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elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
reply to djrobx

Re: Sports need to be treated like movies

said by djrobx:

Agree, but it would require government intervention. The networks demand inclusion in the base package as part of contract negotiation. If DirecTV didn't agree to that, their customers would be denied the content altogether.

That's simply not true.

Directv could "hold out" as long as it takes, to sever the mandatory bundling.
If that means their customers go without certain content, so be it. Eventually, the networks would realize (feel) the loss and come back with a better offer.

If you've ever been to NAB or CES or met with cable, satellite and broadcast executives, you'd understand why they are so eager to cave and force all subscribers to subsidize ESPN. There is a substantial Sports bias in the boardroom.

Skippy25

join:2000-09-13
Hazelwood, MO

By as long as it takes I assume you mean until their competitors use this against them to take enough of their subs that they finally give in.

It will take all content providers to do it at the same time to hurt the content owners enough to cause them to rethink their model. Which is exactly why the owners negotiate contracts with long terms and with much different end dates.

The government could easily resolve this by simply stating that all contracts will be paid as agreed until X date and no new contracts can go beyond this date. That x date could be until the last big one expires (Say Comcast is the last to expire in 2/15). They can then couple this with a set mandatory expiration date for those that try to beat the deadline for when this rule comes into effect or if their contracts are already set to far out. Say 12/17 which would then provide all parties (content owners, sports leagues, productions companies) an opportunity to adjust their forecasted revenues and make the needed changes. Then ALL must be renegotiated with a la carte packaging for ALL channels along side of small, medium and large bundles. They can do bundles based on # of channels picked, content owners, themes or any other combination they see fit.


Androidian

join:2012-12-14
Purcellville, VA
Reviews:
·Comcast
reply to elray

said by elray:

That's simply not true.

Directv could "hold out" as long as it takes, to sever the mandatory bundling.
If that means their customers go without certain content, so be it. Eventually, the networks would realize (feel) the loss and come back with a better offer.

I agree in theory, but not in application.

While there would be some like me who would probably not leave DirecTV over holding out like this, there are many who would not be as willing to stay. As an example consider parents of young children who suddenly might find themselves without programming like Nickelodeon or the Disney Channel if something happened around those networks. Depending upon the channel, this could cost DirecTV a bunch of revenue. (What if it was something like ESPN, or TBS, or TNT, that draws a lot of viewers?)

One also need consider that DirecTV's objective in holding out wouldn't be the same as yours or mine. At the end of the day, their focus is money (maximizing bottom line profit) and not altruism (working to achieve a cause for the betterment of others). Thus, in holding out, DirecTV would be likely to fold if offered a smaller price increase - so the scenario that both you and I dream of isn't likely to ever be held out as a serious bargaining chip.

What we really need is for an established company like DirecTV to be willing to take a large financial risk and change its operating model entirely. Unfortunately, I wouldn't hold my breath - as "established company" and "large financial risk" don't go well together these days. Maybe a smart start-up could try to do this (it would be a more likely scenario), but they're not likely to have successes against the content providers since they won't have much bargaining power.

elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
reply to Skippy25

said by Skippy25:

By as long as it takes I assume you mean until their competitors use this against them to take enough of their subs that they finally give in.

It will take all content providers to do it at the same time to hurt the content owners enough to cause them to rethink their model. Which is exactly why the owners negotiate contracts with long terms and with much different end dates.

Any one provider could achieve the desired result by holding out, as long as it takes. But they would have to assume the risk, when in today's climate, it is easier just to pass the cost on.

said by Skippy25:

The government could easily resolve this by simply stating that all contracts will be paid as agreed until X date and no new contracts can go beyond this date.
...
Then ALL must be renegotiated with a la carte packaging for ALL channels along side of small, medium and large bundles. They can do bundles based on # of channels picked, content owners, themes or any other combination they see fit.

I am ever reluctant to suggest that the government should interfere with the marketplace. But I'm not opposed to discussing the possibility of legislation, to motivate the players to be more competitive.

At some point, we need an iTunes Store model for video content leasing, with per-channel/episode/season/day/week/month/year, density and volume pricing options - which should actually yield more revenue than the current structure, while giving the consumer more freedom of choice. But we need industry to build it, not have it dictated from Washington.