The financial and technological proposals are incredibly complicated, but they provide the kinds of details that broadcasters have wanted to see before they decide whether to let the federal government auction to broadband providers some of the airwaves now used for TV. The process being circulated by FCC Chairman Tom Wheeler includes a reverse auction, where station owners would indicate how much cash they want for their spectrum and can drop out if the bidding is too low. There’s also a forward auction, where wireless companies would raise their offers in successive rounds. When it’s all done, the FCC will repack the spectrum — making usage efficient by assigning new channels to the broadcasters who stay on the air. There’s also a plan to accommodate low-power TV, translators, and wireless microphones that will be affected by the changes. “Whether television broadcasters participate in the Incentive Auction will be purely voluntary, but participation in the Incentive Auction does not mean they have to leave the TV business,” Wheeler says in a blog post. “New channel-sharing technologies offer broadcasters a once-in-a-lifetime opportunity for an infusion of cash to expand their business model and explore new innovations, while continuing to provide their traditional services to consumers. We will ensure that broadcasters have all of the information they need to make informed business decisions …
In this week’s podcast, Deadline’s executive editor David Lieberman and host David Bloom untangle the latest twists in the giant Comcast-Time Warner Cable merger proposal, as a Senate committee grills Comcast’s “Jedi Master” of a chief lobbyist and Charter prepares a challenge at the TWC annual meeting. The Davids also talk about the very different tone of two just-signed retransmission deals, at least compared to last year’s Time Warner Cable-CBS brawl; how IMAX reduced its stake in China while increasing its influence; and this week’s National Association of Broadcasters conference, where FCC Chairman Tom Wheeler urged broadcasters to think like “tech disruptors” and NAB chief Gordon Smith called for a federal plan for broadcasting.
UPDATED: The Senate Judiciary Committee hearing into Comcast’s $45.2B acquisition of Time Warner Cable wrapped after three hours today. And Comcast EVP David Cohen upheld his reputation as a lobbying Jedi Master, although critics of the deal scored by pointing out how it could lead to higher prices and problems for independent programmers. Cohen started off strong in his opening statement: He cast his company as the embodiment of the American Dream — and announced that it has more than 1M WiFi hot spots with plans to boost their transmission speeds. “This is the 13th time we’ve increased Internet speeds in 12 years,” he says. Public Knowledge’s Gene Kimmelman — a former Justice Department antitrust lawyer — hit back. He charged that it would be “anathema to Comcast” if programmers want to offer content directly to consumers via the Internet for a low cost. The cable giant is committed to “charging top dollar” and, as owner of NBCUniversal, would be like an octopus with tentacles “each capable of squeezing innovation.”
In regard to pricing, Cohen said, in response to a question from committee Chairman Patrick Leahy (D-Vt.), that “there is nothing in this transaction that will make anyone’s bills go up….Consumers today are in the driver’s seat.” He added later that programming costs have appreciated 98% over the last decade. Later he told Sen. Al Franken (D-Minn.) — who wanted to know whether shareholders would demand higher prices — that “we have made it a point of significant discussion about our need to continue to invest to compete better with national and global competitors.” Kimmelman responded that Comcast is in the driver’s seat in the highly concentrated video and broadband markets. “The squeeze will come from Comcast,” he says. “It’s logical. They want to save money….and it could lead to significant price increases for others.”
Franken had Cohen against the ropes in a discussion about Comcast’s efforts to push customers to buy multiple or upgraded products. “When you train [sales]people to upsell, you’re not training them to sell the stand-alone product.” Cohen said that “we are allowed to train people to upsell,” but sales reps also “have to be aware of the stand-alone product” and provide it on request.
More than two dozen network-affiliated Hearst Television stations went dark on the satcaster tonight after the sides hit a wall in their retransmission talks. Dish Network‘s carriage deal with Hearst TV expired March 1, but the parties had extended the deadline to tonight at 7 PM Pacific. The blackout affects more than two dozen Hearst stations including ABC affil WCVB in Boston, the nation’s No. 7 TV market, and outlets in top 25 markets Sacramento, Pittsburgh and Tampa, FL. It comes the same day that the Weather Channel and satellite giant DirecTV settled their carriage dispute and seven months after Time Warner Cable and CBS settled their bitter retrans fight.
Tom Wheeler gave as good as he’s gotten today when he addressed a potentially hostile audience of TV and radio station owners at the NAB Show in Las Vegas. “Trust me. I get the skepticism,” he told the group which has been irked by his efforts to block local station cooperative agreements, among other things. “Here’s the former head of the cable AND the wireless industry at the NAB Show telling you he’s your friend….There is no more ridiculous metaphor.” But he assured the audience that now “I have the American people as my client.” And they would be best served if broadcasters think differently about their medium.
“We are at an inflection point where broadcast licensees can move from being the disrupted, to being the disruptor,” much like Netflix, the FCC chairman says. Instead of just hitting up pay TV providers for retransmission fees, local stations can create vibrant local news and entertainment online services. “It can be the basis for a fixed and mobile-delivered cable-like service. You possess the two most important components of a successful digital strategy: compelling content – specifically, the most important content: local content – and the means to promote it. …For all the wonderful things the Internet has done, one place that it has yet to deliver on its promise is local content.” Net neutrality would ensure that these services are carried online. But “your window of opportunity won’t stay open forever,” he says, nothing that others including Yahoo and Verizon are preparing deals to offer competitive content.
Comcast Sets Stage For Testy Senate Hearing, Telling FCC That Time Warner Cable Acquisition Serves Public
UPDATE, 10:06 AM: Comcast EVP David Cohen just fleshed out in a press call some of his company’s arguments for the Time Warner Cable deal. To those who say the combined company would be too big he says that “in this particular case we think big is good” — it would be better able to offer new and improved services. And if Comcast is wrong “it doesn’t make any difference really because, as a customer, you’ll have the exact number of choices as you had before the transaction.” The only change: With Comcast instead of TWC as a broadband or video provider consumers’ “choice will be better.” He adds that Comcast is focused “like a laser” on improving the customer experience. (Sound familiar?)
PREVIOUS, 8:09 AM: This is the kind of thing you’d expect the cable giant to assert in a regulatory filing — and that will be roundly contested, including tomorrow at a Senate Judiciary Committee hearing on the $45.2B deal. Content companies that might oppose the deal “have strong relationships” with the committee, which oversees copyright matters, Guggenheim Securities’ Paul Gallant says. What’s more, the committee includes two strong critics of media consolidation: Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.).
Comcast detailed its public interest arguments in a 175-page document delivered to the FCC this morning. It “lays out in considerable detail how Comcast and TWC are better together for millions of customers and businesses, describing the exciting enhanced services and other concrete consumer benefits that will be available because of the transaction,” Comcast EVP David Cohen says in a blog post. In addition to cable and Internet services, Comcast owns NBCUniversal.
The company indirectly takes issue with Netflix CEO Reed Hastings’ claim that Comcast imposed an “indirect tax” on the streaming video company in a recent deal: Netflix agreed to pay Comcast directly to access its broadband lines in a way that will deliver the best possible transmissions to its customers. Comcast says it has “no economic incentive” to hit up so-called edge providers because its customers “place a high premium on being able to access any Internet content they want.” Comcast would have about 30M broadband customers after acquiring TWC.
National Association of Broadcasters CEO Gordon Smith offered a healthy plate of red meat to his constituents today as he urged officials to ensure that TV and radio have the same kinds of regulatory protections often provided for broadband and other media. “On one hand, government can treat us as if we are dinosaurs and does what it can to encourage TV stations to go out of business,” he told broadcasters at the kickoff of the annual NAB Show in Las Vegas. “On the other hand, the FCC says we are so important and powerful that two TV stations can’t share advertising in the same market, while it’s OK for multiple cable, satellite and telecommunications operators to do so. Which is it? Too powerful or irrelevant? It can’t be both.” He says it’s only fair to develop coordinated policies to give the industry as much support as the government offers for cable and wireless providers. ”Why doesn’t the FCC have a National Broadcast Plan?” he says.“Why is there no focus to foster innovation and investment in broadcasting to ensure our business continues to be a world leader alongside our broadband industries? Where is the FCC’s gusto and determination to embrace broadcasting’s values and public service responsibilities?”
On the day the king of late-night longevity announced his plans to retire, we thought we’d take a look back at some of David Letterman‘s most memorable moments. We’ll start with two unforgettable incidents from his NBC days and work our way up through the CBS era. First, we set the wayback machine to the first Reagan administration …
Andy Kaufman vs. the Wrestler, July 1982
The polarizing comic was known at the time for wrestling women and mouthed off until he finally got into the squared circle with a man. He took on pro grappler Jerry “The King” Lawler and lost, falling victim to a piledriver. A few months later, the two faced off on Late Night:
The National Association of Broadcasters is upset, but consumer groups are gleeful, after the FCC followed Chairman Tom Wheeler’s lead and approved orders that limit TV stations’ ability to jointly negotiate ad sales and retransmission consent deals. In a 3-2 vote on party lines, commissioners said that a station that sells at least 15% of the ads for a would-be rival will be considered to own the station — which could run afoul of ownership caps. Broadcasters can get a waiver if they demonstrate that the arrangement serves the public, or doesn’t affect the smaller station’s programming. Companies have two years to either secure a waiver or unwind sidecar deals. In a separate, 5-0 vote the FCC barred joint retransmission consent negotiations involving two of the four highest-rated stations in a market. Wheeler says that the changes will promote competition and diversity. TV station collaborations represent “a growing end run” around the FCC’s ownership limits.
Former Commissioner Michael Copps, now with Common Cause, says that he hopes the vote “marks the long overdue start of a new era of public interest leadership.” Another FCC vet, former Chairman Michael Powell — now CEO of the National Cable and Telecommunications Association — also praised the retransmission consent rules saying that “such coordinated behavior harms consumers by artificially inflating the cost of watching over-the-air broadcast stations on cable systems.” But NAB’s Dennis Wharton says that the vote threatens the ability of “free and local TV stations to survive in a hyper-competitive world dominated by pay TV giants.” He adds that “the public interest will not be served by this arbitrary and capricious decision.”
Investors seem to be clearing their heads from the adrenaline jolt they experienced yesterday when Bloomberg reported that Dish Network chairman Charlie Ergen recently approached DirecTV CEO Michael White to discuss a potential merger — in part as a response to Comcast’s $45.2B deal to buy Time Warner Cable. Shares in both satellite companies shot up on the news, but have started to settle as of midday trading today leaving Dish +5.5 over the day and a half period with DirecTV +2.6%. The big surprise in the report was that Ergen is still interested in a deal: He has been focused lately on amassing wireless spectrum to launch a broadband service, and has made skeptical comments about the prospects for traditional satellite TV. But he and White have noted that the companies could save a lot of money — if regulators would let them combine.
EXCLUSIVE: The Writers Guild of America has offered a chilling picture of the future of television to the Federal Communications Commission in a bid to block the proposed Comcast-Time Warner Cable merger.
In February, Comcast agreed to buy Time Warner Cable for $45 billion in a deal that would combine the two largest cable companies in the United States. The deal must still be approved by the FCC.
“The FCC should deny the proposed merger,” the WGA said in a brief filed with the FCC on Friday, noting that the merged entity “would control almost 30%” of the cable and satellite TV market.
Such a merger, the guild argued, “would give too much power over broadcast and cable networks. Comcast’s ability to blackout one-third of television viewers would force networks to agree to terms and rates set by Comcast, harming investment in programming.”
A merged Comcast-Time Warner would also control approximately 30% of the broadband Internet market, the guild said, “giving the company the means to limit competition from online video providers like Netflix and Amazon. Comcast has already demonstrated its inclination for anti-competitive behavior by exempting its own streaming service from data caps when watched on an Xbox, while applying data caps to competing services.”
In economic terms, the guild told …
Will Netflix end up challenging Comcast’s $45.2B deal to buy Time Warner Cable? It didn’t look that way last month when they made what they described at the time as a “mutually beneficial” interconnection deal that involved Netflix payments to Comcast. But the streaming video company’s chief Reed Hastings cast the agreement in a different light in a blog post today. He called the payments an “arbitrary tax” that he had to pay to improve the quality of transmissions which had slowed on the cable company’s systems. “If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future,” he says. He also called this a net neutrality issue, even though it involves Netflix transmissions to Comcast — not the ones the cable company sends to subscribers. Without what he calls “strong net neutrality,” major Internet providers including Comcast “can demand potentially escalating fees for the interconnection required to deliver high quality service.” That will drive up consumer costs: “For any given U.S. household, there is often only one or two choices for getting high-speed Internet access and that’s unlikely to change. Furthermore, Internet access is often bundled with other services making it challenging to switch ISPs. It is this lack of consumer choice that leads to the need for strong net neutrality.” Comcast, he says, “has been an industry leader in supporting weak net neutrality.” Netflix …
In this week’s podcast, Deadline Executive Editor David Lieberman and host David Bloom preview CinemaCon, the big annual gathering of theater operators in Las Vegas that puts the popcorn in popcorn movies. They also examine the NAB’s claims to the FCC of a faltering local TV business; update the Comcast-Time Warner Cable merger with news from the states; whistle through the highlights of the relatively quiescent Disney annual meeting; examine the implications of the recent settlement of the long-running Viacom-YouTube copyright lawsuit; and ponder what’s next for Yahoo, given the imminent stock IPO by Alibaba, which it partly owns.
This isn’t what you usually hear from broadcast execs — and it certainly doesn’t jibe with the industry’s message to Wall Street. But the National Association of Broadcasters takes the bearish view in a new filing at the FCC that responds to a Justice Department attack on arrangements that enable a TV station to handle ad sales, programming, and other chores for rivals in the same market. The FCC is poised to restrict these widely used deals. That would be dangerous, the NAB says, because stations need help: “Largely as a result of marketplace fragmentation and the growing number of options for advertisers (including online), television broadcasters’ revenues and profits have fallen significantly,” it says. Ad sales were lower in 2012 than they were in 2004, and a forecast from SNL Kagan shows that they “will not reach the level of revenues earned in 2004 until the year 2020.” Broadcast lobbyists are singing the blues to counter the Justice Department’s claim in a recent filing that shared services agreements make stations less competitive and diverse. Although the deals are supposed to protect both goals, by propping up weak stations, “our investigations have revealed that these ‘sidecars’ often exercise little or no competitive independence from the other station.” But the NAB says the argument lacks “direct evidence” and its proposal “would harm consumers and the public interest.” The collaborations “have become vital to local station operations.” They need economies …
This is a surprising change, but an unavoidable one, Wells Fargo Securities’ Marci Ryvicker says, as FCC Chairman Tom Wheeler begins to crack down on arrangements that enable rival stations in a market to collaborate on ad sales, programming, and retransmission consent negotiations. Many consumer groups and the Justice Department say these cozy so-called “sidecar” deals diminish competition and local progamming, and effectively circumvent FCC caps on the number of stations a company can control in a market. The National Association of Broadcasters says the deals make programming more local and diverse. In any case, “NO pending [merger] deals with any sort of ‘shared’ arrangements will close until/unless they are restructured to exclude such stations and related loan guarantees,” Ryvicker says she was told by her sources in Washington. As a result, she decided it’s time to recommend that investors hold any TV station company stocks they own, but not buy additional shares. She says that she’s “frustrated” because she still likes “the underlying fundamentals of the business, as we see strong core and political advertising revenue trends, robust [free cash flow] generation, and a nice growth trajectory” for income from retransmission consent deals with pay TV distributors. But the growing antipathy to the shared services agreements “is likely to put pressure on trading multiples as well as lead to estimate reductions (especially for those with deals pending before the FCC),” Ryvicker says. “We really …
PaleyFest: ‘Orange Is The New Black’ Panel Talks New Backstories, Screwdrivers And Who “Shakes Everything Up” In Season 2
Authentic. Risky. Diverse. Conversation starter. Those are the kinds of words that often pop up in describing Orange Is the New Black, and they were among the many topics creator Jenji Kohan and a dozen castmembers discussed during the prison dramedy’s PaleyFest panel Friday. “Our focus is on character, and these people are individuals,” Kohan said early on. “We talk about them like they’re people we know. And you don’t approach it like, ‘Well what does the black one do? What does the Latino one do?’ It’s like you know these people – you can’t view it as tokenism.” Said Laverne Cox, who plays Sophia Burset: “We should talk about the conversations that this show has sparked — who is in prison and why are people in prison, things we need to talk about more in this country. It’s important for the trans community; a lot of people are having conversations about trans people that they weren’t having. Amazing conversations about diversity, a lot of important things that we need to be talking about.” Kohan chimed in: “But it’s natural, its normative – it’s presented as something that’s part of everyone’s life. It’s not the ‘very special episode about the trans character.’ It’s normalizing this conversation.”
Related: PaleyFest 2014 Schedule
The FCC is hearing both views this week following Chairman Tom Wheeler‘s recent proposal to restrict local TV joint service arrangements. National Association of Broadcasters CEO Gordon Smith came out swinging with a charge that the regulators are making it hard for broadcasters to promote localism and diversity — objectives called for in the Communications Act — according to notes publicly filed today of his visit yesterday with Commissioner Mignon Clyburn. He says that Wheeler lacks solid evidence and “makes sweeping generalizations” that are “arbitrary and capricious” about the problems that arise when a station handles ad sales, programming, or retransmission consent negotiations for a rival in the same market. These collaborations “greatly foster localism and diversity,” Smith says. He says that Wheeler’s proposals “use a sledgehammer where a scalpel, if anything, is far more appropriate.” Smith also called it “manifestly unfair” to bar TV stations from collaborating when it “permits the cable industry to do so.” All in all, the NAB chief says, the FCC is “not doing everything it could to actually promote localism and diversity.”
Others are pressing regulators to hang tough. There’s already “ample record evidence” showing that station collaborations hurt the public, Andrew Jay Schwartzman and Angela Campbell of Georgetown Law School said in their visit with Clyburn yesterday. “If particular arrangements would serve the public interest … the Commission can and should craft …
UPDATE, 2:40 PM: Comcast’s Sena Fitzmaurice just responded to the Tennis Channel’s petition, urging the FCC to reject it as “baseless litigation” that “simply reiterates arguments that the court of appeals and the Supreme Court have already rejected.” In 2005 the companies “negotiated and signed an arm’s length contract” that Comcast has fulfilled “in exactly the way the contract requires.” The DC Court of Appeals agreed that Tennis Channel’s plea to be carried as a basic service would have “immense costs and no benefits for Comcast and that, therefore, Comcast’s carriage decision was appropriate and non-discriminatory. When given the opportunity to pursue the case at the Supreme Court, the government’s own lawyers chose not to do so.”
PREVIOUS, 12:55 PM: Tennis Channel has lost a game and a set in its discrimination cases against Comcast, but it still believes that it can win the match if the FCC agrees with a new petition asking it to review the matter again. The filing follows a U.S. Supreme Court decision last month not to review an appeals court decision that vacated a 2012 FCC order. The regulators agreed that Comcast had discriminated against Tennis Channel by putting it on an extra-fee sports tier while putting similar channels that it owns — Golf Channel and NBC Sports Network — on the expanded basic tier. The appeals court concluded that the FCC offered no evidence to refute Comcast’s position that it made a simple financial judgment that few subscribers wanted to watch tennis. Tennis Channel says that the FCC now can return to the case because “there is considerable evidence in the record that satisfies the new tests” the appeals court used to vacate the FCC’s order. If regulators look again, they “will once again conclude that Tennis Channel is correct in its view that Comcast has illegally discriminated against it.”
Pilot Locations 2014: New York Production Rises, Los Angeles Plummets, Texas Hot
By Nellie Andreeva – While California Gov. Jerry Brown is still “not committed” to expanding the state’s film and TV tax credit, Los Angeles is seeing another drop in broadcast pilot production to what appears to be an all-time low. New York, which also lured The Tonight Show franchise away from Los Angeles, returns this year as the most popular drama location and reinforcing its strong position in comedy.
Dish And Disney Finalize Output Deal That Ends Their Ad-Hopper Dispute
By David Lieberman – The companies have officially announced a “wide-ranging” deal, which “will result in dismissal of all pending litigation between the two companies, including disputes over PrimeTime Anytime and AutoHop.” The agreement calls for Dish to disable AutoHop functionality for ABC content within the C3 ratings window. The pact also for the first time allows Dish customers to access Disney’s authenticated live and VOD products.
White House Backs Broadcasters In Aereo Case
By David Lieberman and Dominic Patten – The Solicitor General’s office put the Obama administration solidly in the anti-Aereo camp with a 40-page amicus brief filed with SCOTUS.
‘The Wire’s David Simon Takes On Oprah-Produced HBO Mini On Martin Luther King
By Mike Fleming Jr. – I’m hearing that David Simon, the architect of the HBO series The Wire, Homicide and most recently Treme, will spearhead the HBO six-hour MLK miniseries adaptation of America: In The King Years, based on the celebrated book trilogy by Pulitzer Prize-winner Taylor Branch.