That wasn’t the precise topic of the Senate Commerce Committee hearing today. (It had the boring title: “The Cable Act at 20.”) But the question — as well as ones about whether the federal government over-regulates media — bubbled underneath the discussion of problems including higher-than-inflation annual pay TV price hikes, and contract disputes that sometimes result in blackouts of consumers’ favorite channels. Committee Chairman Jay Rockefeller (D-W Va.) says that there’s too little competition in a system where pay TV customers “are still forced to pick larger and larger packages of channels no matter how few they watch.” His view resonated with Colleen Abdoulah, a witness who chairs the American Cable Association which primarily represents small and mid-sized cable operators. She says that broadcasters make “crazy payments for sports (rights) because they can be forced onto consumers…This abuse of power should be outlawed.” Mark Cooper of the Consumers Federation of America also called for changes that would enable pay TV customers to just buy the channels they want. “The only way to break the market power (of major networks and programmers) is to ensure consumers have choices.”
I agree more often than not with BTIG analyst Rich Greenfield’s industry insights. So I’m surprised to see how impressed he is today with a new product that strikes me as a likely loser: Aereo. The company, backed in part by Barry Diller, just announced that it will go live in New York City on March 14. Residents willing to pay $12 a month will be able to stream signals from local over-the-air TV channels, and watch their shows on demand with the functionality of a 40-hour, dual antenna DVR. The service will only work as long as users are in the local market — not, say, if they’re on a vacation or business trip. Aereo execs expect lots of people to subscribe, perhaps in conjunction with Netflix, as a substitute for the $65 a month cable or satellite TV package. That could be revolutionary, Greenfield writes today in a blog post: “If Aereo is in fact legal, we find it hard to fathom that the traditional (pay TV) bundle will survive and that retrans payments will continue to scale as broadcasters are expecting them to over the next several years.” If he’s right, then it’s the end of the media world as we know it. The giants
2011 TV: Comedy Is Back, Soaps Are Out, Charlie Sheen Is Out Then Back, Netflix Challenges TV, & Oprah’s OWN Struggles
Who knew that the biggest TV story of 2011 would be a sitcom cast change? The Charlie Sheen meltdown and subsequent public firing from the CBS hit Two And A Half Men, followed by the show’s successful transition with new star Ashton Kutcher and Sheen’s comeback in the new comedy series Anger Management, grabbed the biggest headlines. But it was eventful year, featuring major shakeups in daytime and off-network syndication as well as ushering in new players in original programming and a comeback for comedy.
No other TV area saw more dramatic changes in 2011 than daytime. Soaps’ march toward extinction accelerated with the demise of ABC’s One Life To Live and All My Children. Two other staples of daytime TV, talk show queen Oprah Winfrey and another longtime host Regis Philbin, made their departures. Winfrey’s exit changed the landscape of daytime television, which she had dominated for a quarter of a century. With her gone, two big names threw their hats in the daytime talk show ring this year — former Today co-host-turned-CBS Evening News anchor Katie Couric, whose job change once again became a media circus, and Queen Latifah. Couric’s Disney-ABC talker launches next fall, Queen Latifah’s Sony TV-produced talk show is targeted for fall 2012.
Closing one chapter, Winfrey and the ABC soaps tried to open another, but the transition proved bumpy for all. On Jan. 1, 2011, Winfrey launched OWN: The Oprah Winfrey Network. A year and some $300 million in investment by Discovery Communications later, OWN is still struggling to find an audience and outperform the Discovery Health network it replaced. Heavily promoted entries like Mark Burnett’s reality series Your OWN Show, Oprah Presents Master Class and the Rosie O’Donnell talk show have disappointed, and the network has been mulling a more niche approach, catering to African American audiences. Winfrey will make another attempt to salvage her network with Oprah’s Next Chapter, a new weekly primetime show, which premieres on Jan. 1, OWN’s first anniversary.
There will be no next chapter for canceled ABC soaps All My Children and One Life To Live. After a five-month effort to secure financial backers and union agreements, Jeff Kwatinetz’s Prospect Park recently abandoned its plans to continue the daytime dramas online after licensing the shows from ABC in July.
While Prospect Park couldn’t find a business model that would sustain network quality series online, another company, Netflix, made a big bet this year that it can make it work. In the most significant challenge to traditional TV networks to date, the streaming giant last spring outbid the network with deepest pockets, HBO, for the David Fincher-Kevin Spacey drama House Of Cards in a deal that could be worth more than $100 million. Since then, despite the company’s stock price woes stemming from blunders in the core DVD rental/movie and TV shows streaming business like the ill-fated Qwikster spin-off and fee hike, Netflix has been aggressively building a slate of original series. In the past couple of months, it picked up Jenji Kohan’s comedy Orange Is The New Black, Eli Roth’s horror thriller Hemlock Grove and a new season of Arrested Development.
FCC Chairman Julius Genachowski is prepared to junk federal rules that limit companies from owning TV and radio stations in the same market — and go half way in doing the same for TV stations and newspapers. He’s circulating a Notice of Proposed Rulemaking that would wipe out the TV-newspaper restriction in the 20 largest markets, trade magazine Broadcasting and Cable reports citing “a person familiar with the document.” But it would keep a test that could block a combo in smaller markets if it would result in less local news, less diversity of voices, or too much concentration of economic power. Genachowski’s proposal sounds a lot like the standard that former FCC Chairman Kevin Martin, a Republican, pushed through in 2008. The U.S. Court of Appeals for the Third Circuit overturned those rules this past July, saying that Martin hadn’t given the public enough time to weigh in on them. Public interest advocates who want to preserve cross-ownership restrictions applauded the court decision. Newspaper and broadcast owners say that mergers are needed to preserve local newsrooms as their companies compete against a massive number of national news competitors on cable TV and the Internet. As part of the rulemaking process, the FCC will ask whether stations skirt the ownership limits
News Corp President/ COO Chase Carey is optimistic about the future of broadcast TV thanks to the emergence of the dual revenue stream model. That’s when, like their basic-cable cable counterparts, broadcast nets seek retransmission consent fees from cable and satellite operators to supplement ad revenue. ”I don’t think, with retransmission, we’re screwed,” Carey said about the broadcast networks today at HRTS’ first Newsmaker Luncheon of the season. “It has to be a dual revenue model, or it’s not realistic to expect broadcast to compete with cable.” Speaking of cable, Carey also said he will push for higher carriage fees for News Corp’s cable networks FX and National Geographic. “We have room to grow,” he said in the Q&A session.
It’s like broadcast TV industry’s version of a hangover. It’s already August, the marketplace should be bustling with business but only a few pitches have trickled in so far. “We’re very late this year,” a network topper tells me. Why is that? Some point to the last selling season which was so long and bruising, by the end of it everyone felt exhausted. “We all took a collective break,” one top TV lit agent says. Also, there are a lot of new scripted series — 38 — picked up by the broadcast nets for next season, almost 60% more than the 24 new series ordered last year. That, coupled with the increased volume of original series on cable, made fewer writers available to develop this year. A non-writing producer told me he has never gotten so many “not available” answers from TV lit agents when inquiring about writers.
What’s more, I hear the major studios this year don’t allow writers staffed on first-year shows to develop. The general practice had been for scribes working on new series where they would be paid as much as $40,000-$50,000 an episode to regularly take time off to pitch their own projects or work on drafts of their own pilot scripts. “We don’t want them distracted, we want them focused on those 13 episodes,” a studio head said.