Aereo Disrupts NFL's TV Business Model with a favorable Supreme Court Decision

Aereo, the Barry Diller backed company that I've written about in numerous posts on SMM is certainly a hot topic these days.  Since it launched, it has been embroiled in legal battles which have pushed their way through the court system where as early as today the Supreme Court could issue a ruling in the dispute between the broadcast networks and the startup streaming service. Although it more than likely will be some time before the courts ruling may actually come down, the media is a "buzz" about the topic. Yesterday, the Washington Post published an article that claimed that, if Aereo wins, “the foundation of the NFL’s television business could crumble” because “a thriving Aereo could help fans bypass the broadcasters, devaluing their expensive contracts with the NFL.” In my opinion this claim is bias and full of false statements but I am not the final judge that will determine the faith of this industry disrupter. Truth be told, I honestly hope that Aereo if not some spin on it's technology will prevail however, I'm acutely aware of what a big stakes game this is.  

The Little Antenna that could
change the broadcasting industry

Read up on it at: The Washington Post - Cecilia Kang's 06/17/14 - How the Supreme Court’s ruling on Aereo could change how we watch football and also review a good contrasting perspective with Chris Morran' 06/18/14 piece on Consumerist - No, A Supreme Court Victory By Aereo Would Not Crush The NFL. I'll be interested to read your feedback as well as watch how this all plays out.

Boom or Bust - TVB's Predictions for '08-'09

Prepare for a big year in 2008. With heavy election spending and the Olympics on the horizon, advertising on both national cable networks and local cable ad sales are expected to jump 5% to 7% in 2008, and 1% to 3% in 2009, the Television Bureau of Advertising said today. TVB predicted that local broadcast spot advertising will increase 5% to 6% through 2008, while national spot advertising will jump 14% to 16%. Bittersweet but when it comes to estimates, TV spot revenue won't be higher than two years ago and in 2009, national spot advertising is expected to fall by 8% to 10%, while local spot advertising will increase 1% to 3%, TVB said. Good luck with getting that through your company’s annual budgeting process!

"The Fair Elections Now Act" - Political Pickpockets

Congress is looking at forcing stations to cut their lowest unit political rates by an additional 20%. According to the NAB, candidates already get an average 30% discount through the current use of the existing lowest unit rates (LUR). The proposed government backed campaign-funding program that the Senate is considering, is a bill that would cut LUR to even lower levels. It's known as The Fair Elections Now Act (S. 1285) and I certainly don't think it's fair to everybody. The bill not only reduces rates, kill scheduling options, expands the pool of advertisers receiving discounts and directly taxes broadcasters. The new bill would force stations to offer a fixed rate 20% below LUR (it's monpreemptable as it is currently as well), and would apply during the 45-day period prior to a primary election and 60 days before a general election. In addition, it would extend these rights to the federal party committees. Finally, adding to the pain, it would impose a 2% tax on gross broadcast advertising revenues to give politicians and committees a "Political Advertising Voucher Account." They say that history repeats itself and it this case it appear to be true. In 1980 Congress tried to put a similar system in place with little success do to the powerful broadcast lobby. NAB Chief David Refr is running point for the industry on this and insiders say its prospects appear dim.

Politicians Scrutinize Pharmaceutical Advertising

Advertising of pharmaceutical drugs to the public is a peculiar U.S. phenomenon, which has allowed great expansion of the pharmaceutical business by pushing demand. Hedonistically I've always enjoyed the windfall that the Ad business has enjoyed as well over the past decade however I have wondered about downside of going to our own doctor and announcing our own prescription.

Apparently I’m not alone in this thought process and the Energy and Commerce Committee's Subcommittee on Health is looking over a multi-pronged bill concerning health in the US. Some of the items being considered are an amendment to the Federal Food, Drug and Cosmetic Act "to improve drug safety." Advertising Policy is one of the primary concerns. Here are some of the proposed changes: an ad may need government approval: "the risk evaluation and mitigation strategy for a drug may require that the applicant submit...advertisement of the drug for pre-clearance." The appropriate authorities would have 45 days for review. Second, if there have been any "significant adverse events" or other risk associated with the drug, this must be part of an advertisement, and "advertisements lacking such disclosure would be false or misleading." Finally, the bill states that "the risk evaluation and mitigation strategy for a drug may require that for a fixed period after initial approval, not to exceed three years, the applicant not issue or cause to be issued direct-to-consumer advertisements..."

I’m all for putting a few controls into place however this sounds like bureaucratic BS at it’s finest. One thing we know for sure is nothing will change fast. There are far to many companies involved with very large vested interests.

Cables Political Ad Growth

As campaign season ratchets up, television ad spend is on track to possibly break the 2002 record. But unlike previous midterm election years, candidates are devoting more money than ever to cable TV in an effort to target voters more precisely. Though most political ad dollars traditionally are spent after Labor Day, tight primaries and early spending on House, Senate and gubernatorial races have pushed local TV-ad spending above 311 million as of mid-August, up 45% from the same point in 2004 and more than three times as much as in 2002, according to TNS Media Intelligence. All political ad buys by mid-year, including issue ads, ballot initiatives and other issues, have pushed spending above 700 million nationally, according to the WSJ. National Cable Communications (NCC), the spot cable-ad rep firm estimates about 200 million will be spent on local and national cable spots this cycle. Link: WSJ.com 08/28/06 - As TV Campaign Spending Soars,Cable Outlets Attract More Dollars

Can Political Spending help bring in the Budget this Year?

According to a recent Kagan Research report, local cable advertising revenues grew just 3% in the first quarter (trailing the 11% revenue gains estimated for national ad-supported cable networks). Most broadcast groups are feeling a similar pain however they have more experience in handling slowing revenue growth. If your pacing behind its getting late so don’t miss one of this years greatest opportunities – Political - particularly if you're located in a political jurisdiction which is considered to be in play - - a number which seems to be increasing on almost a daily basis.

Even without a presidential race, the 2006 political advertising market is roaring. Candidates and issue-oriented groups have spent $440 million on advertising through early June. That’s $110 million more than political advertisers spent in 2004 through the same date. Overall, U.S. political ad spending is projected to top $1 billion overall, most of it flowing over broadcast and cable TV outlets. What is the catalysis driving 2006’s growth: 36 races for state governor.

Television will account for close to 85% of all political spending, helping the industry make up for the defection of some other ad categories to new-media outlets and Spot cable should get a strong share of spending from U.S. House and Senate races believed to be “in play”. In these markets it is very important to do all of your ground work on these accounts now because TNS Media’s Campaign Media Analysis Group projects that more than 90% of the dollars will flow over the final 60 days of campaigning.

All indications are that the final total on political in 2006 will blow away that spent in any other mid-term in history, and will probably blow away most of the presidential years. The balls in your court!!