amazon Announcement

It is expected to be announced tomorrow that Amazon will extend its communication footprint past the tablet to now include its own smartphone.  How this handset differentiates itself from Apple and Android based phones remains to be seen.  One rumor is that the screen will deliver a 3D like experience.  Whether that proves valuable to the consumer remains to be seen.  It hasn't worked with past products, from gaming systems to HDTVs, but perhaps the timing and the technology is finally right.

The other news is that AT&T will be the exclusive carrier for the new Amazon phone.   Of course, the primary use of the phone is calling and texting, but consumers also like a large library of apps for games, news, weather, video, music, and other needs.  Amazon might just have its own app that further eases the transaction process along with easy access for Amazon Prime customers to all its subscription services.  Along with subscription and advertising, e-commerce is the third leg of revenue streams that Amazon continues to conquer. 

Its certainly been a long time since Apple first did its iPhone exclusive deal with AT&T; now the iPhone can work on almost every carrier.  Loyal Amazon customers could follow a similar path.  And should the product prove highly desirable, could give AT&T a nice bump in subscription.

Tomorrow's Amazon announcement could be broader than just a phone.  Updating its Kindle line of tablets, e-readers, and Fire set top box, and creating a stronger synergy of its product line could be viewed very positively by consumers and investors.  Integration, communication, and commerce could just be the buzzwords we hear by CEO Jeff Bezos.