The McCain Cable Bill Can Only Do So Much; Real Change Is Market-Driven
from the it's-innovators-who-need-freedom dept
There's a lot of buzz about Sen. John McCain's proposed Television Consumer Freedom Act (pdf and embedded below), a bill designed to encourage cable companies to unbundle the TV stations they offer, and force the networks to do the same. It also takes away the weak bargaining chip that some networks have attempted to play against Aereo, in which they threaten to pull their broadcasts from the open air, by making them sacrifice broadcast licenses in order to do so.
Everyone on the consumer side agrees that they'd like to have à la carte choices from cable companies, but beyond that there's no shortage of debate as to how effective the bill is likely to be and whether the end result would actually be any better for those consumers. The television market is badly distorted at all levels by monopoly interests and those whiffs of not-quite-collusion by groups of companies with a shared interest in maintaining the status quo, but is this bill capable of overcoming that? And is the practice of bundling really at the heart of the problem, or just a good public face for the deeper issues?
This is hardly the first attempt to stop the practice at either the network or cable provider level. Some courts have already found bundling by cable providers to be legal and not anticompetitive; meanwhile Cablevision is currently pursuing an antitrust suit against Viacom for the network's bundling of stations that it sells to providers. Most of the details of the latter are under seal, but one notable point is Viacom's claim that it already offers channels individually, they just cost way more. If that's true of all Viacom's content, then it wouldn't be affected by McCain's bill anyway, which still permits bundling as long as there is an à la carte option.
And even if it's not true, it just underlines the core problem of this approach: the bill doesn't give networks any reason to make individual channels affordable or desirable. They either already offer an expensive à la carte menu that nobody orders from, or they could easily do so. Moreover, it's not as though the justification for bundling offered by the networks is completely falsified: they can spend more money on niche channels and programs by subsidizing them with the revenue from more broadly popular fare. Of course, it's not as though that justification isn't exaggerated and twisted to suit their needs either, nor is it true that the same fundamental idea couldn't exist without bundling. Networks get more value from niche programs than just transmission fees: they care about audience reach, brand-building, competing with other forms of content, accumulating accolades for prestige shows and even, believe it or not, making good television. There's no reason their businesses could not be structured to continue subsidizing niche programming with popular programming in a slightly less direct manner.
So the final solution, as always, needs to be found in the market — and that's already happening. Basically every single noticeable trend in media consumption habits, not just in television but in music and publishing and every format, points towards a more à la carte world. It's not news that the networks and cable providers have dragged their heels on this in the hope of milking their incumbent position a bit longer, nor is it news that they are privately a lot more freaked out by the cord-cutting movement than their public statements admit. Ultimately, it will be consumers making choices that force these companies to either adapt or perish.
But for that to happen, innovators do need to be able to actually give the consumers those choices. If the market has become so badly distorted that innovators are being locked out, then legal action and new laws are needed. And that's why the aspect of the bill that is likely to be the most effective (not to mention the most interesting) is the way it all seems to come back to Aereo.
The fight that Aereo started sits at the core of almost everything in the bill. Network owners don't like Aereo because they don't want to lose their retransmission fees from cable providers. Cable providers don't like Aereo because they don't want to lose the appeal of the major networks which, despite the ascendence of cable channels, still sit at the core of their service bundles — and because, generally, they don't want cord-cutters to have more options. McCain's bill basically says: Aereo or no Aereo, consumers need choices, and they're going to get them, whether you like it or not.
Is it a worthwhile step? Yes — or, at least, it's hard to see how it could do any harm, even if it does prove ineffectual. Is it the best approach? No. It almost feels like a bet on Aereo's failure. If Aereo were permitted to innovate, rather than being forced to jump through endless technological hoops and still spend more time in court than in the workshop or the boardroom, then the market would already be giving consumers what they want and pushing the networks and cable providers to become more competitive. If there is to be legal reform, it shouldn't be another layer of conditions and caveats on broadcast licenses and the retransmission fee structure that attempts to force the hand of the networks and cable companies, it should be a clarification (and probably a relaxation) of the rules, removing the legal and regulatory uncertainty that holds disruptive startups back. Television doesn't need a Consumer Freedom Act — consumers already have lots of freedom, they just don't have many choices in how they exercise it. The heart of McCain's bill is in the right place, but a Television Innovator Freedom Act is what we really need.
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Filed Under: a la carte, bundles, cable tv, innovation, john mccain, policy, technology
Companies: aereo
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"Sunk (or fixed) costs" make individual channels expensive.
If you'd just attack the high profits and regulate the hell out of these middle-men, you'd have a Populist basis that could take off, instead of weenie whining that's doomed to fail.
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Re: "Sunk (or fixed) costs" make individual channels expensive.
Actually I used to work in a cable headend. You are simply incorrect sir - All you need is a Controller and a QAM. Most QAMs can deliver a minimum of 4 channels simultaneously, and with the move to Switched Digital video the # of QAM's needed in a typical cable headend is a fraction of what it used to be.
The initial costs of such equipment for a typical cable operator would have been paid off years ago - I'm not aware of any *new* cable companies starting up in the last decade :)
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Re: "Sunk (or fixed) costs" make individual channels expensive.
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Re: Re: "Sunk (or fixed) costs" make individual channels expensive.
I don't need 5 ESPNs or CSPANs so why pay for something I'm not using. Cable companies should still be able to offer at least an à la carte bundle. Don't want to just charge for one or two channels? Have a package of 10, 20, or 30 channels and let customers pick what channels they get. After that, THEN allow individual channels to be added at an additional rate.
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a)attempt to remove whatever monopoly Congress has already grated to the industry concerned
b)ask the very people who will be using the services that are or will be available what they want
why is it that the very consumers never get a say? it's always the supplier that gives various options but only in ways that are, obviously advantageous to the business. the problem then arises that if no one signs up to use the service because of the choices offered, the supplier then starts to plead poverty and blame anyone and everyone, but usually illegal downloading or something similar as the cause of the failure rather than admitting to the real reason, itself, and doing something about it!!
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When the general public start replacing the Lamar Smiths and Dianne Fensteins, the Orrin Hatches and Nancy Peolosis in large numbers than, and only then, will the consumers actually be given a voice in the decision process.
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Anyone who thinks this is going to do a damn thing for the public and is not meant to push more special interest money McCains way is just delusional.
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If ESPN came out and offered all their content streaming live for $50 a month, I'd still save money every month, and that makes it worthwhile to me. I doubt Disney is getting $50 every month from DirecTV on my behalf.
It's no different than the HBO/Game of Thrones meme: Take my money! Consumers are screaming for better options and more choice, and are willing to pay for it. Networks seem to be purposefully sticking their fingers in their ears, because it's easier to buy political power the old-fashioned way than to have to change for Internet-centric world. And why bother, when you've built up so much power in DC over the past century that you can pretty much regulate to death anybody who tries to do any actual innovating?
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I only can disagree in the positive.
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Fox uses its deep pockets to run the FX Network, which has a bunch of niche original shows that have gotten fantastic receptions -- Fox found a way to capture the audience of people who hate everything on Fox. Plus The Simpsons has fuelled the Sunday night animation block forever now, and Fox got to experiment with a tonne of niche shows around it, eventually finding sturdy syndication fare like King Of The Hill and (though they almost missed it) the moneymaker of Seth MacFarlane.
Adult Swim airs those syndicated KOTHs and Family Guys and Futuramas as a lead-in to the block of extremely niche animated programming, where they've supported all sorts of wild experiments and made themselves one of the biggest names in modern animation in the world -- and the cult following allowed them to branch out into music and a sizeable web presence with reasonable success.
There are lots of reasons to subsidize shows that, on paper at a glance, appear to lose money or break even.
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Beech appears to be saying if they can't stand on their own axe them, you seem to be saying that if they can stand on their own (even if it takes experimenting and time to prove it) they should be kept.
So if a niche channel can't stand on it's own indefinitely it should be axed eventually, unless it can end up standing on its own.
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Why even buy channels a la carte?
Second, most of the rest are garbage most of the time. AMC runs advertising over and during and through movies, so forget watching them there. Other channels cut the hell out of them and compress them and stuff them with commercials -- including teasers FOR THE MOVIE YOU'RE WATCHING. Thanks for the spoilers, assholes. And jebus tapdancing christ, will the SciFi, oh excuse me, SyFy channel PLEASE stop making movies? Really. You're embarrassing yourselves. Just stop.
Third, most of the rest are garbage some of the time. Cop shows, detective shows, and soap operas -- none of which display much in the way of creativity, plot, character development or acting/directing skills.
There ARE some good things buried in this drivel: "Mad Men", for example. "Dr. Who" is still wonderful. But why should I buy an entire channel for one show? And why should I have to watch them on THEIR schedule? Screw that. I'll wait until the whole thing is available, then either buy it or download it, then watch it on MY schedule -- which is usually 4-6 episodes at a time.
The only reason left to subscribe to a cable channel is live sports -- and clearly that only applies to sports fans. I'm really starting to think that Aereo might be the answer to that, in a lot of cases.
So at this point, as I look over the available channels, I don't think I'd pay $.99/month/channel for most of them. It's just not worth it.
TL;DR: Comcast has made and continues to make a powerful argument as to why I should stop being their customer forever.
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Youtube's experimentation with subscription channels, along with the continued growth of services like Netflix, are showing where the future of TV are headed. A growing number of us are no longer content with watching a show at Thursday at 8pm or Sunday at 7pm, and the technology now exists where we don't have to.
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Heck, I'd pay that NOW to get ESPN-everything over the Internet so that I could drop Comcast, but ESPN won't sell it to me. (In other words, ESPN could make $20/mo from me instead of $5/mo. But they don't want to.)
Guess what my response to that is.
The producers of content need to wake up and realize that intermediaries (some intermediaries) are very expensive middlemen who subtract value. I'm sure that ESPN's hi-def coverage of football looks much better before Comcast mangles the hell out of it and delivers it to me...and if I'm going to get that kind of degraded product anyway, then why should I pay Comcast anything?
And: sell me a subscription to a show, not a network. Can you imagine how much money "Firefly" would have made if they'd adopted that model? Jebus, there are people that would pay to watch Nathan Fillion eat breakfast.
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Freedom and choice?
WTH does that mean? How can we have lots of freedom with few choices?
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Re: Freedom and choice?
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If aereo is allowed to survive
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Market driven changes won't work in this situation
As it is, the industry players are entrenched and made it hard for any new players to enter the space.
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Re: Market driven changes won't work in this situation
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Will non-watched channels be cut?
The other problem is that some niche channels may be cut by your cable provider if not enough people pay for it. What happens if I'm in an area where not enough people watch the History Channel? If the customers aren't paying for the channel, then there's no reason to keep it, so too bad for anyone who watches it.
And if the cable company isn't paying the History Channel, would we lose the other channels like History2 or History International?
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