Is the FCC Redefining Television

The Federal Communications Commission is preparing a proposal which could help the fledgling OTT industry by treating certain online video services like cable and satellite TV providers. The move would help the online services gain cheaper access to major network programming and could allow them to become stronger competitors to the dominant pay-TV providers like Comcast.  Gaining rights to popular channels has been a major hurdle for online TV services. Sony Corp. and Dish Network (as previously reported here) are among the companies considering Web-based services to compete with traditional cable and satellite operators. The big issue and cause for some OTT failures like Intel’s exit from its “OnCue” service, is in securing highly coveted programming from ESPN, NBCU, AMC and others is that the networks typically are owned/controlled by the larger MVPD’s (Comcast, Time Warner, Cablevision).

FCC Chairman Tom Wheeler was asked about the matter yesterday and stated that a proposal is circulating among commissioners “is probably a bit of an overstatement.” Nonetheless the industry analysts are buzzing. “This is a very big deal,” said Richard Greenfield, an analyst for BTIG. “It could pose very significant challenges to the traditional cable TV bundle.” Paul Gallant, with Guggenheim Securities, said in a note today, that broadcasters such as CBS Corp. and 21st Century Fox Inc. would potentially benefit from having more buyers for their programming.

According to an unknown source by Bloomberg, the change would affect online video providers that offer a cable-like programming service on a schedule, and not on-demand services like Netflix, which allows subscribers to watch videos whenever they want. But it could revive the controversial online video service Aereo, which allowed subscribers to watch broadcast TV channels on their computers and Internet connected-TVs.

 

Although for now this may just be chalked up as a rumor, it is one that would have a broad impact on the business as it is today, a  move which could significantly broaden competition in the MVPD market. More: FierceCable 09/30/14 - Rumor mill:Aereo-like platforms may be given program licensing rights by FCC and/or Variety.com09/29/14 - FCC Wants Some Online Providers to be Treated as Cable Operators

Aereo - SCOTUS rules in favor of the Broadcasters

Aereo - Time to modify the business plan?

After my recent post about Aereo & the NFL, I felt it was worthy of a follow up on today's Supreme Court decision. I've always seen  Aereo is an industry disruptor but the question remained, was it legal or were they skirting the law? The verdict is in and the Supreme Court, in a 6-3 decision, has ruled that Aereo's technology is indistinguishable from cable systems and publicly performs copyrighted content and that Aereo violated those copyrights by delivering broadcast programming without permission. Barry Diller, whose IAC/InterActiveCorp was the principal financial backer of Aereo, said in a statement that ruling was not a “big (financial) loss for us,” adding, “but I do believe blocking this technology is a big loss for consumers, and beyond that I only salute Chet Kanojia and his band of Aereo’lers for fighting the good fight.” Stock prices for CBS, 21st Century Fox, Disney and Comcast rose on the news of the ruling.  MORE: The Los Angeles Times 06/25/14 -Supreme Court rules against upstart Aereo TV service in copyright case and USA Today 06/25/14 - Supreme Court rules against Aereo in Internet TV fight or The New York Times 06/25/14 - Supreme Court Rules Against Aereo in Broadcasters’ Challenge
  

AT&T takes aim at Comcast with Direc TV Acquisition

AT+T may be on the verge of buying DirecTV for $50 million, which would be the largest in years and reshape the television business at a time of rapid change in the industry. Reports of rumors on the acquisition appeared all over the blogosphere today an a official announcement may be just weeks away. The Wall Street Journal, citing unnamed sources familiar with the matter, reports the two companies are discussing a deal that would involve a mix of cash and AT&T stock. A combined AT&T-DirecTV would hold a vast swath of wireless spectrum, the public radio signals that make smartphones and tablets work and would also be better positioned to compete against the proposed Comcast/Time Warner combined entity.  The pact would be a way to expand its video offerings, which is similar to how the Comcast and Time Warner Cable deal could deliver. AT+T currently provides pay-TV service through its U-Verse brand. MORE: WSJ - 05/12/2014 -

AT&T Could Strike $50 Billion Deal for DirecTV, or

Bloomberg - 05/13/2014 - AT&T in Talks to Buy DirecTV for About $50 Billion

Cloud based DVR's are on the Way

According to hothardward.com, Comcast is currently testing a cloud DVR service called X2 in the Boston market. Cloud base technology offers consumers the ability to watch whatever programming they record wherever and whenever they choose to view it. The current test only allows for tests on iPhones and iPads and at present it is unclear when other types of devices will be added. At CES earlier this month STB manufactures like Cisco, Alcatel Lucent, Simple.tv,Tivo and others proudly demo-ed their versions of this technology however none of them had a large scale test in place at the time. MORE: hothardware.com - 01/20/14 Comcast Testing Cloud DVR In Boston, Take Your TV Shows On The Road by Seth Colaner

Netflix in Discussions for U.S. Cable Carriage

In an effort to continue to expand their subscriber base and to create a second revenue stream, Netflix is in talks with Comcast, Suddenlink Communications and several other cable operators about integrating its streaming video service with leased set-top boxes. Obviously U.S. MVPD's have taken notice of Netflix’s new arrangement with Virgin Media and, more recently, with Sweden’s Com Hem and are weighing out the potential future impact those deals may have state side.  At this point the company's mix of original series and large catalog of TV shows and movies, has essentially become a new premium subscription service that can do battle with HBO, Starz and Showtime. According to the Wall Street Journal, Netflix doesn’t have all the distribution rights it needs to offer its entire service on leased boxes in the U.S., at least not yet.

 

According to industry insiders, at this point in the game, Netflix would not gain much from a U.S. cable deal. The current distribution of cable STB's with IP capabilities, is very small and the overwhelming number of boxes deployed in the field today don’t speak IP (which at this point is critical to support a Netflix app). While cable operators are starting to deploy IP boxes, they will represent a fraction of the market for the near term future.

Technology aside the WSJ reports the biggest holdup between Netflix and U.S. cable companies is cable providers' fear of losing viewers of its own services and advertising. Currently they are 30 million Netflix subscribers in the U.S. alone and they will continue to access the service one way or another – via gaming consoles, retail TiVo boxes, Roku boxes and smart TVs – with or without cable’s help. In my opinion having Netflix on the set-top box would at least keep subscribers engaged with the cable video platform and prevent them toggling to a different video input and a different video device. MORE: MediaDailyNews - Netflix May Cut Deals with Cablers - 10/14/13 and Adweek - Is Netflix Looking for Cable Distribution Deals? by Sam Thielman 10/14/13

 

Malone's Liberty Global - Now the worlds largest cable TV provider

Yesterday U.S. cable pioneer John Malone's Liberty Global officially closed it acquisition of British cable provider Virgin Media for $24 billion cash and stock. The deal expands Liberty Global's total subscriber count to 25 million customers in 12 countries in Europe now bigger than Comcast Cable which counted 22.3 million subscribers at the end of the first quarter.

Malone, is also looking to boost profits from U.S. cable systems. In March, Liberty Media agreed to pay $2.62 billion for a 27.3 percent stake in Charter Communications. That deal also gave Malone and three of his Liberty lieutenant’s seats on Charter's board of directors. I sure it's also no coincidence that Charters top brass consists of some of the cable industries best and brightest and I have no doubt they will be jumping at the chance to drive consolidation in the U.S. cable industry. I’m sure it will not be long before we hear much more from Liberty and Mr. Malone in the future.

Yahoo eyes Hulu

Add Yahoo to the growing list of Hulu-suitors. According to reports, Yahoo CEO Marissa Mayer and Chief Operating Officer Henrique De Castro recently met with executives at Hulu, the premium video service whose owners have been considering selling it for some months. Hulu would make a powerful weapon to add and they also have mobile applications for their premium subscribers, making the company a natural fit. Mayer's drive into the mobile & digital content spaces seem to offer this deal synergies that could justify the enormous cost of this acquisition. She has made it no secret that her company has been looking to expand its video assets, recently acquiring the exclusive rights to all of SNL's classic clips from 1975 through 2012 while expanding their original exclusive programming. While speaking this past Tuesday during the Wired Business Conference, Mayer's stated that "video is important across all of the company's properties" and that Yahoo is becoming a "mobile-focused firm".

Hulu's board still has a lot of decisions to make and Yahoo has not made and offer. One thing does seem clear at this point and that is that if Yahoo is to pick up the video company, it will fundamentally change the online video landscape, and put Yahoo into competition with a host of new firms.

Time Warner Cable adds Live Programming to TV Everywhere App

Following the lead of rivals Comcast and DIRECTV, Time Warner Cable has announced that today it is adding live programming to its TWC TV app.  Currently content is only available to subscribers who own Apple tablets or smartphones but they will introduce the new programming to other platforms later this year. As of today the live channels include; the Big Ten Network, the Pac-12 Network, BBC America, beIN Sports,  FearNet, GMC and some local outlets.

 
Time Warner Cable COO Rob Marcus told analysts on an earnings call in January that Time Warner was working on signing deals with programmers that include rights to out-of-home viewing. He said the TWC TV app generated more than 750,000 unique users in December. Many of the largest programmers, including Walt Disney Co. and TWC sister company Turner Networks, have not made agreements yet which include content streaming however as content deals come up for renewal this cable-industry shift toward "TV Everywhere" will prevail as the MVPD's push the content providers for broader carriage deals. MORE - 04/17/13 Rapid TV News - Time Warner Cable adds out-of-home access to TV everywhere app

Twitter Shopping TV Programming Deals

It's no secret that Twitter has recognized the power of video. In 2012 they developed a partnership with Disney/ABC's ESPN to offer highlights and sports clips on the site. Earlier this year it announced a deal with The Weather Company to offer weather-related videos (ouch... AccuWeather!). Today according to a report from Bloomberg, the San Francisco-based company is close to reaching partnerships with television networks that would bring more high-quality video content and advertising to the social site.  The deals (potentially with Viacom and NBCUniversal) are said to be for short clips, not full-length episodes, similar to the company's current partnerships. Frankly it makes sense that Twitter would continue to develop partnerships of this kind.  Videos from Viacom properties i.e. The Daily Show, Colbert Report, MTV, etc. are some of the most shareable on the social network.

According to Bloomberg which first broke the story, the partnerships would let Twitter stream videos on its site and split the resulting ad revenue with the networks. Obviously the rapid rise of Netflix, Amazon Prime and the cable industries moves to the TV Everywhere concept and Hulu's future up in the air as its owners contemplate selling, the marketplace could be giving Twitter a good entry point that they can monetize.