Tivo Wins Again

After a very protracted fight, Dish finally succumbed to the law and paid TiVo for its DVR technology. Next up, AT&T, decided it was better to pay up rather than fight and is paying 215 million dollars to settle. "TiVo sued AT&T and Verizon in August 2009 alleging infringement of the Time Warp patent"; so the next question must be, what will Verizon do? Will they fight like Dish paying lawyer fees that will only raise their cost of doing business or will they rollover like AT&T and pay out a sum in order to settle. Clearly, TiVo appears to be the likely winner in that next match. TiVo also has pending litigation against Microsoft and Motorola Mobility, two more companies that must also be looking at the writing on the wall.

Of course, any time TiVo comes up in the news, speculation grows whether they may be a possible takeover target. With deals in place with a number of cable and satellite companies, TiVo has the potential to grow even larger. The timing has never seemed better.

I Know Why Movie Attendance And Revenue Are Down

With 2011 coming to a close, the latest movie industry report declares that attendance was down 4.2% and US revenue was down 3.4%. And from the Bloomberg article comes the reason for this downturn, "'It’s the movies themselves, it’s the economy and it’s all the competing technology,' said Paul Dergarabedian, president of the box-office division of Hollywood.com." So my question is, are these the real reasons for the downturn or is something else at play. Let's dive deeper.

1. It's the movies - we didn't have an Avatar this year, but we did have a Harry Potter and Mission Impossible. Were there less movies distributed in 2011 or more bad movies? Regardless, people like to be entertained and the movies are a release from reality. And yes, even bad movies get watched. Perhaps people don't care as much for 3D, but a number still attend 3D movies and pay more for that right. So I don't believe the drop in numbers is about the movies themselves.

2. It's the economy - the cause for every problem these days. But in the early days of movies, a bad economy and job loss was a reason people went to the movies. It was an inexpensive way to escape our problems, even if it was just for a couple hours. So why is the economy the culprit now? There is more here then meets the eye.

3. It's competing technology - blame on-demand, blame the internet, and you may be right. It is less expensive to watch a movie this way then at the theater. And with new releases hitting the smaller screen just 3 to 6 months after its initial release, the wait to watch is not so long. It is a reason for shifting viewership, but it also represents money back in the distributors' hands, simply through another window. But it shouldn't be blamed for lowering theater attendance. People like to escape their homes too and the movie theater offers the bigger screen, better sound, and especially that key word, "escape". Sure some indie films are direct to TV, but they are not the cause for lost theater attendance.

So why is attendance and revenue down? Perhaps, the cause is price elasticity of ticket prices. The cost for a family of four at the movies for tickets alone nears $40. In the cities, it is even higher. Could a rollback of 50% in price of a ticket encourage an increase in attendance? Perhaps a marketing test is in order. I believe that the price of tickets are too high, especially when you consider the other revenue that theater owners are gaining.

When ticket prices were lower, there was also no advertising on the screen. Today we pay a ton more to sit and watch multiple commercials. Is this revenue being separated from the revenue theater owners are receiving from receipts. Perhaps the bigger picture shows that theater owners are actually seeing total revenue growing. It's a true number I would like to see. By lowering ticket prices, attendance should rise significantly and advertisers will likely pay more for more eyeballs. A win-win scenario.

Lastly, one can not blame what you can't control. Technology is here and will continue to improve the home screen experience. But more can be done at the movie theater to keep customers coming in for more. How about more IMAX screens for popular movies. A 3D experience without glasses, and lastly the rise of the 4D experience with vibrating seats and other special effects in the auditoriium to make the movie watching experience more immersive. And make the theater a destination with more retail opportunity to buy items featured in films. As kids leave a movie, they are going to want to buy a Harry Potter wand or an Alvin plush doll or even a Mission Impossible poster. It is an opportunity that seems to be largely ignored.

It's easy to blame the movies themselves, the economy, and the technology; but the solution for theater owners is in your grasp. Don't blame, lead the change.

Perhaps Cablevision Not Ready To Sell

In an earlier blog, I mentioned that what happens between Time Warner Cable and MSG might give us some insight into whether TWC was a possible buyer of Cablevision. Given that both MSG and Cablevision are owned by the Dolans, it would give a clearer understanding of their relationship with TWC. In this world of cable, despite Cablevision and MSG now being separate companies, they are both owned with super shares by the Dolan Family. The link between MSG and Cablevision runs deep. And as it is January 2 and MSG and TWC could not agree on a renewal of their agreement. Result, MSG is off the air on TWC systems. Thus there must be no likely relationship brewing with Cablevision.

This fight, like so many before it, always comes with much name calling on both sides, across other media, print, radio, and the web. The fact that an agreement was not reached and the channel was pulled off the air simply demonstrates that the Dolans and TWC are not as cozy as one might have hoped. Since no hint of leniency was shown for MSG post agreement, it is less likely that TWC and Cablevision have been having serious discussions about a possible acquisition.

So Ranger and Knick fans living on TWC systems will not be seeing their teams for a while. How long depends on how far apart and how acrimonious the two sides are too each other. The longer MSG is off the air, the less likely TWC is a buyer of Cablevision. It is that easyto graph.

And with a rudderless Cablevision, without Rutledge to steer it, and no successor in mind, one wonders what is next for Cablevision. Is there another buyer in sight or will they simply drive forward on automatic for a little while longer? Stay tuned.

Early 2012 Media Predictions

With the holidays fast approaching and a desire to beat others to the punch, I thought I would put together some media predictions for 2012. Some may be too obvious, others are a little more out there, but only to help my win-loss percentage! Agree or disagree, it's better to have tried to predict and fail, then never to have tried at all. So here goes.

1. Time Warner Cable drops MSG from its line-up on January 1. No contract renewal will come quickly although eventually one should happen. Should TWC and MSG agree to keep the signal on while negotiations continue into 2012, then it foretells my second prediction.

2. Cablevision is officially put on the sale block. The likely bidder is Time Warner Cable, but don't underestimate Comcast. And what about Verizon? Would the DOJ and FCC even let them bid. Let me also put under this prediction that if not Cablevision, another cable operator will certainly be acquired. Could it be as large as Cox Cable? Would Charter put itself for sale after picking up Tom Rutledge? But there are also smaller operators that might just be ready to give up the fight. Someone is going down.

3. Every prediction seems to include Apple and mine is a no brainer. There will be an iPhone 5 and iPad 3 in 2012. But I don't believe we will see an HDTV from Apple; rather, I am banking on bigger improvements to their Apple TV product. Let this little box do all the dirty work for any HDTV.

4. RIM/Blackberry gets sold. They have lost the mobile battle and need a new owner and leadership to rebrand. With no major enhancements to their product line planned for next year, it's like the white flag is already being waved. So who buys them? Google bought Motorola, so maybe Amazon needs to pick up RIM.

5. Hearing that the Super Bowl will be streamed for free next year, will cause the other major sports groups to do the same. The NBA, NHL, and World Series should all see their final games live streamed in 2012.

Okay, now a couple of more outlandish predictions. Anything is possible and here's a couple to make you think.

* A cable operator buys a wireless provider. As a wired distributor of content, the next space logically seems wireless. WIFI coverage may not be enough and perhaps there is new business opportunities in buying someone like T-Mobile or perhaps even Sprint. Would Comcast or TWC seem the likely party, absolutely. They could easily move their marketing from a triple play to quad play,offering cable, hardwire phone, broadband, and a wireless phone contract.

* There are too many discount web businesses, with Living Social and Groupon leading the list. Can they all survive or will one quickly exit? I've lost interest in checking everyday for deals.

* Another cable network loses its independence and merges with a bigger group. Who will it be/ I don't want to say, but consolidation continues to push forward and content distribution will only grow as big fish eat up the little fish.

* Barnes & Noble continues to diversify and improve its merchandising strategy in-store and sees a significant boost in retail business along with its growth with the Nook as well.

* Lightsquared figures out how to exist without hurting existing GPS signals. It will help to push additional competition in the broadband space.

So there they are. I hope you enjoyed reading my ramblings this year. If you like reading what I write, please share the link with your friends. To all, a safe and happy holiday. No plans to blog again till after the New Year. Happy and Healthy!!

Sports Networks Will Never Allow Cable Tiers

Let's just put it on the table, no major sports network will allow itself to be repositioned onto a cable sports tier. Not now, never. The latest contract negotiation involving a sports network is brewing between MSG, home of MSG networks and Fuse, and Time Warner Cable.

Come the end of this year, the contract is up and plans are underfoot to drop it from basic. Already TWC has dropped its sister network, Fuse, as a sign of things that could come if an agreement is not reached. It seems they are miles apart, MSG wants a 53% increase, TWC is willing to go up to a 6.5% increase. Of course at the end, an agreement will be reached and any increase will be added to their customers' cable bill. Don't even think that TWC or any cable operator will simply absorb that kind of a fee increase; ultimately, the consumer will pay more in their monthly bill.

TWC CEO Glenn Britt has an idea, "Shifting sports channels to a separate tier, as Mr. Britt said, would allow cable operators to shift the cost for sports channels to those sports fans who want the programs—and cut the cable bills for nonsports fans." Not a new idea and certainly not one that a sports programming network would even consider. The highest license fees for networks are with the sports networks. That includes ESPN, MSG, and others. Their monthly fees are based on full distribution across the lowest level of service reaching every household TV. Should penetration fall, those fees typically increase proportionately higher than the lost percentage. So placing sports channels on a tier that reaches half the total audience could result in fees more than double the amount than full distribution. A $5 monthly license fee could be $15 on a tier. Add together all the sports networks being placed on a sports tier and the cost to the consumer now becomes a luxury expense. The price elasticity model won't simply bend, it will break.

But it's not just with ESPN or MSG. Comcast Cable is rebranding its sports network Versus into NBC Sports Network. There is no way that they will want their channel on a tier either . And what about TNT, an entertainment network that also plays NBA games. They too charge higher fees than other networks to cover their sports costs. You also have professional sports with their own sports network, NFL and MLB. And Tennis Channel just won a suit to be repositioned on basic on Comcast systems. The thought of repositioning all sports networks from basic carriage to a separately priced tier may sound like a legitimate idea, but the cost from the loss of subscribers will price this package of sports networks to a level that most consumers won't purchase.

In fact, it may be more likely to push them to the web. Consumers will buy a la carte their NFL or MLB game and stream it through an app or their Xbox. They may watch less, but they will also pay for only what they really want to watch. And encouraging more cord cutting and driving subscribers further away from cable is a bad business decision for cable operators.

Is Gov't Blocking The AT&T - T-Mobile Deal A Good Thing

When I re-tweeted this link to the SAI article, I received a number of comments that agreed with the DOJ decision to block this purchase. Good news for the consumer, more choice were cited. But is that really true? T-Mobile is the fourth and smallest of the major players; Verizon and AT&T already own at least two-thirds of the market. With Sprint in third place and with half the customers of AT&T. So did the government do us any favors blocking this merger?

Without T-Mobile, AT&T remains number two behind Verizon. T-Mobile, struggling already, has two alternatives, find another buyer or drop out. They may have gotten monies from AT&T from reneging on the deal, but they have a long way to go to build out and bulk up. They need help. Should that buyer be the number three carrier, Sprint, would the DOJ nix that deal as well? The argument of loss of major competitors still holds true, it just brings Sprint up closer to AT&T although it still would keep them third place. If competition is the concern, then the argument to nix this deal as well still holds.

And what if T-Mobile decides it can't remain in this mobile world without a partner? What if they simply drop out and break up to smaller competitors? Competition is still reduced and all the DOJ did was hasten the death of T-Mobile. So despite the comments of the government actually looking out for the consumer, the likelihood remains that we still lose T-Mobile. The only difference, AT&T doesn't capitalize on the assets of a purchase.

The author of this article makes another good point. "Of course, this is (basically) the same government that still grants monopoly licenses to cable and phone operators in most regions, thus giving massive companies MONOPOLY control over those markets. And given how much most people hate their cable and telephone companies, if the government wanted to protect us from any monopolistic communications-company abuses, they could have started there."

Communication exists both in the carrier space and broadband world. With wireless hotspots growing around the country, competition for spectrum still exists. Technological changes continue to find new competitors to the space. Let's not forget that Lightsquared is still out there seeking approval to compete as well.

So yes, I agree that with the author that the government's decision to block this merger was wrong; inconsistent given the monopolies that it has already allowed to flourish, and not likely to change the competitive landscape because it kept a fourth competitor from leaving us sooner rather than later. In the next couple of years, we will likely still see the big four become the big three carriers. DOJ simply slowed down the process of change.

Ex-Cablevision COO New Charter Cable CEO

It must have taken a lot to cause Tom Rutledge to finally leave the roost at Cablevision and to quickly turn up at Charter Cable. And one has to wonder when his right hand man, John Bickham, will once again turn up at his side. As they say, third time is the charm, right.

But what caused Rutledge to so quickly depart from Cablevision after almost a decade of service? So far I have heard a few possibilities. One is that as a family business owned by the Dolans, the COO position was the highest role he could attain on the ladder. He simply isn't "family", unless he married into it. And with the programming networks, AMC and MSG, sold off, he had less to control. Perhaps Charter's offer of a CEO role and more "ownership" was compelling.

Another possibility brewing was that there was a big fight internally and a riff that made dealing with the Dolan's more difficult. Another newspaper has speculated that Rutledge was fighting with Jim Dolan's wife, Kristen, a marketing executive on the senior team. If true, I can only say that family and business never mixes well. But I personally find it unlikely that this is the cause of his departure. They have worked together from the beginning and it is hard to believe that any disagreement would have caused Rutledge to walk away. It just doesn't seem like his personality.

And the third possibility is that Cablevision has quietly been exploring a sale to another cable operator and Rutledge's days would be numbered if he stayed. That seems especially true if the new owner would be Time Warner Cable, the company he was at before joining Cablevision. That John Bickham also left a month earlier seems to put more credibility into this third scenario. Should Bickham actually join Rutledge at Charter Cable, I think that is more proof that this possibility has validity.

The truth will continue to emerge in the coming days and weeks. Rutledge has been described as a strong leader and he certainly led Cablevision to great success under his tenure. His hiring at Charter spells great potential for them to finally emerge as a cable leader. Despite being larger than Cablevision in number of subscribers, Charter lacks a clear center, both geographically and managerially. A Rutledge led team is good news for Charter's future.

If You Understand The Digital Distribution Platform, Can You Build Better Content?

Certainly the future of print lies in digital distribution. The rise in penetration of tablets and e-readers with digital content is that proverbial chicken and egg scenario where one continues to drive the other, perpetually linked. And this latest piece of news demonstrates the commitment that how well this digital content gets purposed in a digital form is just as crucial.

"Rodale is expected to announce that it has hired Anthony Astarita as senior vice president and general manager for digital and brand development. Before joining Rodale, Mr. Astarita served as Barnes & Noble’s vice president and general manager for e-commerce and digital products." It indicates to me that Rodale understands that delivering content to a digital platform is not enough. Maximizing the value of the new space requires understanding its strengths and weaknesses more completely. Bringing someone from the platform side can help Rodale reshape and deliver the content in a way that enhances the value of the content and fulfills the expectations of the viewing receiving it in this different form.

And I don't see this hiring as a means for Rodale to get into the hardware space. It is not their business nor should it be. Theirs is to drive content across multiple platforms and hopefully to be agnostic about which one the consumer might ultimately choose to view its content on. With Apple, Amazon, and Barnes & Noble vigorously competing along with other CE manufacturers, it is not in Rodale or other publishers' best interest to join this side of the fight.

The Nook and other tablets are not simple replacements for a magazine or newspaper. These devices bring more capabilities and more opportunities and this hiring should help Rodale and others to make its content more compelling, more interesting, and more necessary. Knowing the hardware side means faster loading, streaming, viewing options, interactivity, and other technological feats to improve the experience. And that can drive more subscriptions and more ad revenue.

Cablevision For Sale

Cablevision, the fifth largest cable operator in the US, is a very successful company. From its humble roots, it has grown and prospered with innovative marketing and an unabashed style of management. They coined the triple play campaign of cable, voice and data at $99 and heard initial jeers from other cable companies. But the campaign was wildly successful and soon these same naysayers were following Cablevision's marketing strategy. Even with Verizon FIOS in their neighborhood, they never wavered in their competitive fight.

At one time, they were operator and programmer with ownership of networks like AMC and MSG. But now each have been spun off into standalone, publicly traded companies. And Cablevision sits as simply a cable operator. So the loss of two executives, John Bickham, and Tom Rutledge, raises speculation that Cablevision may finally be for sale...for real this time. With Jim Dolan managing his primary interests of music and sports under the MSG Network, it may just be easier to sell the operation side.

And who might be interested? Time Warner Cable has longed for this operation since it has owned New York City. Other investors may simply be waiting to come in and snatch what has long been considered prime property. Is Cablevision for sale finally. The answer may shortly come out.