The crowd at Dodger Stadium gave their Hall of Fame announcer a standing ovation when the team revealed during tonight’s game that he’ll be back in the booth next season. Vin Scully will return to announce Dodger games for a 66th season, more than any other broadcaster with a single team. The announcement was flashed on the scoreboard during the second inning. “Naturally there will come a time, when I will have to say goodbye” Scully, 86, said in a statement, “but I’ve soul-searched, and this is not the time.” The timing is good for Time Warner Cable, which could use a shot of positive PR right now. Earlier today, FCC Chairman Tom Wheeler blamed the cable net for the impasse that is keeping most of Los Angeles-area pay TV customers from seeing the Dodgers — whose local TV rights are controlled by TWC’s SportsNet LA. Right after the announcement, TWC sent out a press release touting a postgame interview with Scully that will be available exclusively on — you guessed it — SportsNet LA.
UPDATE: 5:37PM: The company behind SportsNet LA isn’t getting any sympathy from the country’s top satellite TV provider regarding the impasse over Dodgers telecasts in Los Angeles. DirecTV issued an unambiguous statement today in the wake of FCC Chairman Tom Wheeler blaming Time Warner Cable for the mess and threatening to take action if it isn’t resolved soon. And the satcaster believes it speaks for a number of pay TV rivals: “We agree with Congressman Sherman that any loyal Dodger fans deserve the opportunity to see games,” DirecTV said, “yet not at the expense of the millions of other AT&T U-verse, Charter Communications, Cox Communications, DIRECTV, Dish Network, Mediacom, Suddenlink Communications, Verizon FiOS and other families who have little or no interest in paying for Time Warner Cable’s excess. Rather than force everyone to bail Time Warner Cable out, the simplest solution is to enable only those who want to pay to see the remaining Dodgers games to do so at the price Time Warner Cable wants to set.”
Earlier today, TWC said it was open to having an arbitrator settle the matter, but DirecTV has shown no interest in that idea. “We are willing to enter into binding arbitration with DirecTV, and we appreciate the Congressman’s concern for Dodger fans,” TWC spokesman Andrew Fegyveresi said in a statement. “We prefer to reach agreements through private business negotiations, but given the current circumstance, we are willing to agree to binding arbitration and to allow DirecTV customers to watch the Dodgers games while the arbitration is concluded
PREVIOUSLY: 1:17PM: FCC Chairman Tom Wheeler has had it with the disputes that have kept most Los Angeles area pay TV customers from seeing the Dodgers — whose local TV rights are controlled by Time Warner Cable’s SportsNet LA. “Inaction is no longer acceptable,” Wheeler says in a tough letter today to TWC chief Rob Marcus. “I strongly urge you to end the impasses that are depriving Los Angeles consumers from being able to watch their home baseball team.” He adds that the FCC “intends to monitor this situation closely in order to determine whether intervention is appropriate and necessary.”
Announced early last year, SportsNet LA was born out of the 25-year, multibillion-dollar deal Time Warner Cable inked with the Dodgers for broadcast rights. Sources say TWC is seeking $4-$5 per subscriber per month for channel in the first year of the contract. Roughly 70% of LA remains without SportsNet including DirecTV, which has close to a 30% share of the market with more than 1.2 million subs.
AT&T customers should start to see fewer buffering delays when they watch Netflix as a result of the new interconnection deal. The actual agreement was made in May. Since then they’ve “been working together to provision additional interconnect capacity to improve the viewing experience for our mutual subscribers,” the companies say. “We’re now beginning to turn up the connections, a process that should be complete in the coming days.”
Netflix has complained that the deals that require it to pay to improve the quality of its transmissions effectively run afoul of the FCC’s goal to promote net neutrality. It has agreements with Comcast and Verizon similar to the new one with AT&T. Comcast, for one, has countered that Netflix is one of the biggest users of Internet bandwidth. What’s more, net neutrality rules apply to the links between an Internet service provider and the consumer, not the ones connecting content providers to ISPs.
Related: The ABCs Of Net Neutrality
The FCC is investigating these so-called peering arrangements as part of its effort to craft new net neutrality rules.
The Government Accountability Office dinged the FCC in report released today for failing to collect enough information to judge TV station joint-operation deals. The FCC wants to tighten restrictions to keep stations from combining ad sales or newsgathering resources. Critics of the deals say that broadcasters often use them to do an end-run around rules that bar a company from owning multiple stations in a market, thereby weakening competition and narrowing the range of local voices. Station owners counter that deals help by making it possible for financially weak stations to stay in business.
But the FCC has “not collected data or completed a review to understand how broadcaster agreements are being used and the potential impacts with respect to its media ownership rules and the corresponding policy goals of competition, localism, and diversity,” the GAO says.
Time Warner CEO Jeff Bewkes has a problem. Fox CEO Rupert Murdoch is preparing to sweeten his offer for the owner of Warner Bros, CNN, and HBO after it rejected an $80B cash-and-stock proposal last month. And Bewkes, who says he wants to keep Time Warner independent, has few takeover defenses. What can he do? Here are a few of the leading options that Time Warner execs and their advisors at Citigroup are weighing.
Combine with CBS: This would make Time Warner toxic for Fox: The FCC would not allow Murdoch to control two of the four biggest networks, and two of the largest TV station groups with overlaps in the nation’s largest markets.
And the business logic of a Time Warner-CBS combination is compelling. CBS chief Les Moonves would like to diversify his company to make it less dependent on domestic TV advertising. (He has already said that he’d like to buy CNN if Fox prevails with Time Warner and puts the news channel on the block.) Moonves also has made it clear that he’d like to play a bigger role in movies — his CBS Films appears to be struggling to figure out its identity. CBS could address these concerns by blending with Time Warner’s cable channels and movie studio.
The chief obstacle is that CBS is controlled by Sumner Redstone, who also owns Viacom. He hasn’t wanted to give up either property, and some bankers believe he’d prefer to …
WGA West President Chris Keyser sent a “private” email today to select members of the guild in a pitch for money to support the WGA political action committees’ lobbying efforts. Guild leaders, who oppose virtually all media mergers, used Fox’s proposed takeover of Time Warner as the drumbeat to scare up money to support its PAC’s ongoing political activities.
According to the guild’s latest filing with the Department of Labor, its political action committee spent $347,037 last year on “political activities and lobbying,” and it wants to raise even more this year. The PAC was formed in 2009, and the guild says that it is funded solely from voluntary contributions from its members. “WGAW assets will not be used to fund contributions to the WGAW PAC,” the guild told the Department of Labor. “WGAW PAC will solicit and raise voluntary contributions from the WGAW members, which will be used to support political activities on behalf of writers.” The guild’s PAC is administered by an 11-member committee that includes the guild’s elected officers and executive director. Day-to-day operations are delegated to a firm of election law attorneys.
In the supposedly private email, Keyser and negotiating committee co-chairs Chip Johannessen and Billy Ray pointed to a New York Times headline about the proposed Fox takeover of TW (“$80B Offer From Rupert Murdoch Puts Time-Warner In Play”) saying, “If this headline scares you — and it should — then consider this a call to arms.” The email said the pitch letter was “paid for” by the guild’s political action committee.
NBC and cable networks led by USA “were trading at a 20% discount to our competition” in the cost-per-viewer of ad sales before the recent upfront market, NBCU chief Steve Burke told analysts this morning. “We’re now at about a 10% discount.” Comcast‘s entertainment arm says it bucked a trend in the upfront — seen as generally down 5% vs last year — as it benefits from the growing popularity of its shows, and a decision to sell broadcast and cable ad inventory together. “If the industry was down 5% and we were up 10%, that’s a 15% difference vs what we would have done” if NBCU had sold broadcast and cable separately. “It’s a swing of $750M” that will go “a long way toward closing monetization gap.”
Netflix Touts ‘Orange Is The New Black’ As Q2 Earnings Meet Expectations; Streaming Service Tops 50M Subs
Shares are up about 2% in early post-market trading, though probably mostly due to subscriber gains — topping 50M streaming customers worldwide for the first time — rather than the financial results for Q2. Netflix generated $71M in net income, up from $29.5M in the period last year, on revenues of $1.34B, +25.4%. While the growth is impressive, it was also expected: Revenues came in just a little ahead of the $1.33B that analysts anticipated. Earnings at $1.15 a share were a penny shy of the consensus forecast.
But the company says it had 36.24M domestic streaming customers at the end of the quarter, up 570,000 from March, which it attributes to “our ever-improving content offering, including Orange Is The New Black Season 2.” Netflix expects an additional 1.33M in Q3. On the international side, streaming customers increased by 1.12M over the three-month period to 13.8M. But the company lost 342,000 DVD-by-mail customers, ending the quarter with 6.17M.
Looks like Rupert Murdoch can’t acquire everything he wants. “Sorry can’t buy Trib group or LA Times — cross-ownership laws from another age still in place,” he tweeted overnight. He salivated over Tribune‘s papers which include the Chicago Tribune, Baltimore Sun, as well as the Los Angeles Times. The parent company has wanted to sell them, and now plans to spin them off in a separate entity that will be publicly traded beginning August 4.
Murdoch still has plenty to keep him busy: Fox disclosed this week that it made an $80B offer for Time Warner, which the company rejected. And News Corp — Murdoch’s publishing company — is eyeing Time Inc, the publishing company that Time Warner just spun off.
This is a setback for Aereo‘s effort to carry broadcasters’ programming for relatively low fees. The U.S. Copyright Office says it “does not believe Aereo qualifies” for a designation as a cable service, which would enable the streaming service to have what’s known as a compulsory license to offer broadcast signals with fees set by the government. Internet transmissions of over-the-air TV “fall outside the scope” of the copyright rules that apply to cable companies; they just apply to services “regulated as cable systems by the FCC,” the arm of the Library of Congress said in a letter sent to Aereo yesterday.
Last month the U.S. Supreme Court said that Aereo can’t stream broadcast signals without payment because it seemed to resemble a cable distributor — which would be legally bound to pay to retransmit local TV stations. Even so, the Copyright Office says that “We do not see anything in the Supreme Court’s recent decision…that would alter” its view that the rules just apply to companies that the FCC deems to be cable systems. That could backfire on Aereo: FCC-designated cable companies are governed by communications laws that require them to negotiate fees directly with broadcasters.
Warning that Internet video distribution could, like cable television, become “dominated by a few vertically-integrated conglomerates,” the WGA West made its last pitch to the FCC today for proposals to protect Internet neutrality. The FCC is expected to hand down its new policy on the issue within a few weeks, following the close today of a public-comment period on the latest proposal to regulate Internet transmission of video and other data.
In January, the U.S. Circuit Court of Appeals in Washington D.C. struck down parts of the FCC’s 2010 rules, leading to a new round of guidelines, including a controversial provision that would say Internet Service Providers “may not act in a commercially unreasonable manner to harm the Internet.”
Today was supposed to be the deadline for people to respond to the FCC’s proposed open Internet rules — the ones that HBO’s John Oliver famously lambasted last month. But the agency extended the comment period to midnight on Friday after “an overwhelming surge in traffic on our website” made it “difficult for many people to file comments” on the FCC’s electronic filing system, it says today. “Please be assured that the Commission is aware of these issues and is committed to making sure that everyone trying to submit comments will have their views entered into the record,” the agency says, adding that people also can contribute to the public record by emailing their views to email@example.com.
The public response could be unusually important to the proceedings because the commission itself is so divided on a key question: Should it reclassify the Internet as a kind of telecom service, which the FCC can clearly regulate, or keep it defined as an information service, which requires the agency to take a lighter touch? In January, the U.S. Court of Appeals in DC remanded the net neutrality rules the FCC adopted in 2010 saying that they overreached the agency’s authority over an information service. Two of the Democratic commissioners are open to reclassifying the Internet. But the two GOP members strongly oppose that. Chairman Tom Wheeler steered a middle course. He proposed extensive changes without reclassifying the Web — but said that he considers it an option.
Open Internet advocates say that …
Business Briefs: DreamWorks Animation Stock Downgrade; Aereo Strategy Questions; Cable Nets Rocky Forecast
DreamWorks Animation Shares Touch 52-Week Low
The stock is down about 1% in early afternoon trading after taking a hit early this morning following B. Riley’s Eric Wold’s decision to abandon his “buy” recommendation. It touched $21.90, a 12-month low, after the analyst dropped his price target nearly 22% to $25. Wold acknowledged that his upgrade in March, when the stock value was 23% higher, “proved to be ill-timed and premature.” He calls the box office for How To Train Your Dragon 2 “disappointing” which “may turn DWA into a ‘show me’ stock and keep a ceiling on valuations until more consistent box office results develop.” The good news? Wold still likes DWA’s plans to diversify and expand its TV production. He also says that Dragon shouldn’t require a write-down.
Aereo’s Effort To Define Itself As A Cable Company Could Backfire At FCC: Analyst
Aereo may have bought some time with its attempt to redefine itself as a cable company, but it likely won’t succeed, Guggenheim Securities’ Paul Gallant says this morning. He figures that U.S. District Court Judge Amy Nathan — who’s overseeing broadcasters’ plea for an injunction to shutter the streaming service — will want to hear additional arguments after the U.S. Supreme Court recently ruled that Aereo could not take over-the-air signals without payment. Justices likened it to a cable company: Copyright law gives operators the right to a compulsory license, which enables them to carry broadcast signals if they pay a relatively low fee set by the Copyright Office. But if the FCC also deems Aereo to be a …
I can tell you that DirecTV today filed a breach of contract complaint against Al Jazeera America. I can tell you that the civil case complaint demands a 10-day jury trial and seeks more than $25,000 but also is looking for declaratory relief. Finally, I can tell you that the 17-page filing by the satellite service provider has something to do with the Affiliation Agreement that DirecTV entered into with AJAM predecessor Current TV back on July 13, 2005, just over two weeks before the channel co-owned by Al Gore debuted. Beyond that, and who the plaintiffs’ lawyers are, virtually everything else in the complaint (read it here) is redacted. DirecTV reps had no comment when I contacted them about the blacked-out filing. Al Jazeera America weren’t saying much either. “We have not reviewed the complaint and therefore have no comment,” an AJAM spokesperson told me today. A non-redacted version also has been filed in LA Superior but is under seal, I’ve learned.
Could this complaint be something similar to when Time Warner Cable dropped Al Jazeera America from its service minutes after the Qatar-owned news channel bought Current TV for $500 million back in January 2013. Saying it didn’t consent to the sale, TWC jettisoned AJAM. The new station launched on August 20 that year, and a few months later the two sides …
Web videos taken from shows that aired on TV with closed captioning also will have to offer the text option online, the FCC ruled today. “Americans living with intellectual and physical disabilities stand to benefit the most from broadband-enabled technologies but are among the least connected segments of our society,” FCC Chairman Tom Wheeler says.
Congress authorized the rule making in the Twenty-First Century Communications and Video Accessibility Act of 2010, which is designed to promote equal access to all forms of programming. In 2012 the FCC required closed captioning in full-length TV shows offered online but not in clips.
And they’re off…The FCC officially started its informal 180-day clock to review Comcast‘s planned $42B acquisition of Time Warner Cable, and its side deals to transfer systems to Charter Communications and a new spinoff entity temporarily (I hope) called Spinco. FCC chairman Tom Wheeler and his four fellow commissioners set an August 25 deadline for comments and petitions to deny the applications. Parties must respond by September 23, and replies to those comments are due October 8. Although the FCC wants to reach a decision within 180 days, regulators often stop the clock if they need additional time to sort through issues on major deals.
UPDATE: Aereo CEO Chet Kanojia has sent a message to “users and supporters” with a link to today’s letter to the court that outlines the company’s new position. “From the beginning, it has been our mission to build a lawful technology that would provide consumers with more choice and alternatives in how they watch television,” he says. The Supreme Court decision against Aereo resulted in “a challenging journey for our team, but your support has continued to lift and propel us forward. We remain committed to building great technologies that create real, meaningful alternatives for consumers.”
PREVIOUS, 4:14 PM: The Supreme Court‘s recent ruling against Aereo may have left an opening for it to stay in business — but now as a kind of cable service – its lawyers said today in a joint letter with broadcasters outlining their views to the U.S. District Court in New York. (Find it here.) The high court concluded that the streaming service was so similar to cable companies, which are required to negotiate a deal if they want to carry broadcasters’ programming, that it could not simply pluck signals from the airwaves without paying. That’s significant, Aereo says, because the classification also means that it’s “now entitled” to work out a deal — which broadcasters, in turn, must negotiate in good faith. Indeed, Aereo says, its eligibility for what’s known as a compulsory license “must be decided on an immediate basis or [its] survival as a company will be in jeopardy.” It suspended service shortly after the Supreme Court decision.
Broadcasters say that Aereo, having lost once, is now raising “a brand-new defense” that it “never before pled (much less litigated).”
The Dish Network chairman made his plea on Monday in meetings with all five FCC commissioners and several staffers, according to a Dish filing today. Comcast’s $45B deal for Time Warner Cable “presents serious competitive concerns for the broadband and video marketplaces and therefore should be denied,” Dish told regulators, according to its account of the talks. “There do not appear to be any conditions that would remedy the harms that would result from the merger.” Charlie Ergen said that Comcast could hobble Internet video services at three choke points: The cable company would control last-mile connection to the home and the point where content providers access Comcast’s network. In addition, it could squeeze potential rivals by devoting lots of its web capacity to special high-speed lanes for favored services. “Each choke point provides the ability for the combined company to foreclose the online video offerings of its competitors,” the filing says.