Charter Cable May File For Bankruptcy

As cable distribution gets more competitive with both telcos and satellite competing with cable operators, and customers preferring broadband to cable for entertainment, Charter must decide what to do next. Do they use bankruptcy protection to revise their strategy and revisit their costs in order to renegotiate better contracts, or do they sell off their cable properties to pay off their creditors? Paul Allen has had a tough time turning Charter into a profitable venture. "Allen, the co-founder of Microsoft Corp., has held a controlling stake since 1998 in the company, which hasn’t turned a profit since going public a decade ago." Is this unexpected for Charter, NO; but it is sad to see another cable operator bite the dust. The landscape is filled with many cable companies no longer part of the landscape: Adelphia, TCI, Suburban, Lenfest, Helicon, Prime, Falcon, Tele-Cable, Wometco, and many, many, many others. Goodbye Charter.

Is the Web A Radio Killer Too?

It's been well noted that the web has caused great frustration to traditional media, print and TV especially. The web has also affected retail as well, with brick and mortar stores like Virgin Records unable to compete with digital downloads. So it should not come as such a surprise that it has affected radio as well. "Los Angeles station Indie 103.1 will cease broadcasting over the air on Thursday, according to on-air announcements, but will continue to broadcast via the Web. " While other radio stations have enhance their reach by also streaming their signal over the web, 103.1 is switching over completely from airwaves to web. Cost may be a factor, declining audience may be another. Certainly there is more to the story...

Hulu, Joost, and Others to Stream Inauguration

While I tend to talk about how streaming video content will change cable's subscription model for access to TV channels, I will make an exception today. While networks have been walking a fine line demanding fees for carriage and then offering the same content free for streaming on the web, it is sometimes in the public good to agree with that irony.

I am speaking about next weeks coverage of the inauguration of Barack Obama. Last night, I asked my son's teacher if they were planning to watch his swearing in and speech in their classroom. She replied that not every classroom has cable TV access, but that they all do have internet access. And so the power of technology will allow these students the ability to watch live what is sure to be remembered as an historic event. "Hulu, the Webcaster jointly owned by News Corp. and NBC Universal, will carry a two-hour stream of Fox Broadcasting's live coverage of the swearing-in ceremony from noon to 2 p.m. ET." And while today it is possible to tape the coverage and replay at a later date, technology has provided us the ability to watch it live through multiple devices. In the days of Kennedy, broadcast or radio were the only means to connect; today, the rise of cable and web access has enabled even more accessibility to this historic event. "'In 2009, the word (for all-news outlets) is ubiquity,' MSNBC's Griffin said. 'We're in places where you don't normally see us.'"

For my son, and other students around the country, I hope TV or web access is available at your school to take advantage of and be part of what is sure to be a long remembered experience for this Country.

SAG Still Squabbling - No Strike Authorization Ballot Yet

Infighting can be the death of any family or any business. The same holds true for the Screen Actors Guild Union. Keep their head negotiator, or fire him, the membership is clearly at odds within their organization but their course of action. "A meeting of the full board of directors of the Screen Actors Guild, which lasted more than 30 hours on Monday and Tuesday, concluded without setting a mailing date for a strike authorization ballot and without the removal of controversial head negotiator Doug Allen." Nor is SAG is negotiation yet with AMPTP with whom they have not had a contract since last June. The only meetings are internal and even those ones can't find agreement.

The course of action is painfully obvious. Analyzing the current economic environment, reviewing the terms of the current signed agreements with other unions, and agree to structure an agreement that emulates their term AND expires at the same time as their agreements. The greatest revenue is still in the hands of traditional distribution and their is no missed opportunity to follow a wait and see strategy. New media is still a nascent business and a few years won't hurt you economically. Structure your new terms to expire concurrently with AFTRA or the Writers Union or both and utilize the leverage of this partnership in the next negotiation. But for now, stop threatening strike and sign a short term contract.

Movies via the Internet, How Can VOD Compete

It is no surprise that Blockbuster is copying the Netflix business model and bringing streaming video to their consumers via the web. But it is also clear that Netflix is light years ahead as the leader of the field and Blockbuster ranks an also ran. As Netflix announces additional partners, Blockbuster is just starting but can they catch up?

It gets me to thinking, where is cable and VOD in this discussion. Netflix does not have the full library to stream and Apple is a transactional business. Cable, on the other hand, provides a huge library of TV and movie product, some free, some with monthly subscription to a premium channel, and the rest transactional. How can cable and VOD maintain its lead and market share in this ever changing distribution pipeline.

I have a number of suggestions:

1. I believe that Netflix and Blockbuster subscribers are also film lovers and most likely also cable customers. Research should be done to determine that overlap. Would a satisfactory experience with one service lead to the consumer to drop the other?

2. Improve the set top box - better search, faster response, cleaner look. Make the set top box smarter so that on demand viewing doesn't switch off if the DVR in the box is recording. And make it easier to move content from one TV set in the house to another. The box is there, adding access to the internet puts you in the game, too.

3. Trick features on VOD films. Sure, disable the fast forward when the ad is in the pre-roll, but in movies especially, enable chapters markers so that consumers can move forward to sections of the film they want to watch rather than fast forward through the entire stream.

4. Content is King. And exclusivity on libraries of content can be merchandised back to the consumer. If you own it, they will come.

5. Interactivity. And when content is universal, how you differentiate it, matters. Adding trivia under a movie, enabling e-commerce, contests, etc. can all be effective tools to make the viewing experience unique to cable.

So as the talk moves to video streaming on the web, remember that cable is already bringing HD quality VOD content to the big screen. It just needs to be better marketed and monetized.

Cable-Ready vs. Internet-Ready TVs

Just a few years ago, all the talk was about cable ready TV sets and cablecards to bypass set top boxes and get direct connections from TV to cable programming. But today, those conversations are barely heard; instead, the talk is around TV manufacturers building sets that connect directly to the web. And while they don't bypass cable programming in the process, they certainly minimize their value and exclusivity, enabling content off the web to be sen on the big screen. Today, most of that content (UGC mainly) is poor, but the rise of Hulu, and other sites with broadcast and professional content, bypasses the linear channel and VOD for what I guess can be called WOD (web on demand). And that will change the business model - "Once the average living-room TV can tune in those sites as easily as NBC or Comedy Central, viewers may be hard-pressed to justify paying $80 a month for the few shows or networks they can't stream for free from the Net. And cable and satellite operators may find themselves having to cut rates after having increased them steadily for years."

The other discussion that has been proposed for years by the FCC has been a la carte pricing, enabling the consumer to purchase individual networks, rather than bundles of programming. "The good thing is technology may soon make this debate obsolete. While channels may not be offered a la carte anytime soon, in many cases, the programming on these channels already is. Take TNT—episodes of its original shows The Closer, Saving Grace, Leverage, and the soon-to-premiere Trust Me can all be seen on TNT's website. Other broadcast and cable networks also offer much of their content for free either on their own sites or other sites." The rise of "WOD" programming and networks (Next New Networks, My Damn Channel, etc.) would indicate that any channel can escape the clutches of poor positioning or bundling on a higher priced tier of networks to connect directly to their viewer via a web network.

The biggest obstacle facing a full blown access of networks on the web, whether streaming or on demand, remains the current cable model of subscription. While the niche and newer networks see access as more important than subscriber fees, the mainstay networks would be hard pressed to lose that substantial revenue source. Viacom and Time Warner just renegotiated their agreement for fees at the beginning of the year. And cable operators, seeing more broadband usage from their customers, will most certainly raise their fees to offset a loss in cable revenue.

Web access is a trend that is not going away. What cable nets did to the broadcast model, web nets will certainly do to the cable model. Remember, early cable programming wasn't strong either, but it did get better. So too will web programming.

Let’s Invent an iTunes for News

Not for nothing, but haven't I been saying the same thing in older blogs. Perhaps I have been taking it from the device side, hoping that Apple would devise a Kindle like product with its own special touches; but at the same time, suggesting an ability to subscribe and receive daily or weekly newspapers or magazines downloaded to the device. But to the NYT credit, an iTunes app would enable ownership, not only to the device, but to the PC as well, so that one subscription could be shared and downloaded to other members of the family. Like iTunes does with the iPod, allowing multiple devices to share music and video content. Why shouldn't an iTunes print category do the same thing.

And speaking about Steve Jobs, David Carr writes "Remember that when iTunes began, the music industry was being decimated by file sharing. By coming up with an easy user interface and obtaining the cooperation of a broad swath of music companies, Mr. Jobs helped pull the business off the brink. ... Those of us who are in the newspaper business could not be blamed for hoping that someone like him comes along and ruins our business as well by pulling the same trick: convincing the millions of interested readers who get their news every day free on newspapers sites that it’s time to pay up." Jobs made it okay to purchase content and not simply take it from a P2P site. Now if only Steve Jobs and Apple could pull the same feat with printed content.

Everything to Connect to the Web, But What About Interconnectivity?

As the Consumer Electronics Show comes to an end in 2009, all the buzz seems to be connectivity to the internet, but what about interconnectivity. Does every device need to pull from the web, or will there be networking that remains inside my home. And while it is nice to pull movies off the web to a TV set, there is some content I already own on my PC that I want to move easily as well. For music, home movies, even photos, how can I best network my home to take advantage of this content. Do I need to push all this data first out to the web before getting back to my home. Linking to the web is nice, linking to my own home network is nicer.

And what about the content being generated by my own home. How about the refrigerator pinging me that I need to change the water filter, or keeping a grocery list of items inside that are running low. How about remote connection to my HVAC system so that I can adjust temperatures if I forgot to reset my temperature gauge when away from the house; or pinging me on my cell phone if the alarm goes off. How these devices converge and interact is perhaps an even bigger win for technology in the coming years.

Is Online Video Too Fragmented To Survive?

A recessionary economy, lower ad spending, and too many viewing options hurting the entire industry. In the good ole days, the choices for ad spending were limited - print, radio, TV. And inside each of these buckets were limited choices; for TV a handful of broadcast channels, for print, a handful of newspapers and magazines, and for radio, AM or FM stations. Today, technology has lowered the barriers to entry in each of these arenas as well as enable new sources of content distribution to emerge. In TV, there are many cable, VOD, and now internet streaming choices; In radio, the rise of satellite with SiriusXM and internet radio. And in print, the internet has hurt the printed product. But the ad dollars may not have grown as quickly as the players and getting your "fair share" of the media buy is harder and harder. In addition, by lowering the barrier to entry, technology has dealt a heavy blow to the subscription model. Where companies have enjoyed two streams of revenue, the adage why buy the cow if the milk is free comes to mind; why buy a subscription if it is free to view, read, or hear somewhere else.

This proliferation of content has created what many call the "long tail", scratching away at the mainstays and developing niches and even "sub" niches of categories. And while there is literally something for everyone to read, hear, or watch, these content specialty stores may be too limited in the long run to survive. "BitGravity CEO Perry Wu said time was already up for many of the smaller online video development and distribution studios: 'We work with hundreds of content companies and to be honest, many of them won’t survive.'" The classic product/industry life cycle theory says that eventually it will move from fragmented back to fewer, meaningful, larger segments over time. And if advertising isn't paying the bills, these smaller content creators will either merge or die.

Another popular maxim is that the big fish will eat the little fish and perhaps that is what the industry expects to happen. Already broadcast companies like CBS, NBC, ABC, and Fox have acquired cable networks and websites. Cablevision and Fox own newspapers; Magazine publishers are building web portals. It seems their is more consolidation to come. But is it aggregating fast enough and are these big box companies using their advertising arms to sell across platforms or are they not synergized and find themselves believing that each arm should sell advertising independently of its other pieces.

So is it already too fragmented? Yes. Cable Operators have watched the many become the few and independent cable networks are purchased by the bigger companies. Magazines are closing and newspapers are replacing print with online editions. How much more growth is in new entrants to the internet stream or will innovation start coming from inside the existing big fish. Hey, Hulu came from NBC and Fox to challenge You Tube. I can assure you this, it's going to be an interesting ride.