Dish Might Finally Get To Buy More Wireless

Dish Network has been wanting a bigger stake in wireless and has failed in its last two attempts.  No Sprint and no Clearwire acquisition to show for all its effort.  But they might not strike out and could find themselves picking up LightSquared.  "According to documents filed with the U.S. Bankruptcy Court for the Southern District of New York, a group of LightSquared’s lenders have called for an immediate auction of the company, naming Dish as the 'stalking horse' bidder for the spectrum."  Whether Dish ultimately wins the final bid remains to be seen. 

At the same time, I expect that Dish will still be pursuing another cellular player with T-Mobile seen as the next target.  Such an acquisition would reshape Dish into a player with the resources to compete against other telcos and cable providers.  Of course, there are some that hope that Dish and DirecTv combine to take on the cable players.

Netflix Growing, Just Not Fast Enough For Investors

While Netflix continues to grow, it missed analyst expectation on subscriber growth.  "The company finished the quarter with 28.6 million paid domestic customers, a shade behind Time Warner Inc.'s HBO, which had 28.8 million as of March 31, according to SNL Kagan."  Still, Netflix is growing revenue Having "reported profit of $29 million, or 49 cents a share, a nearly five-fold increase from the same period a year ago."  The stock market is not what you have done but what you can do and investors are worried that subscriber growth will slow and profits will decline as Netflix finances more original content for its pipeline.  Yet Netflix should shortly pass HBO in total subscribers.

Like HBO, Netflix relies on subscription revenue to grow.  Both must handle churn and marketing support to retain current customers.  But Netflix might be able to add an advertising revenue stream if done in a non-intrusive way.  While I am not suggesting pre-rolls on streaming content to subscribers, perhaps the Netflix website could expand to showcase native and display advertising as well as previews with pre-roll.  Extra featurettes to shows and other added content could potentially come with sponsorship advertising.  And certainly future licensing of original series to other platforms could return some of the investment from the production.  These may be outlier advertising efforts but it augments the revenue growth without interfering with subscriber enjoyment of their content views. 

Time Warner Cable Pushes Aereo

With a retransmission fight looming and the threat of CBS being dropped from certain Time Warner Cable systems on August 1, TWC is offering a solution, augment your cable carriage with the Aereo service.  "While Time Warner Cable does not seem ready or willing to deploy Aereo-like technology, a spokeswoman, Maureen Huff, said Sunday that it would recommend Aereo to its New York subscribers if CBS was blacked out." 

It may be a veiled threat, though it has repercussions.  But be careful what you ask for TWC.  If consumers get so tired of these same negotiations year in and year out with networks, they might just drop cable service all together for Aereo.  Plus with the rise of original series on Netflix and Amazon, consumers may be finding that they can do without their cable subscription. 

Aereo continues to expand with plans to launch in Utah in August even before their Chicago launch in September.   Before we know it, Aereo will be across the country and neither CBS or Time Warner Cable will be happy with the way this disruptive technology is taking over. 

CBS, Inc and Time Warner Cable Clash Over Retransmission Fees

Time Warner Cable's current license fee agreement with CBS, Inc. expires June 30 and cable customers might find themselves without CBS and its owned cable networks two weeks from now.  "At issue is TWC’s right to carry the CBS television network and affiliated local stations including those in New York, Los Angeles, and Dallas-Ft. Worth (where TWC is the dominant local cable system operator), as well as the Showtime suite of networks, the Smithsonian Channel, CBS Sports Network and the former TV Guide Network, now called TVGN. CBS acquired a 50 percent stake in TVGN earlier this year (the other half is owned by Lionsgate) and acts as its operator.  The big hammer in these negotiations is CBS Sports, where NFL games are set to air starting in September."
Essentially, CBS wants more for their content and TWC wants to pay less. 

TWC hasn't been the first to have acrimonious negotiations with a broadcaster and they won't be the last.  Each time these agreements begin to expire, posturing begin and we as consumers are faced with ads criticizing the other for lack of good faith.  Here is the latest example:



One thing is clear, at some point, now or months later, these two sides will settle.  But what if Time Warner Cable decides to follow the model that Aereo has designed, building farms of mini antennas to capture the CBS broadcast signal and deliver to the consumer. It doesn't answer the problem of the the other cable networks at risk of being dropped but it does lower the cost of operations.  Perhaps a financial model is due to determine what savings might come by converting to the Aereo type model.  If significant, it could lead to a different balance of power.   Of course building farms if antennas would take a good deal of time and resources and consumers would still be without the content for a period of time.  That could lead to more drops of service before such a plan could be put in place. 

Of course these negotiations are more complicated then just right of access to programming.  "These deals also include other multi-platform aspects such as video-on-demand rights and TV Everywhere distribution rights."  Especially with VOD, Aereo can't offer this content.  But the amount of increase, whether a few pennies or dollars, add up quickly and are ultimately passed through to the consumer.  And it is the increased costs of cable service that continues to push consumers to services like Aereo and other OTT options like Netflix and Amazon. 

Apple TV - Partner vs. Competitor To Cable

It has been said that if you can't beat them, join them.  In the world of OTT, companies like Google, Intel, and others are trying to create competitive platforms to compete against cable with lower subscriber costs and better functionality.  But cable operators have a tight grip on programmers with license fee deals and growing revenue, despite drops in cable subscription. 

And while it is possible to get lower rated and off the chart programmers to make deals with the OTT overbuilders, the top networks may be reluctant to lose sure cable dollars for digital pennies.  Apple may have seen their own attempts to acquire programming fruitless and now seems to be aiming toward partnership with cable operators, not competition.

"Instead of trying to create an Internet-based pay-TV service, Apple is going to attempt to turn pay-TV into another application.... (New York Times writer Brian) Stelter says Apple is talking to big distributors like Time Warner Cable about doing applications for the current Apple TV, which is a little box that gets plugged into the television."  For me ideally, that would mean that I could replace the current cable TV set top box with an Apple TV box and get all the functionality of DVR, on demand, and more in a much more improved interface.  No more tree and branch interface, rather the ability to search, scroll, select, record and using my iPad, iPhone, and iPod and watch on these devices or on my big screen TV set.  How easy and how cool!  Add to that the ability to watch authenticated programming outside the home in a TV Everywhere world. 

Consumers could rent Apple TV devices from their cable operators or easily buy and install on their own.  As an added product extension, equip these devices with a hard drive to offer DVR recording along with N-DVR option.  Along with all the other apps that an Apple TV can offer and you have built a very strong reason for consumers to stick with their cable operator too.  So I am eager to see how Apple proceeds and which cable operators embrace this technology partner. 

Aereo Still Disrupting Cable Industry

The broadcasters are unhappy with Aereo. Aereo is taking their signal and not paying them a retransmission fee or providing any data on consumer usage.  So broadcasters can't sell a higher advertising reach or receive additional revenues.  And broadcasters believe that Aereo is reselling their service to the consumer without their consent.  And in a majority ruling the federal courts have sided with Aereo. "A New York federal appeals court has denied a bid by the major TV broadcasters to shut down New York-based tech startup Aereo, which picks up free, over-the-air TV signals and streams them onto the Internet." Aereo is disrupting normal business practices and if they are allowed to continue, broadcasters may be at risk of losing all their license fee revenue from cable operators. 

So is it stealing to take something that is offered for free over the air and repackage it, bundle it into a bigger package, put an interface around to enable programs to be recorded and viewed, enable it to be watched across multiple mobile devices, and sell it to consumers at a low price?  Aereo certainly adds unique incremental value to the broadcaster's antenna service and serves an audience seeking a low cost alternative to cable. 

Unfortunately, the Aereo win is the broadcaster loss.  Broadcasters in market are unlikely to offer broadband access when they are getting a fee from the cable operators in the DMA they serve.  And cable operators may have clauses in their agreements with broadcasters that actually prevent them from offering any kind of competitive Over The Top (OTT) offering of their signal.  If they don't cable operators might likely drop broadcasters that attempt to offer their own OTT access. 

So the likely next round for broadcasters and Aereo will be the Supreme Court.  "As of now, Aereo’s service is legal, according to the U.S. Second Circuit Court of Appeals."  Should the Supreme Court here the case, the case might just revolve around the FCC and the requirements of broadcasters to offer their signal without charge to consumers that seek access.  For those not willing to place their own digital antenna in their home, Aereo offers additional functionality for a fee, and that added value is what the consumer ultimately pays for.  As long as Aereo uses individual antennas for each account, they may ultimately be the winner.  And it may be up to broadcasters to negotiate an agreement to access usage data for a direct connection, no antenna farm required.

Hulu Might Still Sell A Piece To Time Warner Cable

Fool me once, shame on you, fool me twice shame on me is the adage and Hulu has delivered.  For the second time, they have pulled themselves off the For Sale block and disappointed a number of investors, including DirecTv.  And for all that work, these prospective bidders lost not only their time and money, but also their intellectual property as to what they might do with Hulu once acquired.  And so it goes.

At the same time, Time Warner Cable (TWC) may still have an opportunity to buy a piece of the business.  As the Hulu strategy may be all about offering a competitive streaming subscription model to cable, I am not quite sure how TWC could benefit other than as an investment for revenue to the bottom line.  Still, they might have something up there sleeve that adds more value to the TWC business model.  Such a partnership could happen with cable operators to stream through their cable box to enable greater content inventory to be offered to subscribers.  But that doesn't necessarily require an investment stake. 

It's Not TV, It's Netflix

Where broadcast couldn't swear or show nudity, HBO came along with quality programming that crossed that line while it delivered growing audiences.  By going against conventional wisdom, HBO proved that what they offered went beyond anything offered on television.  But since then, HBO has faced increasing competition, both from other premium providers like Showtime and Starz, and cable networks like AMC. 

But consumers are now moving beyond cable to streaming media and Netflix is proving itself as the go to source for streaming video content.  And according to Liz Shannon Miller of Paid Content, "Orange Is the New Black confirms: Netflix is the new HBO".  Truth is Netflix has been pushing the envelope, both with original content and renewals of a show like "Arrested Development."  Their push to delivering more content, both syndicated and original, has enabled them to grow their subscriber base and compete directly against premium content and basic cable.  

For consumers seeking content that follows them, a TV Everywhere approach, Netflix enables consumers to directly buy a subscription.  HBO, on the other hand, offers its HBO GO feature, but only to authenticated cable subscribers.  Good for cable operators but bad for consumers that don't want that buy through.  

Is Netflix the next HBO as Miller suggests.  For me, it may be too soon to tell. Amazon, Hulu and others are in this space too.  But I like the direction that Netflix has taken in driving original content to their platform.  It worked for HBO, it worked for AMC, and it will continue to drive traffic to Netflix as long as the quality remains high.

Can Radio Shack Survive?

The Radio Shack chain has been a perennial establishment when kids were building electronics and transistors and other quaint products.  But with the rise of computers and smartphones, radio shack has become less relevant as kids no longer build their own telephone or light/buzzer device.  Today, Radio Shack is seen as a place to sell smartphones and other small electronic appliances.  It seems the 21st century has left Radio Shack behind.

"RadioShack Corp. said it is in talks with investment banks on ways to bolster its finances, as the money-losing electronics chain works to remake its image and reverse sliding sales."  As a century old business with a century old name, the first course of business for Radio Shack is a name change.  No matter how you cut it, the name Radio connotes old technology and not the place to sell the latest and greatest.  Identities are hold to change but Bell Atlantic successfully became NYNEX and finally Verizon and Boston Chicken became Boston Market.  It is apparent to me that step one is a name overhaul and a strategic decision as to what kind of technology store you want to be.

Steps are already being taken, according to the article, to update the merchandise and modernize the store, but it needs a name change to complete the transformation.  It also faces the same issues that Best Buy and others face, competition from the web and price comparison shopping.  A new name, modernized stores, and better merchandizing just might draw a crowd to come in and keep visiting.  But I believe it can be done.