Faxassins 2 is Here!: What if two trade journalists got bored and decided to produce their own TV show? You'd end up with "Faxassins," an example of TV at its worst. Good thing cable networks don't take programming advice from Seth and Mike.
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Heather Umen (left), VP of Brand Experience & Events at WE tv, and Alex Dombronovich, VP of Marketing & Business Development at WICT, enjoying theCableFAX 100 celebration in NY Dec 10. To see more photos from that event and from CableFAX's Most Powerful Women in Cable festivities please click View Gallery above.
AD-REA MITCHELL: Enjoying NBC U's kick-off dinner in DC at the Association of National Advertisers board meeting are: (l to r) NBC U Sales and Marketing chief Michael Pilot; NBCU Women & Lifestyle Pres Lauren Zalaznick; General Mills' CMO Mark Addicks; Andrea Mitchell of NBC News; and Proctor & Gamble Marketing GM Edgar Sandoval.
Hallmark Channel’s big announcement that it will partner with Martha Stewart to bring the icon’s homespun content to its network highlights a trend that has accelerated in recent months and years. The idea is that America loves celebrity, and that cable networks can create more brand awareness by latching on to top personalities that align with their brand messaging and audience. Of course, while these deals always look good on paper, they don’t always go smoothly: After all, the Hallmark-Stewart deal comes almost exactly two years after Discovery’s announcement that it would rebrand the sagging Discovery Health into The Oprah Winfrey Network. That effort still has yet to produce a channel, partly because of much-reported executive shuffles at OWN over the last year. OWN, which was originally set to launch by late 2009, is now slated go live in Jan 2011. Big personalities can also create transition issues in the broadcast world, which became obvious in recent weeks as the Jay Leno-Conan O’Brien debacle painfully and sometimes comically unfolded.
But love ‘em or hate ‘em, those celebrities are what drive eyeballs to television screens. And whether it’s courting them to rebrand a network, create programs or simply attach their famous faces and voices to shows, working with celebrities seems to have become a mainstay. At one point during this month’s Television Critics Association tour in L.A., Discovery Channel even found itself defending its choice of Winfrey as narrator for its upcoming “Life” series (produced with partner BBC). One critic pressed the network on why it replaced original voice work by the iconic Sir David Attenborough with Winfrey. The explanation was that Weaver brought something special and unique to the table. That’s fair enough. But it seems logical that Winfrey’s higher celebrity status and broader demographic appeal were prevailing factors. And should anyone fault Discovery for that? Probably not.
Cable networks are in the business of aggregating eyeballs. Period. In a tough advertising environment, celebrity hosts, producers, voices and the like can help “sell” a program—to both viewers and advertisers. That’s the game, and it’s not going to change any time soon. In fact, this is true even when advertising isn’t a factor. When non-ad supported HBO taps Rosie O’Donnell for a documentary on the changing American family (“A Family is a Family is a Family”) or Steven Spielberg and Tom Hanks for “Band of Brothers” follow-on “The Pacific,” it knows that it will get more press attention (In fact, Rosie was just on “Good Morning America” this morning to talk about her HBO special). More press leads to more awareness, which leads to more viewers, which leads to more press, which leads to more nominations during awards season, which leads to more press, which leads to more viewers—and on and on and on.
Are there pitfalls to this need for celebrity firepower in everything cable networks do? Sure. Celebrities can be a royal pain. They demand top dollar and often want complete creative freedom, a combination that doesn’t necessarily lead to brilliance. And you have to wonder whether audiences and critics are more willing to give something a chance when it doesn’t have a big star attached. AMC’s “Mad Men” slowly grew into a hit without a single big name to trot out to the late night shows or the red carpet. In this case, cable didn’t try to mold a show around a star or group of stars; it cast the show with talented but relatively unknown actors and then let them shine. They’re all stars now. But they owe that to AMC, not the other way around. In the old days, that was cable’s role. These days, cable competes nearly head-to-head with big broadcast networks for talent and viewers. That isn’t a bad thing. But with great power comes great responsibility. And often… many headaches.
(Michael Grebb is executive editor of CableFAX)
For sci fi fans who marveled at the intricate and unpredictable storylines that made SyFy’s “Battlestar Galactica” one of the best dramatic series in TV history (IMHO), the season debut of prequel “Caprica” tonight (Fri, Jan 22, 9pm) bears a heavy burden. In the coming weeks, how will creator Ronald Moore and his team match the excitement and critical acclaim of Battlestar—especially when they must literally start from scratch? After all, Caprica takes place nearly 60 years before Battlestar and therefore includes no cross-over characters except for an adolescent Bill Adama who will grow up to become captain of Battlestar Galactica. Instead, Caprica focuses on the genesis of the Cylon “race,” which began as the brainchild of billionaire entrepreneur Daniel Graystone (Eric Stolz). In the 2-hour pilot that airs tonight, Graystone creates the robotic cylon prototype to get a juicy military contract but later—after his daughter Zoe (Alessandra Torresani) is killed in a terrorist attack—his quest takes on a more altruistic motive: Resurrecting his daughter, who made a digital “copy” of her memories and personality before she died (yeah, just suspend your disbelief). As Graystone tries to transplant his daughter into a cylon body, something goes horribly wrong, making him believe he’s lost the data forever. But by the end of the pilot, it becomes clear that the data is alive and well—and that there will be an eventual reunion (and perhaps not an altogether happy one).
If you’re confused already, that’s understandable. Moore and his writers like complicated plots that test our willingness to accept somewhat outlandish ideas and story tools. For example, Caprica continues Battlestar’s use of seeing things that aren’t actually there for dramatic effect. In the first episode airing Jan 29, Zoe can be seen by the audience even when other characters see only her robot exterior. Will characters also start to “imagine” people who aren’t there, as was done so often in Battlestar? Meanwhile, Battlestar’s heavy religious overtones (and the eventual cylon belief in one God vs. many) becomes even more prevalent in Caprica. And Moore revels in complex characters who are neither good nor evil—they’re always somewhere in between. Daniel Graystone seems like the typical grieving father, but in the pilot we sense an undercurrent of obsession and arrogance that we know will lead to society’s doom. In the first two episodes following the pilot, his flaws become even more pronounced. Meanwhile, Bill’s father Joseph Adama (Esai Morales), a mob lawyer who seems to turn over a new leaf by the end of the pilot, starts to slip back toward the dark side in upcoming episodes as a strained alliance with Graystone starts to fray. By the end of the 3rd episode, the true dark nature of Adama’s character comes through in a chilling scene that I won’t spoil here. But sufficed to say, the audience will be left wondering how to feel about him.
If the early episodes of Caprica have any shortcomings, it’s the sometimes exasperating level of dysfunction among its characters. It’s true that flawed characters were a hallmark of Battlestar; but psychological turmoil can sometimes spiral out of control in Caprica. As referenced above, Joseph Adama’s weirdly schizophrenic battle with his good and dark sides seems at times rushed. And the premature and foolish “confession” that a Graystone’s grieving wife Amanda (Paula Malcomson) makes from the podium of a big public event in the Jan 29 ep seems less about her character and more about creating a “shocking” plot twist to button up the episode. But Moore deserves much credit for constantly surprising us. In the next couple of weeks, one character will be revealed as gay—and we immediately think, “Well, why did we assume otherwise?”
To be sure, Caprica shows much promise—even if it may never reach the apex of Battlestar Galactica’s critical and audience acclaim. Part of the challenge is that this is science fiction that doesn’t really feel like science fiction. Yes, there are robots, cool Matrix-like virtual worlds and highly advanced gadgetry. But people still drive cars, live in houses, work in buildings, eat in restaurants and go about their lives as if this was just a parallel version of present-day Earth rather than distant, futuristic planet that died out thousands of years ago. No one will accuse the Caprica team of trying to re-imagine a human society (Much of Caprica’s look was, of course, set in Battlestar during flashback scenes—so writers are in a bit of a box anyway).
Caprica is us. We are supposed to see ourselves in the architecture and the deeply human flaws that put Capricans on a collision course with doom. And while Battlestar used the same tricks, Caprica sets a higher bar by (at least so far) keeping us grounded in a world devoid of spaceships and space battles. Battlestar constantly reminded us we were in a sci fi world; Caprica lets us forget over and over again. But perhaps that’s the genius of Moore’s vision. Judging from the first few episodes, Caprica will take one of Battlestar’s premises—“Do Humans Deserve to Exist”—and force us to watch as Capricans lay the groundwork for their own demise. Look around our own planet. Isn’t that what we all do every day?
When you consider the excruciatingly erudite nature of legal court filings, oral arguments can seem a bit superfluous. After all, why force both attorneys to stand in front of a panel of judges arguing the same points that they already exhaustively covered in their briefs? What’s the point? Well, last week’s early salvo in the larger net neutrality battle shows that oral arguments can sometimes take center stage and provide many clues on how these skirmishes will play out over many months and years. On the hot seats were FCC Acting General Counsel Austin Schlick and Wiley Rein attorney Helgi Walker, who went mano-a-mano (or mano-a-womano) in the U.S. Appeals Court, D.C., where a panel of grumpy judges peppered them with questions in an effort to pick apart their legal arguments.
Similar to oral arguments at the U.S. Supreme Court, this is high theater and perhaps the most (if not the only) exciting part of a complicated and technology-focused legal fight. In this case, Comcast (represented by Walker) is challenging the FCC’s Kevin Martin-era decision in 2008 to slap the MSO for its bandwidth management practices, which some believe crossed the line in “controlling” Internet activity. Basically, peer-to-peer equals bad. Other stuff sanctioned by “the man” equals good. It’s not really that simple. But the debate has degenerated into a supposedly David-vs.-Goliath struggle between “the people” (represented by public interest groups) and “Big Media” represented by evil corporations intent on firebombing the Internet utopia just like those meany humans in “Avatar” destroyed the alien rainforest. Nevermind that the underdog Na’vi in this story are actually other multi-billion-dollar corporations like Google and Amazon, which simply want to ride those broadband pipes without any interference from their pesky owners. Consumers are really just the “unobtainium” that everybody wants to mine, mine, mine.
Friday’s oral arguments were just one battle in a much larger war, but this one seemed to send the FCC into retreat mode. Without a doubt, the three-judge panel saved its grumpiest questioning for Schlick, who stood up to them valiantly as he defended Martin’s tendency to just do stuff without thinking about the legal consequences. In this case, the FCC fell back on its broad jurisdiction to justify punishing Comcast for doing something that wasn’t really illegal but just didn’t feel right. Or something. Indeed, no law prevented Comcast from ratcheting back Internet traffic to relieve congestion. In fact, that’s kind of the point of network management. But Martin’s FCC didn’t see it that way, suggesting that its broad authority to protect the Internet trumped the small detail that it wasn’t really interpreting any specific statute. To be sure, the judges were extremely skeptical, even at one point asking Schlick how badly he wanted to lose. (His answer: As narrowly as possible). And while Walker also faced some tough questions about whether the FCC’s actions were really as egregious as she claimed, she didn’t face the same uphill climb as Schlick. It helped that she exhibited an almost Rain-Man-like recall of case law to back up her points. But she clearly had her way with the judges. There were even light moments, few of which showed up during Schlick’s turn.
In a way, the FCC has a difficult task: Justifying another Martin-era attempt to sock it to cable because it wouldn’t play ball with him on a-la-carte. Schlick actually held up well when you consider the court’s hostility to the FCC’s position. But the reality is that courts often deliberate in ways that can reverse the fortunes of all involved. The court may decide that the FCC did actually have enough authority under various sections of the Communications Act to act in this particular, narrowly defined case. Or it could issue an extremely nuanced ruling that hands Comcast a win of sorts but still rules that the FCC can exert limited authority over some kinds of bandwidth management in some cases. Either kind of ruling could affect consumers and numerous players in several big industries, including cable, as well as new FCC chmn Julius Genachowski’s attempts to create net neutrality rules. The court will likely rule sometime in the Spring or early Summer, so the world doesn't have long to wait. And if this case ever ends up in a sequel at the Supreme Court, watch out: A High Court decision could define the Internet landscape for a generation.
As everyone knows by now, retrans and carriage negotiations are seldom without rancor. But the level of vitriol between Cablevision and Scripps, a fight that led to the elimination of Food Network and HGTV from the MSO’s lineup, seems especially nasty. Talks continue (sort of), but both sides sound fatigued and relatively fed up with one another. The ultimate decider on that one could be NYC-area consumers, many of whom will vote with their feet. But Pali’s Rich Greenfield calculated that Cablevision has a high tolerance for pain here, as it could lose up to 39,000 subs before rejecting Scripps’ demands would actually cost the MSO any money. Scripps says it’s worth much more than the MSO is paying considering the net's ratings and what Cablevision pays other similarly successful nets (and makes sure to note that every other major distributor has signed on the dotted line). Cablevision, however, says it’s just too much of an increase and too fast—and so far reports only “modest” rumblings from its customers. Of course, Cablevision and Scripps aren't unique in all of this. Just about all MSOs and content owners have skirmished from time to time over carriage—often under the glare of the media happy to pass along the blow-by-blow to the public and policymakers. What's the usual result? Dissatisfied customers caught in the middle.
Over the years, I’ve both covered and observed these carriage negotiations. And what’s amazing is that they really haven’t evolved at all. They just hit the same notes year after year, renewal after renewal, angry statement after angry statement. Both sides accuse the other of intolerable cruelty and disregard for the public. Both sides blame the other for any carriage loss and consumer unrest that results from failed negotiations. And eventually, after much pain and suffering, both sides learn to live in peace and harmony. Or at least in a state of mutually assured destruction. But really—and not to use the biggest cliché of the last 20 years, but it’s just so relevant here—“Can’t we all get along?”
Apparently, we can’t. And some would argue that’s perfectly fine. After all, this is business. And these are negotiations. They’re not supposed to be nice, and the very nature of negotiating is that both sides try to push the other to the brink in order to gain the biggest advantage and squeeze out the best possible deal. Fine. But it’s interesting that the tactics and results of these carriage negotiations haven’t changed despite the fact that consumers can now get content through multiple avenues, including online and through telco competitors with similar triple-play products. In some ways, programmers have more leverage than in the past because they can tell their fans to simply switch to a competitor. Operators, however, have shown that they still consider themselves the 500-pound MVPD gorillas who refuse to let themselves get trampled by rate increases that eventually get passed along to customers, who then blame the MSOs rather than the nets (Time Warner Cable’s “Roll Over or Get Tough” campaign is a great example of this tug-of-war playing out very publicly). Where does this go? Anyone’s guess.
The truth is that the MSOs and programmers need to realize that their inability to get along during these times of strife plays out in the public square. And it doesn’t go unnoticed. When you have politicians like John Kerry and Ed Markey—not to mention public interest groups—saying that the retrans process may need regulation to protect consumers, the entire cable industry should be afraid. Very afraid. After all, Markey was instrumental in convincing Congress to pass the 1992 Cable Act back in the Dark Ages of pestilence and famine, which still give cable executives horrible nightmares. And you can bet that if Congress starts messing with retrans, they will eventually point to fights like the Cablevision-Scripps impasse as evidence that the government also needs to get involved in ALL carriage negotiations. In Washington, the anti-regulation forces haven’t been this weak in years. This is fertile ground for Markey and others to push through new regs, and the cable industry might want to ask itself whether its hard-nosed negotiating tactics and vitriol are helping to make it happen.
A great Saturday Night Live moment was Steve Martin’s 1991 send-off of a heartfelt holiday wish list in which he began altruistically enough but ended with a litany of self-serving desires, including “all encompassing power over every living being in the entire universe.” Wish lists aren’t always serious. But while Martin’s rules all others (he’s got that power thing, after all), he wasn’t very cable-specific—so I’ve decided to remedy that with a wish list containing some no doubt equally unobtainable goals. Here it goes:
Mo' Better HD –Leichtman Research this week predicted that about half of U.S. households now own at least one HDTV set. Cable’s HD looks pretty good now, but at some point distributors will need to move to 1080p to keep up with consumer quality expectations. Personally, when I watch my Redskins get embarrassed and humiliated on a weekly basis, I want to view the players' stunned looks of self-loathing and despair in the best HD resolution available. Cable operators also might be wise to increase the number of linear HD choices to catch up with some of their competitors. VOD is great, but linear prowess also counts. My wish is that cable gets out in front and raises the bar before someone else does.
Better VOD navigation – I’m a broken record on this, but cable’s VOD navigation ranks up there with the Ministry’s pneumatic tube-based filing system in the 1985 cult film “Brazil.” During the 2-hour period between deciding to watch a movie and actually finding it on VOD, I half expect Robert DeNiro to show up in my house to rewire my cable box (You won’t get that one unless you’ve seen the movie). The bottom line: Cable operators have got to retool the way they organize their increasingly rich, diverse and voluminous VOD smorgasbord. As third-party boxes and consoles proliferate, my solemn wish is that cable operators make big improvements in this area in 2010. And if that happens, let’s hope I wasn’t simply imagining it (Again, just go rent the movie).
Better TV commercials – To be sure, cable operators are putting out better TV ads than ever (we love Comcast’s “Slowski” series poking fun of slow DSL speeds). But Verizon’s relentless spots in which a hapless cable technician spars with a much cooler FiOS installer are just ubiquitous (and quite effective). Also hot are DirecTV’s spots in which dopey execs at a large cable company (played by recognizable actors like Ed Begley Jr and John Michael Higgins) struggle to match satellite’s supposed HD dominance. In both cases, cable competitors exploit old stereotypes about unprofessional cable installers and clueless cable suits. These ads—despite a number of inaccuracies—have gone largely unanswered. My wish is that cable takes a cue from Microsoft and starts fighting back against the Apples of the world (Confession: I’m an Apple fan… but you get my point).
Fewer reality shows – Yes, they’re cheap to make. Yes, the increasingly vapid and brain-dead U.S. population continues to lap them up like sugar-coated heroine dumplings. But really… Is this why you got into the entertainment business? Don’t get me wrong. We all like a guilty pleasure sometimes. A few stupid reality shows that humiliate stupid people who stupidly signed away their lives to be on TV… well, that’s fine. And yes, putting D-List celebrities to work helps lower the crime rate. But with some notable exceptions, most of these shows have zero shelf life, degrade the human condition and make stars out of people who should probably be in prison. My wish for 2010 is that fewer reality crapfests get greenlit. Period.
Breaking News Alerts – I’d like to take a moment away from this column to bring you this Breaking News Alert… The 12,454th Tiger Woods mistress just came forward, and gasp… she lives somewhere other than Vegas. Here’s another one: A car wreck in Peoria, Ill. No injuries, but we have some aerial footage that looks cool. And this just in: Congress set Friday as the date for that important vote… yesterday. For the love of all that is good and holy, “breaking news” is just that… breaking. If it happened 17 hours ago, it’s no longer breaking. And if it involves a local police (or balloon) chase, it’s not national news. Really. It’s not. Really!! Stop these constant crawls and dire graphics that make us all feel like every minor occurrence in the world forebodes the coming Apocalypse… That’s my wish.
In the spirit of the holiday season, I’ll stop now. But in all seriousness, please allow me to extend my best to all of you and your families in the New Year. I don’t think any of us will miss 2009. Let’s all wish for a better 2010—and resolve to improve ourselves and our businesses as the world tries to recover from that whole “Worst Economy Since the Great Depression” thing. And as Steve Martin once said, let’s also hope “for all the children of the world to join hands and sing together in the spirit of harmony and peace.” Right after we gain all encompassing power over everything. Happy New Year!
As we all wander through this limbo-like week between Christmas and the dawn of a New Year, it’s easy to miss little morsels of news zipping over the wires. But here’s one that shouldn’t go unnoticed: DirecTV this week launched another satellite into space. So what? Well, Mon’s successful launch of DIRECTV 12 from the Baikonur Cosmodrome in Kazakhstan should enable DirecTV to boost by more than 50% its self-described current lineup of more than 130 HD nets.
According to DirecTV, it will soon be able to offer well over 200 HD channels and also increase the number of local markets able to receive its signals. It’s unclear whether all of these nets will be available across its entire service territory (cable has accused DBS ops of double-counting their HD nets in the past), and the satellite won’t be operational until sometime within the first half of 2010. But make no mistake: The prospect of a major cable competitor significantly boosting its video capacity could create big challenges for cable next year.
DirecTV is already trash talking a little bit. In a statement, DirecTV CTO Romulo Pontual said the launch provides “the capacity to dramatically expand HD and movie choices for our customers and further extend our content and technology leadership… we are able to provide our customers with an unparalleled viewing experience and maintain a significant competitive advantage for many years to come.”
Now, many cable operators might balk at the “significant competitive advantage” assessment. After all, cable has several advantages over DirecTV, including the pricing and packaging benefits of the Triple Play, a fast-evolving authentication initiative (Comcast’s beta shows encouraging signs) and of course an increasingly robust VOD product that becomes better every day. But DirecTV execs know their strengths and weaknesses well. They know their only chance against cable ops and telcos is to focus 100 percent on video—more specifically the company’s HD lineup.
Cable’s challenge over the next year and beyond will be matching DirecTV—not only when it comes to choice in the form of time shifted HD content through VOD but also on the linear side of the equation where many viewers still predominantly roam. It’s a tough balance for cable, as the future seems undeniably tied to the “anything, anytime, anywhere” revolution. But DirecTV’s new satellite launch should remind everyone that linear TV remains important for the foreseeable future, especially when it comes to the battle for HD dominance.
As you know, Comcast last week launched its own authentication beta under the moniker “Fancast Xfinity” to let paying subs access online versions of their favorite shows. So as a Comcast subscriber, I’ve been poking around the Fancast site and kicking the tires on this puppy. The bottom line: It’s pretty good. Not perfect—but pretty good. And considering its beta status, Comcast will no doubt add content, functionality and navigation prowess to Xfinity in the coming months, as well as work out any lingering kinks. Here’s the current lowdown:
Signing Up
Comcast still has a few bugs to work out when it comes to getting up and running. I didn’t mind having to download a 66-megabyte piece of software to authenticate the content and register my computer (Each subscriber can register up to three devices). But even after I downloaded it and installed the ComcastAccess client, the Fancast Web site got somewhat confused about whether I had actually downloaded it, had it running on my desktop and was actually authorized to watch the content. On a few occasions, I logged out, logged back in, tried to play another video and was told that I needed to download ComcastAccess once again—even though it was already installed on my computer. After activating it to run on the desktop, Fancast still couldn’t see it. To watch a video, I had to restart my Mac, remember to open ComcastAccess before I went to Fancast, and then finally stream the content. This is far too cumbersome. I hope that Comcast figures out a way to detect the software and—instead of inexplicably asking a customer to re-download it—simply open it automatically for the customer (or at least remind the customer to open it and try again). People have been trained by Hulu and other sites to point, click and watch. Comcast needs to make its authentication system equally simple.
Basic operation
Once it’s up and running, Xfinity works nicely. Videos load about as fast as Hulu, and they play as smoothly. I tried out several cable shows in full-screen mode on my 21-inch monitor, and they all pixelated somewhat during fast motion but were otherwise watchable. Hats off to CTO Tony Werner and his minions at Comcast. They have built a nice back-end system.
Navigation
I’ll say this for Xfinity. It’s a lot easier to find content here than through my set-top box’s VOD menu. Yes, that’s a bit of a back-handed compliment—but Comcast and every other operator knows they need to improve their TV-based VOD menus, so I’ll let that drop. When it comes to Fancast’s navigation menu, no one is going to win any prizes for Web design or creativity here. The interface is relatively bland. But you know what? That simplicity makes it exceedingly easy to find content (And I’d rather find what I’m looking for than be dazzled by animations, widgets and other nonsense that will crash my browser). A search box at the top makes it easy to find specific shows. And browsing is a cinch, with shows listed by title, genre, network or featured selections. Comcast also tells users about the top streams for those who want to join the crowd. Again, no bells and whistles here. But it’s easy to find content—and that’s more important than aesthetics.
Content
On video quality, some shows look better than others, but most are slightly grainy—especially when shown in full-screen mode (And it’s not my connection; I subscribe to one of Comcast’s fastest residential broadband tiers). Some also aren’t available in 16X9 aspect ratio. That's unfortunate. Availability of shows is also spotty. Why, for example, are all six seasons of “Entourage” listed—but only Season 2 is available for viewing? I could understand if it was a windowing issue and more recent episodes weren’t available yet. But Season 2? Why not Season 1, which is older. I don’t get it. Of course, HBO isn’t alone in this regard. Several networks—both premium and paid—offer less than complete catalogs with little logic as to which ones are included or excluded. Other nets list shows but then don’t provide even one full episode, choosing instead to offer up a few clips. That’s maddening. Either put up a full episode or don’t list the show. Consumers want to watch full episodes in an authentication universe. If you have something to promote, then do it in a pre-roll before a full episode of a similar show.
Overall Grade: B
Despite all my knit-picking above, I applaud Comcast for being out front on this. And for a beta, Xfinity is impressive. Many of the little annoyances and quirks will likely get cleared up in the coming months as Comcast moves to full rollout mode, adds more content and (hopefully) improves some of the video codecs. I can’t wait. If Comcast keeps striving for excellence, this could very well evolve into an A+ product in no time.
The Comcast-NBCU deal will no doubt weave itself into the fabric of all cable-related news over the next year. And yes, resistance to this obsession is futile. However, the last couple of weeks have sparked an interesting debate over whether Comcast’s play for control of a major content firm will spark similar deals among other distributors and content owners. That’s a nice thought. And on the surface, it seems logical that Comcast might prompt a stampede of deals as companies scurry to compete with its newfound scale and reach. But dig a little deeper, and one big question emerges: Who? And with whom? And why? In the end, Comcast and NBCU are unique. Comcast has desired a big content play since Disney rebuffed it in 2004. And NBCU was ripe for the taking because of Vivendi’s desire to get out. Put it together, and it was the perfect deal storm. That’s rare and not easily replicated.
Go through the big players, and it’s hard to see how other combinations would make sense or, in many cases, even be possible. Take Time Warner Cable, which just got out of a content marriage when it split with Time Warner Inc, partly because it was unable to find synergies that made it worth diluting the cable arm’s inherent value. So it seems unlikely Time Warner Cable would make a play for Disney, Viacom or News Corp—all of which boast iron-clad boards and none of which are for sale anyway. Then there’s Cox Communications, which is too small to buy a big media company and actually just unloaded control of its only content property—Travel Channel—to Scripps. Charter? Are you kidding? It just came out of bankruptcy and still carries far too much debt to consider a deal with anyone.
Cablevision, meanwhile, is more likely an acquisition target than an acquirer. Many have speculated that its past attempts to go private signal a deep desire to sell the company at some point. But while Time Warner Cable has always been the supposed suitor, could a big content company like Disney or News Corp swoop down and grab Cablevision as a way to get a toehold in the all-important NYC media market—not to mention up-and-coming assets like Rainbow's AMC and, of course, Madison Square Garden? Would it be worth the trouble? It’s fun to speculate.
Of course, much speculation also surrounds Verizon and AT&T. In recent days, Verizon has dismissed rumors it might make a play for DirecTV even though John Malone recently engineered a restructuring that makes DirecTV rather buy-able. AT&T could also easily acquire a DBS player. But why would telcos, which are both spending billions to lay down fiber, bother to buy a DBS operator, whose inability to offer competitive high-speed data or telephony puts it at a competitive disadvantage? The antitrust regulators would probably squash any such deal anyway. More likely but still improbable is that Verizon and/or AT&T makes a bid for a big content company. Like Comcast, both are large enough to make it happen financially. But again, it seems unlikely that antitrust authorities would allow Verizon to take over, say, Disney or News Corp without serious concessions. But then again, that’s exactly the situation that Comcast faces over the next year as well.
If nothing else, the Comcast-NBCU review will open a window into the soul of the Obama Administration it tries to dissect the deal and, of course, set conditions for approving it. The ultimate reasoning that comes out of Washington may go a long way toward influencing whether other media and telecom giants try to make similar deals in the future. But as stated above, few potential deals seem likely at this point—that is, unless the government chucks out all its rules and ownership caps, and allows media companies to control massive slices of content and distribution. That’s unlikely to happen, especially under this administration. But let’s face it: It’s never easy to predict these things. And just when it seems like no deal can emerge, some Wall Street wunderkind figures out a way to engineer one. But right now, it just doesn’t seem like Comcast-NBCU will lead to an explosion of M&A activity in the media space—although crazier things have happened.
Cable operators—as well as their satellite and telco competitors—worry a lot these days about cable networks going “over the top” to reach consumers directly. They should. But amid all the talk of broadcast and cable nets going direct, it’s easy to forget that the Hollywood movie studios have their own over-the-top plans that potentially affect everyone, distributors and networks alike. They should also be on cable’s radar screen. Let’s face it: While movies aren’t the top VOD category and hardly account for Hulu’s success (thank TV fare for that), Hollywood’s dream factory still accounts for a lot of cable’s premium content—not to mention the allure and prestige of its VOD offerings.
Movies are almost magical in their ability to transport audiences from the drudgery of their lives, if only for a couple hours. It’s powerful stuff. And the studios would love to go direct. During Fall Connection in Denver, Starz chmn/CEO Bob Clasen perhaps said it best as he sat on a panel discussing over-the-top threats with Mediacom chmn/CEO Rocco Commisso and others. Said Clasen: “We're always policing the people we buy from… They're always looking for a way to bypass me and to bypass Rocco.” He was talking about the studios, which make up most of Starz’s content pool. But the threat is equally salient for the rest of the industry.
Motion pictures have always been a big part of both broadcast and cable TV. And despite great original series that now define top premium nets, the availability of Hollywood movies is still an important lure. Movies also help anchor other ad-supported cable nets. A well-known movie—even one that’s several years old—can be the perfect lead-in for original fare or a great space filler on a Saturday night… or just a way for a net to attach its brand to a popular piece of pop culture. But increasingly, movie studios seem to be plotting and scheming as if they were evil villains in their own action/adventure thriller. At least that’s how traditional distributors may soon start looking at it.
Movie studios aren’t exactly hiding their ultimate intention to reach consumers more directly. Hulu, iTunes and others have plenty of direct-to-consumer movies in their arsenals. ZillionTV, which partners with the major studios, is also trying to cut out the middleman to some degree. Meanwhile, the studios are using every means necessary to increase exposure, including deals with video game console makers, online stores and others to create competitive VOD environments. Even studio-owned Epix (Lionsgate, MGM and Viacom/Paramount), which is trying to gain cable carriage the old fashioned way, is simultaneously creating an Internet presence for its new and extensive back-catalog of movies through EpixHD.com. As video distributors work on their own master authentication systems to contain their subs within sponsored online bubbles, it’s unclear how EpixHD.com would integrate into those efforts—if at all. Right now, it’s just for Epix TV subscribers. But the studios could always open it up to anyone willing to pay an online subscription fee or even implement a pay-as-you-go system (especially if cable continues to balk, and Epix finds itself unrestricted by license deals). Verizon is the only major distributor to say “yes” to Epix. Maybe others should do so as well, if for no other reason to discourage Epix from someday going completely over the top.
All of the major production studios also churn out TV programming, of course. And they’re probably not looking to cannibalize their own lucrative deals with networks, which pay for them through the license fees they collect from distributors. But this complicated and decidedly symbiotic chain of relationships is starting to weaken. And it may not be the content aggregators (ie, the cable networks) that ultimately become the weakest link. Rather, it may be the Hollywood studios and production houses that end up most disrupting this tried-and-true business model.
The good news is that cable operators and programmers have immense power here. A Comcast-NBCU, for example, is on more than equal footing with any one of the big studios. That’s more than we can say for the beleaguered movie-theater chains, which now face an MPAA that’s lobbying for new copy protections to make it easier to release movies via cable and satellite while they’re still in theaters. It just goes to show that some over-the-top plans aren’t always bad for cable. But they’re usually bad for somebody.
By now, everyone has heard about today’s big bombshell that Apple wants to eat cable’s lunch by offering a TV subscription service for about $30 per month. The service would work on multiple Apple devices, but the big elephant in the living room is Apple TV, which execs have always called a “hobby” but which many have suspected is really just cover for: “Yeah, it’s our one unsuccessful product, and we’re a little bit embarrassed.” To be sure, if any company was going to operate a viable “over-the-top” service that rode broadband pipes to deliver high-quality TV content, it would be Apple. It already has a practical monopoly when it comes to iTunes and music. It hasn’t forged the same kind of dominance on the video side, despite its best efforts—partly a result of Hulu’s entry into the marketplace. Now that Hulu plans to switch to a subscription service next year, Apple’s ambitions to create a similar subscription model through iTunes seem perhaps a bit more realistic. Some 75 million people already patronize the iTunes store, and it’s plausible to imagine a large portion of them plunking down $230 for the box and then another $30 per month to get a cable-like service over broadband. They already have a billing relationship through iTunes—and Apple just makes it so, so easy to buy stuff.
In a way, cable operators have set themselves up for this scenario by failing to get away from the leased set-top model despite years of talk about it. Tru2Way is supposed to help, but now—after years of work developing the spec—some are starting to question whether even that’s already obsolete. Unbelievable. VOD navigation through cable set tops is an increasingly frustrating experience, made more so by the availability of alternatives like gaming consoles and, yes… Apple TV. This dichotomy has unfortunately created an impression in consumers’ minds: Cable set-tops are clunky; third party set-tops are cool. Cable operators are of course rolling out newer and better set tops (if nothing else, to compete with AT&T and Verizon), but most consumers are still coping with old boxes that almost seem transplanted out of the 1970s at this point.
So what does any of this have to do with Apple’s attempts to create a TV subscription service? Everything. That’s because Apple is the all-time master of image and consumer marketing. Imagine the TV commercials. Maybe Apple will hire John Hodgman (the guy who plays “PC” in those hilarious ads) to play the cable guy, hawking his archaic set-top box with the red display. On second thought, don’t imagine that. It’s too painful.
But here’s the good news: While Apple is a force that can’t be ignored, cable operators and their satellite and telco competitors all have a number of things going for them in this potential fight. For one thing, programmers aren’t stupid. They aren’t about to jeopardize existing license fees just to latch their brands onto the Apple cool-wagon. At $30 per month, Apple is going to discover the cruel economics of the cable business as it tries to get expensive but popular nets to play ball. Add a few consumer gotta-haves to the service, and the license fees add up to $30 or more pretty darned quickly. Not only that, but Apple faces other complications—namely, the existence of soon-to-be-subscription service Hulu and its partners NBCU, News Corp. and Disney. If Apple can’t convince those companies to succumb, it might as well keep selling Apple TV as a really nice VOD and streaming-personal-media-from-the-computer service. And for now, that’s truly a hobby. If it wants to turn Apple TV into a big business, it needs to get big programmers on board. And with TV Everywhere still in flux, Comcast about to buy NBCU, Hulu planning its own subscription service and content providers generally reluctant to screw up their traditional dual-revenue stream, Apple faces an uphill battle to get this done any time soon. But then again, no one thought Steve Jobs would convince dinosaur record labels to embrace iTunes in the wake of the Napster disaster. And he did. Perhaps anything is possible.
