Man Who Blacked Out World Series Blames Politicians

Bloomberg

News Corp.’s Chase Carey, the man who oversaw Fox’s talks with Cablevision Systems Corp. during a two- week blackout, has advice for government officials who want to keep more TV channels from going dark: Stop meddling.

News Corp. last month cut off World Series games and shows including “Glee” to Cablevision’s 3 million customers after the two sides couldn’t agree on how much Cablevision should pay Fox. One problem, Carey said, was that the government wasn’t clear about whether it would intervene, leading Cablevision to think it might get better terms if it held out until the U.S. weighed in.

“This process would have been resolved more easily, more quickly,” said Carey, chief operating officer and second-in- command to Rupert Murdoch. “I would actually contend we wouldn’t have gone off the air at all.”

Clashes between media and cable companies are on the rise as broadcasters such as Fox and Walt Disney Co.’s ABC ask to be paid for programming that used to be free. The number of TV blackouts this year is the most in at least a decade, triggering consumer wrath and lawmaker scrutiny.

Carey, 56, spoke during an interview at News Corp.’s New York headquarters, in a wood-paneled, windowless room barely large enough for an oversized conference table. He said he was eager to clear up what he thinks are misperceptions about the longest blackout for such a large customer group in at least a decade.

“This wasn’t a good experience,” Carey said. “Everybody here found this really painful.”

Kerry’s New Bill

News Corp., controlled by Chairman and CEO Murdoch, fell 5 cents to $14.28 on the Nasdaq Stock Market at 4 p.m. New York time. Cablevision rose 1 cent to $29.33 in New York Stock Exchange composite trading. News Corp. has gained 4.3 percent this year, while Cablevision added 38 percent.

Cablevision, based in Bethpage, New York, declined to make anyone available for comment. A spokesman referred to a conference call last week, when Chief Operating Officer Tom Rutledge said the U.S. Federal Communications Commission should prevent broadcasters from cutting off programming to obtain negotiating leverage.

Senator John Kerry says he plans to introduce a bill when Congress reconvenes next week to keep companies from pulling signals before regulators check for good-faith negotiations. The Massachusetts Democrat is chairman of the communications, Internet and technology subcommittee of the Senate Commerce Committee, which plans to hold a hearing on the issue.

“They’re very high-profile battles because it can turn into the politicians’ constituents losing their TV service,” David Joyce, an analyst with Miller, Tabak & Co. in New York, said in an interview.

‘Not a Nonprofit’

Carey has said Fox needs fees from cable companies, in addition to advertising revenue, to afford marquee events including professional football and baseball games. He’s made subscriber fees a top priority since becoming COO last year, as he strives to return the broadcast network to profitability instead of losing a “few hundred million dollars” each year.

“We’re not running a nonprofit,” Carey said.

Fox and Cablevision reached an agreement Oct. 30 without direct government intervention. Though terms weren’t disclosed, Cablevision called it an “unfair price.” Michael Nathanson, an analyst at Nomura Securities International Inc. in New York, estimates Cablevision will pay Fox about $1 per subscriber a month after a few years.

Carey said he visited politicians in Washington to explain that Fox needs a dual-revenue stream, and to argue that giving Cablevision hope of government intervention encouraged the cable operator to drag out the process.

‘Unfortunate Stalemate’

“As long as they feel they have in places a somewhat receptive audience, it incents them to not resolve this as a business matter but to politicize it,” he said.

At least 50 elected officials sided with Cablevision during the dispute and called for arbitration, the company says. Distributors say they resist paying broadcasters the new fees because they have to pass the costs on to consumers.

“Just because deals are getting signed doesn’t mean that’s going to be the end of the story,” analyst Joyce said.

FCC Chairman Julius Genachowski said in an Oct. 29 letter to Kerry the agency doesn’t have the authority to prevent service disruptions. Congress should revisit current law and examine whether mandatory mediation and binding arbitration could prevent impasses like the “unfortunate stalemate” between Fox and Cablevision, Genachowski wrote.

Kerry’s bill isn’t likely to pass during the post-election session, Andrew D. Lipman, a Washington-based partner with the law firm Bingham McCutchen LLP, said in an interview.

Republican Reluctance

Newly elected Republicans “are going to be less willing to insert government into disputes between cable providers and broadcasters,” Lipman said.

Carey used to be on the other side of the negotiating table. Before returning to News Corp. in mid-2009, he was chief executive of DirecTV, the largest U.S. satellite-television provider. He said broadcasters were “delinquent” in the 2000s for not addressing their faltering business models and not seeking payments from pay-TV operators.

Now that Fox has deals locked up with its four largest distributors, the network is on the path to profitability, Carey said.

Carey said he understands that politicians want to reassure their constituents and show they’re taking action. The problem is that such actions are often counterproductive, he said.

“You’re going to bastardize every negotiation because you’re going to have this specter of arbitration,” he said.

Television Blackouts in U.S. Reach Decade High Over Fee Fights

Bloomberg

 

TV blackouts in the U.S. have reached the highest level in a decade and may climb as pay-TV operators fight higher fees sought by content providers.

Disputes over fees have caused five blackouts this year, the most since 2000. They have affected about 19 million pay-TV subscribers, leaving some viewers without access to the Oscars and New York Knicks games. Dish Network Corp., Cablevision Systems Corp. and AT&T Inc. all lost programming while haggling over costs.

Feuds will escalate as pay-TV companies resist the increased fees they typically try to pass on to subscribers in the form of higher cable bills, said Rich Greenfield, an analyst at BTIG LLC in New York.

“There is increasing pressure for distributors to push back on rate hikes in a tough economy where the consumer is struggling,” Greenfield said in an interview. “As programming costs continue to rise, these battles are becoming bigger and higher profile.”

Content expenses, which total about half of pay-TV companies’ operating costs, have increased about 10 percent in the past year, putting pressure on profit margins. Cable bills climbed about 8 percent on average for the year ended in June, according to researcher SNL Kagan.

‘American Idol’

Cablevision and Dish are currently negotiating with News Corp. over fees for Fox, the home of shows such as “Glee” and “American Idol.” Cablevision’s contract with News Corp. ends on Oct. 15, and Dish’s expires on Nov. 1. If agreements can’t be made by then, Fox could go dark on both carriers.

“It would be terrible business practice to allow any distributor to secure a signal without a valid contract,” Fox said in a statement. “If a provider were to decide to pass on a reasonable offer -- one that was consistent with our other distribution agreements -- then legally they could not re-sell our signal to their subscribers.”

High unemployment and stagnating wages are threatening the consumer’s willingness to pay steeper prices for television services, especially when there’s cheaper alternatives such as Web video and movie-rental provider Netflix Inc., said Chris Marangi, an analyst at Gabelli & Co. in Rye, New York.

“Cable and satellite operators are losing their pricing power,” Marangi said in an interview. “To the extent that there are cheaper alternatives and the economy remains weak, it gets harder and harder to pass along these price increases.”

Premium Prices

Content providers, including Burbank, California-based Walt Disney Co., are further aggravating pay-TV companies by offering shows for free on competitive platforms such as Hulu.com, while making distributors pay premium prices for the same programming.

“The idea that the programmers, who are charging more for their programming, are then taking that programming and making it free on the Internet -- that really pushes the envelope,” Jim Dolan, chief executive officer of Bethpage, New York-based Cablevision, said at an investor conference Sept. 16.

This month, News Corp.’s Fox cut its broadcast signal of 19 local sports channels, FX and National Geographic, to Dish subscribers because of a dispute over rate increases. Disney’s WABC-TV pulled its signal to Cablevision customers in March, leaving 3 million homes in the New York without access to the first 13 minutes of the Academy Awards telecast.

“In tough economic times we need to take a tougher stance against programmers to be able to provide the best prices out there for our customers,” Dave Shull, senior vice president of programming for Englewood, Colorado-based Dish, said in an interview. “The DNA of our company is low prices -- we can’t let these costs continue to escalate.”

A La Carte Pricing

The public, high-profile disputes don’t serve the industry well because they can backfire and prompt discussions in Washington about potential a la carte pricing, according to David Joyce, an analyst at Miller Tabak & Co. in New York.

A la carte pricing is a concept that allows consumers to pay for channels individually. Studies show that such a model would limit choices and raise prices, not benefiting the television operator, content provider, or consumer, Joyce said in an interview.

Still, cable companies and satellite distributors are trying to push programmers to allow them to cobble together smaller, cheaper options for their customers. Time Warner Cable Inc., the second-largest cable operator, has been championing the idea to sell less costly packages of fewer channels to lure economically strapped consumers.

Broad Distribution

“We’ve expressed an interest in having smaller packages,” Rob Marcus, Time Warner Cable’s chief financial officer, said at an investor conference on Sept. 16. “The reality is that our programming vendors have a different interest, which is having the broadest possible carriers they can.”

Less popular channels are often carried by a distributor because they have been tied-in as part of deal with a more popular network. That way, both channels can get broad distribution and produce higher advertising revenue for the programmer. The distributor must carry the less-watched channel in order to get the popular station and can’t strip it out of their packages without losing both.

In addition to raising prices on cable channels, content owners are now also asking distributors to pay for broadcast channels that were previously free. Companies such as News Corp. used to provide their broadcast channels for free in order to gain distribution for new cable channels, like FX.

Lobbying Group

Chase Carey, the president and chief operating officer at New York-based News Corp., said this year that he thinks Fox is worth $5 a month given its sports programming and prime-time hits like “American Idol.” That would top the most expensive channel on the dial, Disney’s ESPN, which brings in $4.08 for each subscriber, according to SNL Kagan.

The dispute has made its way to Washington. Many of the country’s biggest pay-TV operators, including Time Warner Cable, have signed a petition to the U.S. Federal Communications Commission for the government to require, among other things, stations to keep sending a signal as long as the negotiations continue in good faith. They have also formed a lobbying group called the American Television Alliance to push for Congressional action.

Broadcasters say Washington shouldn’t intervene.

Nearly all carriage negotiations conclude without service disruptions, “and despite the overheated rhetoric coming from pay TV providers, there is no reason to believe that won’t be the case going forward,” Dennis Wharton, spokesman for the National Association of Broadcasters, said in an e-mail.

“Pay-TV operators will have less incentive to engage in meaningful talks for carriage of broadcast TV stations if government regulators inject themselves into these marketplace discussions,” Wharton said.

Cable Focuses on Internet while Satellite TV Grows

Reuters

 

U.S. cable television companies wooed home Internet users from rivals in the second quarter, helping offset a trend that has seen their television customers flee to top satellite player DirecTV Group.

Time Warner Cable Inc and Cablevision Systems Corp reported on Thursday, like Comcast Corp last week, that they successfully added Internet subscribers in what is now a key focus for companies that were originally built on the back of cable TV programming.

Time Warner Cable Chief Executive Glenn Britt said on a conference call that successfully marketing Internet access is as important, if not more so, as selling bundles of TV shows.

"Broadband is still growing nicely and becoming a more important part of people's every day lives and we're seeing tangible evidence the consumers are willing to pay more for the speed and reliability," Britt said.

Time Warner Cable added 85,000 broadband subscribers during the quarter, while Cablevision added 27,000. Comcast, the No.1 U.S. cable company added 118,000.

With rising programming costs in their video businesses, cable companies see broadband, with its relatively fixed costs, as a more profitable business to grow.

Cablevision for instance said it plans to offer more video applications to customers who use Internet-enabled devices at home and free Wi-Fi connections to its customers around major spots in its local area.

"Broadband is increasingly important for cable companies," said Collins Stewart analyst Thomas Eagan. "It has become the strategic focus, with TV following."

The top two cable companies both lost video subscribers during the quarter: Comcast lost 265,000, while Time Warner Cable lost 111,000. Cablevision which has been competing aggressively with Verizon Communications in its New York area managed to buck that trend in the quarter by adding 2,900.

DirecTV Group added 100,000 U.S. subscribers, beating the forecasts of most analysts, some of which had worried the company might lose customers due to the slow economy and competition from cable and newcomers to the pay-TV market like Verizon's FiOS and AT&T Inc's U-Verse.

"For years, questions have swirled about DirecTV's ability to sustain subscriber growth in the U.S. Not to worry. Today's results suggest that subscriber growth is just fine, thank you," said Bernstein Research analyst Craig Moffett in a client note.

PROFITS

Both Time Warner Cable and Cablevision posted financial results ahead or in line with expectations.

Time Warner Cable's net income rose to 95 cents a share, beating average Wall Street forecasts for 93 cents. While its revenue rose 5.8 percent to $4.73 billion, ahead of average forecasts of $4.68 billion, according to Thomson Reuters.

"Overall they struck a good balance between customer and financial growth," said Eagan of Collins Stewart.

Cablevision's net income was 20 cents a share sharply missing an average Wall Street forecast of 40 cents, mainly due to the one-time loss on extinguishment of debt. Bernstein Research said excluding that loss, Cablevision's profit was in line with consensus.

Revenue rose 5.8 percent to $1.802 billion ahead a forecast of $1.769 billion, according to Thomson Reuters.

Bernstein's Moffett said Cablevision's second quarter had shown "almost no discernible weak points".

DirecTV, which also added 415,000 subscribers in Latin America, posted an adjusted profit of 60 cents a share, in line with expectations. Its revenue rose 12 percent to $5.85 billion.

Shares in Time Warner Cable and Cablevision have risen more than 40 percent and 30 percent respectively since the start of the year as investors have bet that cable will be a leader in future communications thanks to its broadband strength.

Cable Firms Eye Tablet Space

The Wall Street Journal

Comcast, Verizon and Others Plan New Apps; Licensing Content Slows Process

 

More TV shows and movies may be coming to tablet computers like Apple Inc.'s iPad—for those who pay to watch.

At least seven of the ten largest subscription-TV providers in the U.S. are building new tablet-computer applications that offer select TV shows and movies to their existing subscribers, often for little or no additional fee.

The efforts are going head-to-head with a handful of existing video applications from TV networks and online video services such as Netflix Inc. and Hulu LLC, hoping to compete by offering more content and features that integrate with home TV service.

Comcast Corp. is testing a free iPad application that allows existing subscribers to search for and watch some TV shows on the go, and plans to release it by the end of the year. The company says it already has content providers lined up for the service, but declined to specify which ones.

Verizon Communications Inc. plans to release an app for renting movies on devices than run Google Inc.'s Android operating system in the fall. The app will be targeted at its 3.2 million Fios TV subscribers, but it will eventually be available to nonsubscribers, said Shawn Strickland, Verizon's vice president of consumer strategy and planning. He said the company also aims to launch the service for other devices like the iPad.

Time Warner Cable Inc. plans to launch an iPad app that would let subscribers watch TV shows over Wi-Fi in "the not too distant future," according to a spokesman.

The new apps come as pay-TV providers wrestle with how to keep people paying big monthly subscription fees, despite growing traction for Web-video services like Netflix. Some providers have started to offer paying subscribers the ability to watch TV shows over the Internet, a concept dubbed "authentication" or "TV Everywhere." The rise of video-friendly devices like the iPad has made that push more urgent.

"If we can't keep pace with what consumers want, our product is rapidly going to be less and less interesting," said Ira Bahr, chief marketing officer for Dish Network Corp.'s satellite-TV service, which plans to offer video-watching capability for subscribers in iPads and Android tablets around the beginning of the fall. The service requires either a special set-top box or an adapter, which involve an additional cost.

Charlie Herrin, who runs product development for Comcast Interactive Media, said the cable giant is investing in services for tablets to make its offerings more attractive to consumers. "For certain users, it's a more convenient form factor to curl up in a bed or in a chair watching something," he said.

Comcast's new application will ask subscribers to log in, and include a search function to display all the available episodes of a show—whether they're on live TV, on traditional video-on-demand or available to watch on the iPad.

The new applications arrive as media companies and new upstarts have been aggressively exploiting the Web to offer programming directly to consumers, while paid television providers' Web offerings have often lagged behind. Now, major TV distributors are trying to fight back, with online access through TV Everywhere-type services.

But it has been slow going. Comcast and Verizon, for their part, have already signed up several networks, such as Time Warner Inc.'s HBO, TNT and TBS to participate in offerings for authenticated subscribers, available via computer Web browsers. Those offerings are growing more comprehensive, but they don't include the full array of TV content. In some cases it takes additional rights to put programs on the iPad or other mobile devices, according to people familiar with the matter.

Media companies aren't keen to cede them right away. Some are still working out their own digital and mobile strategies. Some also worry whether online video will ever supply enough cash to support big-budget productions.

DirecTV Inc., the second-largest U.S. television distributor by subscribers, says it has already worked out much of the technology to authenticate subscribers and put video on tablet computers, something it plans to do on the iPad this season with National Football League games for an additional $50 on top of its $300 "Sunday Ticket" offering. But it isn't planning an imminent launch for broader TV content on the Web or tablets in part because of slow progress in licensing. "We're going on the path to negotiate deals with content owners," said Derek Chang, who oversees content acquisition at DirecTV, adding that he hopes to have "critical mass" to launch an authentication-type service, with mobile applications, "within the next year."

Some distributors are trying to get around the issue by offering services where they say they have existing rights. Dish Network is integrating video-watching ability into its existing TV-remote app by tapping into a technology called Slingbox that it already offers in a pricier set-top box. Slingbox, owned by sister company EchoStar Corp., currently gives users access to shows and recordings on their home set-top boxes from computer Web browsers and mobile phones.

Meanwhile, Cablevision Systems Corp., said last week that it is conducting trials that allow people to watch video on iPads and other devices, so long as they are in their homes. The reason: Video outside the home "requires different rights structures," Tom Rutledge, Cablevision's chief operating officer, said in a conference call to discuss second-quarter results.

"We're essentially putting cable TV on any device that can function as a TV in the home," he said.

DirecTV, Cablevision Sales Rise as People Watch Television to Save Money

Bloomberg

DirecTV, Cablevision Systems Corp. and Time Warner Cable Inc. reported second-quarter sales that beat analysts’ estimates, signaling consumers are continuing to spend on pay-TV programming as the economic recovery sputters.

Each company added subscribers in the period ended in June and customers spent more on premium services such as high- definition set-top boxes and digital-video recorders.

Consumers may be putting more value on their time at home and curbing restaurant and cinema visits, benefiting the pay-TV providers, said Tom Eagan, an analyst at Collins Stewart LLC in New York. More Americans than projected filed applications for unemployment insurance last week, indicating firings remain elevated as the U.S. economic growth moderates.

“Cable and satellite has been relatively recession proof,” Eagan said. “Household spending is holding up because people in general see cable and satellite-TV being a relatively good deal versus other forms of entertainment.”

Time Warner Cable, the second-largest U.S. cable-television company, boosted sales 5.8 percent to $4.73 billion, beating the $4.68 billion analysts projected. DirecTV’s sales rose 12 percent to $5.85 billion, exceeding analysts’ $5.73 billion estimate. Cablevision’s sales rose 5.8 percent to $1.8 billion, compared with the $1.77 billion average projection.

DirecTV added $1, or 2.6 percent, to $38.90 at 2:23 p.m. New York time in Nasdaq Stock Market trading. Cablevision fell 2 cents to $27.52 on the New York Stock Exchange, and Time Warner Cable dropped 21 cents to $58.81. Contrary to analysts’ predictions, Time Warner Cable didn’t announce a stock buyback.

DVRs, Pay-Per-View

Cablevision, which competes against Verizon Communications Inc. for New York area TV, phone and Web subscribers, won 75,900 new customers last quarter, led by high-speed Internet users. Customers subscribing to more products helped the Bethpage, New York-based company boost the average monthly revenue per video customer 6.8 percent to $149.12.

“We’re holding up quite well and managing to continue to win back customers from our competitors,” Cablevision Chief Operating Officer Tom Rutledge said on a conference call today. He estimates that 40 percent of Cablevision’s customers who have left to try Verizon’s FiOS product return.

DirecTV’s average revenue per user gained 5.7 percent to $87.90, as the company equipped U.S. customers with advanced and expensive features, such as multiroom DVRs and pay-per-view movies. The El Segundo, California-based company gained a net 100,000 customers in the U.S. and 415,000 in Latin America, helped by World Cup soccer matches shown in high definition.

Premium Movies

“For the first time in several years, our year-over-year buy rates increased for premium movie channels,” said DirecTV’s Chief Financial Officer Patrick Doyle on the company’s conference call. “In addition to premiums, we also saw a solid year-over-year growth in pay-per-view movies.”

To maintain that growth, DirecTV plans to introduce more premium products by the end of the year. Those include an enhanced cinema selection, and an NFL Sunday Ticket “to go” service that will provide live video streams from games to mobile devices like the iPad or a computer for an extra $50.

Time Warner Cable, based in New York, added 110,000 new subscribers. Its subscription revenue rose 5.1 percent to $4.52 billion as more users selected higher-end services like digital video recorders and the company raised prices.

Weakness Ahead?

Still, a cooling economy means employers will resist taking on more staff, raising the risk consumer spending will weaken enough to impact pay-TV providers, too. Time Warner Cable said the sluggish economy limited its second-quarter subscriber gains, and said it saw such weakness continue into July.

“If you look at the key indicators in the economy, things like vacancy rates and unemployment rates - we’re still at exceptionally high levels,” Rob Marcus, Time Warner Cable’s chief financial officer, said on a conference call. “It shouldn’t be terribly surprising that we continue to see weakness in subscriber net adds.”

Initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April and exceeding the highest estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington.

Weak housing starts have also affected subscriber growth numbers. Builders broke ground on fewest new homes in eight months in June after the expiration of a U.S. government tax incentive caused sales to slump.

“The market for housing is still terribly soft,” Cablevision’s Rutledge said. “There is virtually no construction of housing going on in our footprint and occupancy rates are still low. So you don’t have any of the wind at our back.”

Growth in the U.S. economy slowed to 2.4 percent in the second quarter from 3.7 percent pace of expansion in the first quarter. The world’s largest economy is recovering after shrinking 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009.

Drifting Satellite Threatens U.S. Cable Programming

Associated Press

A TV communications satellite is drifting out of control thousands of miles above the Earth, threatening to wander into another satellite's orbit and interfere with cable programming across the United States, the satellites' owners said Tuesday.

Communications company Intelsat said it lost control of the Galaxy 15 satellite on April 5, possibly because the satellite's systems were knocked out by a solar storm. Intelsat cannot remotely steer the satellite to remain in its orbit, so Galaxy 15 is creeping toward the adjacent path of another TV communications satellite that serves U.S. cable companies.

Galaxy 15 continues to receive and transmit satellite signals, and they will probably overlap and interfere with signals from the second satellite, known as AMC 11, if Galaxy 15 drifts into its orbit as expected around May 23, according to the two satellite companies.

AMC 11 receives digital programming from cable television channels and transmits it to all U.S. cable systems from its orbit 22,000 miles (36,000 kilometers) above the equator, SES World Skies said. It operates on the same frequencies as Galaxy 15.

"That fact means that there is likely to be some kind of interference," Yves Feltes, a spokesman for AMC 11 owner SES World Skies, told The Associated Press. "Our aim is to bring any interference down to zero."

He would not name any of the cable television channels or providers that could be affected or say how long the interference could last.

DirecTV Inc., the largest US satellite TV company, said it will not be affected. Comcast Corp. said it was monitoring the situation.

Cox Communications Inc. said it could not immediately specify if its service would be affected and Dish Network Corp., Time Warner Cable Inc., Charter Communications Inc. and Cablevision Systems Corp. had no statements on the matter or did not return Associated Press calls seeking comment.

"We are confident that service disruptions will be minimized or avoided," said Dianne VanBeber, a spokeswoman for Intelsat.

Galaxy 15 is floating over the Pacific Ocean slightly to the east of Hawaii, said Emmet Fletcher, space surveillance and tracking manager for the Space Situational Awareness Programme at the European Space Agency, an 18-nation consortium.

He said Galaxy 15 was highly unusual because it continued to send out television signals, unlike other malfunctioning satellites that automatically went into complete shutdown when their navigational systems malfunctioned. A spokesman for the satellite's manufacturer, Orbital Sciences Corp., did not return a phone call seeking comment.

The dead satellites still are a threat to other satellites, but less of one than Galaxy 15 poses, Fletcher said.

"They'll just cruise around the geobelt, drifting wherever they go, potentially causing havoc, when you lose control of them," he said.

The geobelt is the relatively narrow band of space where satellites can move in orbits that allow them to appear stationary in the sky in relation to specific points on earth.

Feltes, the SES spokesman, said one option to prevent interference with U.S. television would be using AMC 11's propulsion system to shift that satellite about 60 miles (100 kilometers) away to an orbit that's still within its carefully prescribed "orbital box" but as far away as possible from Galaxy 15.

He said SES had other strategies under consideration but declined to provide details.

"We have all of our technicians, all of our specialists on this case," he said.

Both companies said there was no risk of an actual collision between the two satellites in space.

Intelsat said it was analyzing signals from Galaxy 15 daily in order to predict its trajectory and was trying to figure out if it can shut down the satellite's transmission so it would not interfere with AMC 11.

VanBeber said cable companies could also adjust their equipment in order to minimize any interference.

She said satellites like Galaxy 15 today cost $250 million to build, launch and insure but it probably cost less when it was launched in 2005.

Feltes said the two companies, both based in Luxembourg, were cooperating closely.

"They have tried numerous things to regain control of the satellite or to have it finally shut down," he said. "It needs some collaboration to bring the impact of this failure to an absolute minimum."

Key Fact from Selected Cable and Satellite TV Industry Earnings Report

LA Times

Here is a summary of earnings reports for selected cable and satellite TV companies and what they reveal about the industry's prospects:

April 28: Comcast Corp. reported losing net 82,000 basic cable TV subscribers in the first quarter. Comcast had stronger growth with high-speed Internet customers, but growth in phone customers was slowing.

April 29: Time Warner Cable Inc. reported net loss of 42,000 basic cable subscribers. It continued to add Internet and phone subscribers, but gains were smaller than a year ago.

Thursday: Cablevision Systems Corp. reported net gain of 900 video subscribers. That's still 37,900 fewer than in the same period a year earlier. Cablevision had stronger growth with Internet service, while growth in phone business was slowing.

Charter Communications Inc. lost 23,400 basic cable customers.

Satellite TV provider DirecTV Inc., which has been gaining customers at the expense of cable TV rivals, added 100,000 video customers during the quarter. But that was the company's lowest ever, according to Sanford Bernstein analyst Craig Moffett.

Revenge of the Cable Guy

Business Week

If you think online TV will be free forever, think again. The cable companies have a plan to keep control—and stick you with the bill

Once upon a time, not so long ago, a bunch of small companies in Silicon Valley thought the future of television was theirs. Soon, the thinking went, TV would be everywhere. Frequent fliers would tune in on laptops and vacationers on tablets from the beach. If so inclined, you'd be able to watch Glee on a cell phone in a tree house. The network suits and the cable guys just didn't have the digital chops to make it happen. Fueled with venture money, tech companies with names like Boxee, Roku, and Sezmi pursued their dream of untethering viewers from their TV sets—and owning a piece of the advertising revenue.

As the big picture comes into focus though, it looks like the cable guys are playing the lead roles, using the $32 billion they pay content providers each year as leverage. The alphabet soup of newbies is still waiting in the wings for a moment that might never come.

What happened? Part of the answer is TV Everywhere, a service in its infancy, conjured up in quiet strategy sessions by Jeff Bewkes and Brian Roberts, the CEOs of Time Warner (TWX) and Comcast (CMCSA). They took a lesson from the music labels, which looked up one day to find that Steve Jobs and Apple (AAPL) had taken control of their inventory. The cable guys came up with a quick fix, one so technologically simple that you don't have to be a geek to get it: Viewers can watch shows for free, but only if they're cable subscribers first. In other words, as long as you tap a subscription code into your device—any device—you can watch anything you want, whenever you want.

It's worth hitting pause here for a moment. Right now, Time Warner is offering the service in only a few markets. Comcast has rolled out a trial, or beta, version to about 80% of its subscribers. There are plenty of kinks to be sorted out. And as usual when it comes to show business, nothing is quite as simple as it appears. For TV Everywhere to work, the behemoths of the business must stand together and stamp out the rampaging weed called free. After all, if you can get programing for free—real free—why would you ever pay a cable bill?

SELF-PRESERVATION

That's what was worrying Time Warner's Bewkes in the fall of 2008. Back then, Time Warner ran the country's second-largest cable operator (spun off in March 2009) and was also a content provider. Bewkes had previously been in charge of the company's HBO unit, turning the premium cable channel into a profit machine with 30 million subscribers.

Bewkes watched with growing alarm as Hollywood stampeded online to offer TV shows and movies for free, say two Time Warner executives. At the time, Hulu, a video site operated by Fox (NWS), NBC Universal, and Disney, (DIS) was about a year old. For TV addicts, Hulu was a near miracle. Miss the latest episode of Damages on the FX channel? If so, you could watch Glenn Close play a conniving lawyer on Hulu 24 hours later for free. Hulu's owners shared the advertising revenue from the site, but everyone knew it wasn't making money and there was no clear path to profitability. As he watched one entertainment company after another put their TV shows and movies online for free, say the executives, Bewkes began to fear that the pay TV industry would eventually find itself in the same untenable position as newspapers.

That's when the scene shifts to Wisconsin, where HBO was running an experiment in Milwaukee and Green Bay. HBO was letting people watch its programing online as long as they could prove they were HBO subscribers.

The results of the test were unexpected: Viewers who tuned into Big Love on their laptops didn't spend any less time watching HBO on their TV sets. Bewkes was buoyed by the possibility that the same model might work more widely and that his cable properties might be able to keep subscribers from gravitating elsewhere, says a Time Warner executive involved in the discussions. Bewkes told his team: "We can't just talk about it, or play the victim. We need to build a model," the executive recalls. The Time Warner CEO was unavailable for comment.

It wasn't the first time the cable industry had found itself in danger of being outflanked by tech-savvy rivals. In 1999, TiVo began selling a handy little box that allowed people to record dozens of hours of TV shows on a hard drive. After a certain amount of handwringing, the cable guys struck back with overwhelming force. They figured out the technology and marketed their own digital video recorders, for which they charged subscribers an extra $10 or so a month. Next came Apple. Along with Amazon.com (AMZN) and others, Steve Jobs began renting TV shows online. The cable companies beat back that onslaught by beefing up their video-on-demand offerings and giving subscribers a bunch of free shows with a few clicks of the remote. "The cable industry has been very good at not jumping too early on a technology, and watching it play out first," says Colin Gounden of Grail Research, which advises companies on new products. "They have a knack for getting the timing right."

The new attack from Silicon Valley was the most serious yet, because it threatened to permanently cut the coaxial connecting the cable companies and their subscribers. "We wake up every day and there is some new competitor out there—a Roku or a Boxee," says Melinda Witmer, Time Warner Cable's programming chief. "People like to think of cable operators as monopolists, but we face a lot of competition just to keep the business we have." Technically there was nothing too complicated about Bewkes' plan to expand the Milwaukee experiment.

The new service would need a way to automatically confirm that people were paid-up subscribers. Other than that, TV Everywhere, as Bewkes called it, would mostly use existing online infrastructure and established user interfaces.

"FRIEND, NOT A FOE"

Far more daunting was the prospect of persuading the rest of the industry to join up. Unless most of the pay TV and content players banded together, TV Everywhere wouldn't work; viewers could simply flock to sites that didn't require a cable subscription. Bewkes, say two Time Warner executives, decided to float his proposal with Roberts, the chief of Comcast, the largest cable system in the U.S., with 24 million subscribers. In early 2009, Bewkes began wooing Roberts, traveling from his New York City office on Columbus Circle to Comcast's imposing 57-story headquarters in Philadelphia.

Roberts long ago realized that online video was important to the future of his company. In 2006, Comcast had created an interactive media unit that poached heavily from Silicon Valley. The company's first major development project was Fancast, a video site like Hulu that offered hundreds of shows free to all comers. Roberts, who declined to be interviewed for this story, had unveiled Fancast at the Consumer Electronics Show in Las Vegas in early 2008. Before long, says one Comcast executive, he began thinking about a service that would offer much more content—but only to Comcast subscribers. When Bewkes came calling he didn't have to convince Roberts of the importance of preserving the subscription model online. And like most everybody in the cable industry, Roberts was aware of HBO's online experiment in Wisconsin.

Roberts and Bewkes initially disagreed on one big point, say two Time Warner executives who say they can't speak on the record because the discussions were sensitive.

Roberts believed subscribers should be required to go to a central site operated by their pay TV provider in order to view cable shows. Bewkes, true to his divided soul as a content creator and distributor, felt users should be allowed to tap into any cable channel's Web site as long as it was part of the TV Everywhere ecosystem. Bewkes, say the executives, reasoned that letting individual channels keep their own sites would allow them to maintain their brands. Eventually, Roberts agreed.

WINING AND DINING

The Time Warner executives say Roberts and Bewkes saw the cable industry's annual convention, held last April in Washington, D.C., as an opportunity to proselytize about TV Everywhere to the rest of the industry. During one panel discussion, Roberts told his audience that online video was "a friend, not a foe" and that for Hollywood it represented a new way to make money "in this horrific advertising environment."

In Hollywood, studios and cable channels were hearing a very different message from the Silicon Valley upstarts who wanted to cut deals for their programing. Netflix's (NFLX) Ted Sarandos pushed studio executives to give his company the latest movies for its online video service. Steve Jobs proposed launching a stripped-down cable service that would cost consumers $30 a month. Boxee founder Avner Ronen says he traveled to Los Angeles from his base in New York so many times that his "plane knew the way."

Phil Wiser, founder of Sezmi, an online TV subscription service, says his goal was simple: to "replace cable and satellite." He flew executives from NBC Universal, Sony (SNE), the Discovery Channel, and others to Sezmi's offices in a converted horse barn in Northern California, where he wined, dined, and pitched them. Sezmi wanted the content creators to allow him to use their movies and TV shows for an à la carte service that would give customers the freedom to pay for only what they wanted to watch. The studios declined, so he decided to borrow the industry's subscription model. Owners of Sezmi's $299 set-top box would receive network and cable shows for $19.99 a month, about a third the cost of a typical cable subscription.

Wiser told the studios that he would match what cable was paying for episodes of such shows such as The Real World, Top Chef, and Damages. It was an unprecedented offer for a startup, but only one company initially agreed to make its content available: NBC Universal, which is already available on Hulu. Wiser says it took another 18 months to lure more content providers, including Turner Broadcasting (TWX) (owned by Time Warner) and Discovery Networks. What's more, Wiser acknowledges he had to pay the content guys more than they get from the big cable companies. When Sezmi boxes went on sale in Los Angeles in February, the service was missing ESPN, The History Channel, The Food Network, HBO, and other popular channels. "Trying to do this is not for the faint of heart," says Wiser, a former Sony (SNE) executive. "These firms see dozens of new pitches every week, so they're skeptical."

Skeptical—and satisfied. The makers of movies and TV shows are attached to the billions they receive from cable companies and are understandably reluctant to engage in grand experiments with upstarts touting unproven business models. Joshua Sapan runs Rainbow Media Holdings (CVC), which controls AMC, IFC, the Sundance channel, and others. He says tech companies have approached him about licensing AMC shows, but, he asks: "Why would I license my channel to someone and give them Mad Men the day after it shows up on AMC?"

Back at Time Warner Center in New York and One Comcast Center in Philadelphia, the cable operators began to realize they had the studios locked down. As Frank Biondi, former president of the media giant Viacom (VIA), puts it: "Why would [the studios] make a deal with a competitor to their largest customer and risk angering them?"

In summer 2009, Bewkes and Roberts joined forces to take the TV Everywhere model out for a spin with 5,000 Comcast subscribers across the country. Those viewers were able to tap into programing provided by cable channels TNT and TBS, both owned by Time Warner. The speed with which the industry moved on from that trial balloon is a measure of just how important locking in subscriber revenue is to cable's future. In December, Comcast rolled out a beta version of the new service, now christened Fancast XFinity TV. Time Warner Cable has a trial going with nearly 10,000 customers in Syracuse, N.Y., New York City, and Columbus, Ohio. Verizon Communications (VZ) is testing a service nationally, and DirecTV, the satellite operator, plans to as well.

Comcast's service is the furthest along and provides a window on where TV Everywhere is headed. Only subscribers who pay for digital cable—and take Comcast's broadband service—are eligible. (The company is still working out how to bring XFinity TV to the third of its subscribers who get broadband from other companies.) Subscribers can tune into two dozen channels, from CBS to Animal Planet, and view 19,000 full-length TV shows and movies. They can use it on as many as three PCs and get most episodes 24 hours after they first air on TV. Much of that was available on Comcast's free site, but now shows on HBO and the Discovery channel have been added to the lineup. Eventually, Comcast aims to let subscribers access XFinity on their smartphones and tablets.

TV Everywhere has a ways to go before the cable guys can declare victory. There's a ton of stuff to figure out—how the ad model will work, devising a new ratings system with Nielsen. And then there's the question of profits. The cable guys like them, and they're not real comfortable with free. So chances are, down the line, the costs of the new free will probably sneak onto subscribers cable bills. And you know what? We'll all keep paying.

If You Don't Like the Gore, Change the Channel

The Boston Herald

Lucy Lawless knows some viewers will be offended by her new series “Spartacus: Blood and Sand,” premiering tonight at 10 on Starz.

“I think a lot of people are going to be shocked and they are going to shut off their televisions,” Lawless said in a recent telephone interview from Los Angeles.

“And I absolutely encourage that because if they’re shocked by the first few episodes, it ain’t going to let up. But for the people who have the stomach for it, this is a bloody good yarn.”



Lawless plays the conniving Lucretia, who owns the slave Spartacus (Andy Whitfield) with her husband, Batiatus (John Hannah).

“She does terrible things, but she does them out of desperation and need, which is how most people get involved in criminal activities,” Lawless said. “She is venal, but she is also religious. She is full of contradictions, and my aim is to make her so real and so believable that the audience will say, ‘Yes, you know what? I can see myself doing the same thing if I was in her shoes.’ ”

For the part, the 41-year-old appears topless and in explicit sex scenes.

“Really, I just feel like as long as it’s germane to the scene, it’s not offensive to me,” she said. “If it is relevant and historically accurate, then artistically it makes sense. People in ancient Rome had completely different relationships to people and their bodies and sexuality and the law and religion.”

The former star of “Xena: Warrior Princess” is also happy to not be the one involved in the action sequences. Though some may draw comparisons between “Xena” and “Spartacus,” Lawless thinks they are very different.

“There’s no ‘nudge-nudge, wink-wink’ on this show,” she said. “The conceit of the show is so out there. There’s so much blood. It’s larger than life and very operatic. We had to keep the acting and the characters very real.”

The series also allows her to work with her husband, executive producer Rob Tapert, and film in her native New Zealand.

“For the last few years, we’ve had a lot of separation,” she said. “I was working in Vancouver, he was working in New Zealand. This was a great time for our family to get everybody back under one roof and really enjoy what family means. My home life got so much richer.”

Lawless and the rest of the cast will begin production on season two in April. What can viewers expect as season one unfolds?

“Things get very, very dicey for everybody,” she said. “The stakes just get higher and higher, and you see the frenenemies come out to play. You see that the women are more vicious than the men.”

Cable TV Standoffs Could Raise Costs And Limit Viewer Choices

NY Times 

Many questions remain for cable TV viewers nationwide even after Fox and Time Warner Cable settled their noisy spat with a New Year's Day agreement.

The deal was good news for more than 6 million Time Warner customers in the short term: College bowl and National Football League games, ''American Idol'' and a host of other popular Fox programs in New York, Los Angeles, Dallas, Orlando, Fla., and other markets are appearing on their screens as usual.

Sharri Genens of Redondo Beach, Calif., was among the Time Warner customers who were relieved. She said she was extremely upset when she heard she might lose Fox.

''I would have dropped cable entirely if they'd done that,'' said Genens, 39. ''I would have just gone to somebody else to pay more, done whatever I needed to do to get my shows'' -- including football.

Fox had threatened to force Time Warner Cable and Bright House to drop its signal from 14 of its TV stations and a half-dozen of its cable channels if Time Warner didn't increase payments to Fox in a contract that took effect Friday. The deal affects close to half its customers. Time Warner is the nation's second-largest cable provider after Comcast Corp.

But the companies are not talking about how the agreement will affect customers' bills. And the mood among cable providers, broadcasters and other content producers has not improved.

A less amicable ending in a separate programming dispute showed the downside of playing hardball.

Cablevision Systems Corp. customers in New York, New Jersey and Connecticut reacted angrily in more than 100 posts Friday and Saturday on the media and entertainment news site Deadline.com after about 3.1 million subscribers lost access Friday to HGTV and Food Network Friday.

Comments accused Cablevision and Scripps Networks Interactive Inc. -- but mostly Cablevision -- of greed and arrogance when they failed to reach agreement over a fee increase Scripps demanded.

Many of those who posted said they were switching to competitors or satellite or going online. Some were particularly upset at the prospect of missing a two-hour Iron Chef episode set for 8 p.m. EST Sunday that features Michelle Obama and the White House chef.

Neither Cablevision nor Scripps responded immediately Saturday to questions about the status of talks. And representatives of Time Warner and Fox remained mum about the terms of their new deal, declining requests to comment.

Fox had demanded to $1 per cable subscriber per month for programming it used to gave away, saying it no longer can afford to offer programming free when cable channels earn subscriber fees.

Until the 1990s, advertising and fees from local affiliates supported all four of the nation's main broadcast networks -- ABC, NBC, CBS and Fox.

But advertising income has plunged, and by 2008 cable-only producers took in almost 39 percent of TV ad revenue, which broadcasters used to have to themselves. So the networks are increasingly dependent on the license fees they began charging cable providers in 1994.

Fox didn't get all it wanted, but Chase Carey, chief operating officer at News Corp., said Friday the agreement ''recognizes the value of our programming.''

Time Warner continued to carry Food Network and Great American Country as its talks with Scripps went on.

And cable company Mediacom Communications Corp. will keep carrying Fox and CBS signals from Sinclair Broadcasting Group Inc. stations in markets such as Des Moines and Cedar Rapids, Iowa, in a temporary deal that extends to next Friday.

Telephone messages left for Sinclair and Mediacom on Saturday were not immediately returned.

The standoffs refocused attention on the law that let broadcasters start charging fees cable and satellite operators for their programs.

Advocacy groups and some politicians oppose the 1994 law because it lets both cable operators and content producers pass along to consumers the cost of programs they could watch for free when broadcast dominated the television market.

''I think there needs to be some sort of government oversight over the cable industry,'' Mindy Spatt, spokeswoman for The Utility Reform Network, a San Francisco consumer advocacy group, said Saturday. ''There's a danger for consumers that the price is just going to keep rising with no end in sight.''

Sen. John Kerry, D-Mass., said in a statement that broadcasters and cable operators should be able to reach terms without ''consumers being put in the cross hairs.''

The prospect of lawmakers stepping in to take action ultimately may have persuaded Fox to settle, according to Time Warner Cable.

''Engagement by key policy makers ... focused on protecting consumers, was instrumental in preventing unnecessary consumer disruption,'' said company spokeswoman Maureen Huff.

Plot Thickens In Fox, Time Warner Cable Feud

New York Post

What began as an impasse yesterday became a full-fledged war between Time Warner Cable and News Corp.'s Fox, as both sides sought to position the other as responsible for the increasingly likely blackout of the broadcast network at midnight.

With just hours remaining before Fox could go dark on Time Warner cable systems, both camps dispensed with the pleasantries that came to define the negotiations of what many see as a precedent-setting retransmission agreement.

Time Warner Cable CEO Glenn Britt fired the first shot yesterday in a letter to Sen. John Kerry (D-Mass.), offering to keep Fox on the air if the network agreed to submit to binding arbitration or another interim agreement. Britt was responding to a letter Kerry sent both companies last week in which the lawmaker suggested arbitration as a way to bridge the gap between the $1 per subscriber that Fox is asking for and what Time Warner is willing to pay for the network. (In addition to Fox, News Corp. also owns The Post.)

"We are willing to commence an arbitration proceeding immediately before the [Federal Communications Commission]," Britt wrote, adding that, "consumers should not be caught in the middle as broadcasters and video distributors work through these contentious issues."

Sources said Britt's letter was a shrewd negotiating tactic, as it put Fox in the position of having to choose between two unsavory options: Agree to binding arbitration, in which case Fox certainly wouldn't get the $1 per subscriber it's asking for, or blacking out the network, which not only would cost it money in the form of make-goods to advertisers, but may also put the network on the receiving end of viewer anger.

News Corp. Chief Operating Officer Chase Carey, in his own letter to Kerry, moved to neutralize such a public perception from forming while also dismissing the notion that arbitration was an acceptable alternative to a privately negotiated deal.

"When Congress enacted the 1992 Cable Act, it established a clear mechanism for programmers and distributors to reach market-based agreements on the basis of direct negotiations," Carey wrote. "We respectfully believe these discussions do not belong in the hands of a third party."

In a memo yesterday to Fox employees, Carey made clear that the company is prepared to wage this fight in order to get "fairly compensated" for its programming. "At this time, it looks like we will not reach an agreement and our channels may very well go off the air in Time Warner Cable systems," Carey wrote.

In both his letter to Kerry and to employees, Carey noted that Fox's $1 per subscriber request is equal to what Time Warner Cable pays for cable network TNT, which has lower ratings. If the network goes dark, Time Warner's 13 million subscribers will miss out on New Year's Day college football and NFL games.

The Decade In Television: Cable, Internet Become Major Players

USA Today

For TV, it was a decade of Lost and found.

At the broadcast networks, which saw their overall numbers drop by around 8 million viewers, it was 10 years of ratings decline. Yet if those viewers were lost to broadcast, they were found by cable — and what those viewers found was an ever-expanding range of choice.

But don't cry for broadcast yet. They may be smaller fish, but they're still by far the biggest in the electronic pond. (Even in this decade of dispersion, 52.5 million people watched NBC's 2004 Friends finale, a number unlikely to ever be matched by a cable series.) And the upside to smaller ratings: Lower expectations allow shows to thrive that would never have survived back when every series had to be a blockbuster.

So, what did the 2000s bring to TV? Here are six trends for the 10 years:

'Lost' and the rise of the Internet

This was a great decade for drama as shows such as The Wire, Rescue Me, Boomtown, Battlestar Galactica, Mad Men, 24, Grey's Anatomy, True Bloodand Pushing Daisiesall made their debut after 2000 (and 1999's The West Wingand The Sopranosjust missed the cutoff). But if you want one show to represent the stretch, go with ABC's Lost for its sweep, grandeur, ambition, achievement and ability to play by, and yet ultimately alter, commercial TV's rules.

Though quality clearly matters most, Lost also owes its success to timing. Lost was designed to create and encourage passion just when advertisers became willing to reward passionate viewing. And that passion has been amplified by the decade's booming commercial arena: the Internet, which enabled fans to focus (some would say obsessively) on the show's myths and feints and allowed the writers (some would say obsessively) to plant ever more clues for those fans to find.

It has created a community unlike any other — and it's one of the reasons Lost will be one of those series people cherish and remember for decades to come.

'American Idol' and the triumph of reality

We've always had shows that featured "real people" (including the '80s show Real People); we just didn't think of "reality" as a genre. Not, that is, until 51.7 million people watched Sue and Richard on CBS' first Survivor finale in 2000, and networks suddenly realized the dramatic potential of snakes and rats.

So the floodgates opened, and as long as you avoid drowning, much of the water is fine. Look at the epitome of the genre, American Idol, and consider not just the stars it has launched and the entertainment it has provided, but also the impact it has had on TV. Without Idol, Fox is not the top-rated network — and un-Foxian, serious hits such as 24 and House never take hold.

If talent shows, dating shows and contests were all reality had to offer, we'd be fine. Unfortunately, there was also an MTV show called The Osbournesthat inspired a thousand faux biography series, starting with almost-celebrities, moving to people related to celebrities, and now landing on people who are simply desperate to be celebrities. Which is why no triumph is ever celebrated unanimously.

'CSI' and the popularity of procedurals

CSI did not invent the procedural (a self-contained show that follows the procedures used to solve some mystery, usually but not always a crime). What it did was reinvigorate the form with newly invented forensic techniques for solving crimes and newly invented TV techniques for showing them. The result? One of the most popular and influential shows of the decade.

An instant, unexpected hit, CSI helped CBS end NBC's Thursday hegemony and fueled its climb to the ratings peak. Its influence extends from the obvious clones — two more CSIs and two NCISes — to pretty much every mystery on the air, from Bones and Numb3rs to Cold Case, Castle and House. Even the show's look is influential: Every time you see a bullet plunge through skin into some internal organ, you're seeing CSI.

'Mad Men' and the dramatic growth of basic cable

In 2000, when you said "cable series," you pretty much meant HBO, which started the decade with holdovers Sex and the Cityand Sopranos and quickly added Curb Your Enthusiasm, Six Feet Underand The Wire. The network remains a factor, but the energy and the Emmys moved to basic cable. From pioneers such as The Shield, Battlestar Galactica and Monk to current standard-bearers Rescue Me, Breaking Bad, The Closer, Damages, Burn Notice and Emmy champion Mad Men, basic cable has come into its own as a source of original programming.

The basic networks found an economic sweet spot between premium and broadcast, producing fewer episodes than broadcast and doing so much more cheaply than both. Many of the shows are light "blue-sky" entertainments (such as new USA hit White Collar), but at the networks' best, they've also found an artistic midpoint, series that are smaller, often more somber and leisurely than ratings-driven networks shows can be, but more commercially viable than HBO's more esoteric offerings.

'Leno' and the fall of NBC

How disastrous was this decade for NBC? In its final season, Friends drew more viewers than all four of NBC's current Thursday sitcoms combined. The network hasn't produced a single true scripted hit all decade (with the possible short-lived exception of Heroes), and doesn't have a single scripted show in the season's Top 20. The only two achievements current management can claim are dismantling a "must-see" lineup that had lasted 20 years and "supersizing" sitcoms, a creative nadir that masked and exacerbated the network's failure to create new hits.

That's until this year, when NBC turned five hours of prime time over to The Jay Leno Show, horrendously damaging the rest of its schedule, its affiliates' local news, its own late shows and NBC's and Leno's reputations. It's not just that the show is awful and a failure, though it's a failure of historic proportions. It's that it's lazy, cynical and ill-conceived, which was pretty much NBC's trademark for the past 10 years.

DVRs and the influence of time-shifting

From a business standpoint, this decade may end up mattering less for what we watched than for when and where we watched. Most of us still watch shows as the network gods intended: on our TVs, when they air. Even those increasing numbers of us who have recording devices use them to watch semi-live, adding in a 15- to 20-minute delay to bypass commercials.

But changes are coming. In the next decade, our ability and propensity to watch anytime and anywhere is likely to grow as TVs and computers combine and delivery to handheld devices becomes more sophisticated.

One thing, however, will remain the same: There's no such thing as a free program. People who think otherwise, who think they'll be able to see any show they want without watching ads or forking over some fee, are kidding themselves. You'll pay for shows in the coming decade, or you'll no longer have them.

It's as simple as that.

Fox, Time Warner Face Off Over Fees

USA Today

Millions of TV viewers eager to watch American Idol and 24 or football games featuring the New York Giants could be in for a shock beginning New Year's Day.

They might be unavailable on Time Warner Cable systems in cities including New York and Los Angeles if the No. 2 cable operator can't reach an agreement to carry stations owned by the Fox broadcast network.

The current contract expires Thursday. It also covers some of parent company News Corp.'s regional sports networks, FX, Speed and Fox Reality Channel. The companies are locked in a bitter and potentially precedent-setting dispute over renewal terms from Fox that Time Warner Cable warns also could result in higher monthly rates for consumers.

"What consumers are saying is, 'Why can't I buy less?' " says Melinda Witmer, chief programming officer at Time Warner Cable.

There's "a high likelihood that programming will get dropped (or) pulled," says Pali Research analyst Richard Greenfield.

If that happens, Fox would lose revenue from advertisers, because ads would reach fewer viewers. And Time Warner Cable might see some customers switch to another service.

To avoid all that, Sen. John Kerry, D-Mass., urged the companies last week to get an arbitrator to help.

At issue is Fox's effort to get cable operators to pay its local stations a monthly fee, widely believed to be about $1 a month for each cable subscriber. Fox declined to comment.

With minor exceptions, operators don't pay cash to carry local stations. Instead, they've compensated broadcasters by paying for cable channels they've created: For example, Disney, which owns ABC, launched ESPN2. Fox created FX.

Now Fox says it wants payments for its local stations. "We need to have a business model that enables us to compete" with basic cable, News Corp. COO Chase Carey said this month. Time Warner Cable, with 13 million subscribers, says that it has to draw the line on price increases.

(No. 1 cable operator Comcast is not in a good position to lead this fight. It has a deal to buy a controlling stake in NBC Universal. That company sides with Fox on this issue.)

Time Warner Cable also is challenging the value of network TV. It says that Fox and others have hurt themselves by offering shows for free at websites such as Hulu.

The company's threatening to escalate the fight by giving consumers more flexibility to buy the networks they want. That could doom expensive or low-rated channels.

"What consumers are saying is, 'Why can't I buy less?' " says Melinda Witmer, chief programming officer at Time Warner Cable.

Comcast: Bulking Up

from The Economist

IT SEEMED for a while as though the media business had dispensed with swagger. As the markets push their companies around, moguls such as Rupert Murdoch of News Corporation have taken to complaining about the power of Google. A new book, “The Curse of the Mogul”, tries to bury such figures once and for all. But executives at Comcast, a big American cable operator, seem not to have read it. Reports this week suggested that the company was close to a deal to acquire a majority stake in NBC Universal, a television and film outfit. The combination would rival Disney as the world’s biggest media firm.

Ownership of NBC Universal is split between GE (which holds 80%) and Vivendi, a French conglomerate. Comcast would commit cash and merge its modest collection of cable channels, which include E! and the Golf Channel, with NBC Universal’s much more impressive roster. It would end up with 51% of the resulting entity. GE would end up with 49% and would probably exit gradually over the next few years. The deal depends in part on Vivendi agreeing to sell its stake.

Comcast has coveted content for a while—it made an offer for Disney in 2004. The company has reportedly agreed to value NBC Universal at about $30 billion, which seems generous. News Corporation and Time Warner, which boast almost double the revenues of NBC Universal, as well as reputations for better management, are worth about $35 billion each. Comcast presumably believes that cables and content to push through them are worth more together than separately. In that it may be mistaken.

The cable business is labour-intensive—Comcast employs about 100,000 people—and demands huge investment. When Time Warner ran a cable operation (it spun it off in March), investors doubted it could focus properly on either content or distribution. They seem not to like Comcast’s ambitions either. Its shares dropped sharply as rumours of the NBC Universal deal spread, and have not yet recovered. Almost all big media mergers provoke scepticism, given their troubled history.

Although it is hard to imagine regulators blocking the deal, they may attach conditions to it. America has already evolved rules greatly restricting the ability of combined content-and-distribution businesses to bully rivals. Comcast may have to agree to refer disputes over the price it pays to carry rivals’ content, which are expected to become more common in the next few years, to binding arbitration.

There is, however, one extremely good reason for Comcast to do a deal. The big strategic problem facing media companies these days is how to move their products online while preserving margins—without swapping analogue dollars for digital pennies, as Jeff Zucker, NBC Universal’s boss, once put it. As one of the architects of Hulu, an online video service, NBC Universal has been deeply involved in these experiments. For their part, cable companies fear that people will become so accustomed to getting television and films online that they will drop their video subscriptions. A combined Comcast-NBC Universal would be able to exert a good deal of control over old media’s internet dreams, to say the least.

CNN Launches Mideast News Center

from WorldScreen

ABU DHABI: CNN has opened its new news-gathering and production hub in the Middle East, which will host the global network's first daily live news show from the region.

Tony Maddox, the managing director and executive VP of CNN International, officially opened CNN Abu Dhabi today alongside Phil Kent, the chairman and CEO of Turner Broadcasting System, and Christiane Amanpour, chief international correspondent. “The Middle East has played a significant role in CNN’s heritage and is part of our DNA, two of our earliest bureaus were in Cairo and Jerusalem,” said Maddox. “This region unquestionably plays an integral part in world affairs, and the new hub in Abu Dhabi gives us the opportunity to get to the heart of the rich and diverse stories across the political, business, social and cultural spectrums.”

“The establishment of a permanent broadcast and production centre in the Middle East by CNN is a significant and unique move by a Western news broadcaster,” he continued. “It gives CNN a powerful base from which to coordinate seven regional bureaus and showcase a new daily news show from the Middle East.”

The facility in Abu Dhabi will coordinate newsgathering for the seven CNN operations in the region—Baghdad, Beirut, Cairo, Dubai, Jerusalem, Kabul and Islamabad—with a staff of more than two dozen. Built as a fully high-definition and online production facility, CNN Abu Dhabi houses a four-camera digital studio with 24/7 live capability, edit suites and fully integrated newsroom.

With CNN Abu Dhabi the network launches its first daily live news show from the Middle East, Prism, hosted by Stan Grant. Also due to be produced at CNN Abu Dhabi are Inside the Middle East, now in its sixth year, and Marketplace Middle East, which launched two years ago.

Monthly Billers Have Weathered The Market

From the Economist

Subscriptions have succoured media firms during the recession. That may not last

VIACOM, a media conglomerate based in New York, has an unusual response to the downturn: it is launching a television channel. This month Epix will begin showing films from Paramount and MGM, as well as original programmes. It may get off to a slow start, since it has not yet signed up many cable and satellite distributors. But its creation points to one of the media business’s few bright spots.

Having fallen steeply after the collapse of Lehman Brothers in September 2008, the shares of all the big American media companies have outperformed the market since March. But recession has struck some parts of the industry much harder than others, changing its shape. As a rule, media products that are sold in shops—CDs, DVDs and magazines—have suffered. Advertising is showing only tentative signs of recovery. The kind of media for which people pay a monthly bill, in contrast, has not only held up better but has in some instances prospered through the downturn.

Cable and satellite television was a good business going into the recession and is now triumphant. In the year to June 30th Britain’s BSkyB added more subscribers, obtained more revenue from each customer and reported more profit than the year before. Discovery Communications, which derives almost all of its revenue from cable, notched up a 13% increase in profits in the second quarter. In the past year the fortunes of big media groups have depended largely on the proportion of their revenues coming from pay television.

Cable networks obtain about half of their revenues from advertising and half from carriage fees paid by the firms that distribute their channels, which in turn get paid by subscribers. In the past year increases in carriage fees have outpaced inflation, offsetting weakness in advertising. At Time Warner’s cable networks, for example, advertising fell by $30m in the second quarter compared with a year earlier. Income from distribution rose by $144m. “People would sooner unplug their refrigerators than their cable boxes,” says Craig Moffett, an analyst at Sanford Bernstein.

As pay television has soared and just about everything else has fallen, even the most diversified conglomerates’ accounts have been transformed (see chart). News Corporation’s cable channels are worth more than broadcast television, film and newspapers put together. Although an advertising recovery will rebalance such firms somewhat, the underlying trend is clear. Media firms are investing in pay-television markets in Latin America, eastern Europe and Asia, which can be expected to grow. The number of channels in emerging markets is rising so fast it is actually boosting the firms that own the satellites (see article). Viewers and creative verve are drifting steadily from broadcast to cable networks. On October 5th Disney appointed Rich Ross, who ran its cable channels worldwide, to head its film studio—an acknowledgment of their success in producing lucrative new content.


A steady stream

The strength of subscription television has encouraged media firms to try charging for other products. Disney recently began selling subscriptions to its large online library of children’s books. Viacom’s chief executive, Philippe Dauman, said last month that the company was exploring ways of getting people to subscribe to its popular online games based on characters such as Dora the Explorer. The firm’s controlling shareholder, Sumner Redstone, once observed that content is king. But at the moment, subscription is king.

There has also been much talk of creating new subscription models for newspapers and magazines. As far as their online offerings go, this is still mostly talk. The boldest conglomerate is News Corporation, which sells online subscriptions to the Wall Street Journal and will begin charging for the newspaper’s smart-phone applications. This week the firm announced plans to charge for membership of rewards schemes run by Britain’s Times and Sunday Times. More quietly, but just as profoundly, many newspapers and magazines are stepping up their home-delivery efforts as newsstand sales falter.

The best model in media has its limits, however. The fact that nearly all newspaper websites remain free suggests how hard it is to charge for content that has been commoditised. Successful subscription models for music have proved elusive for a similar reason. Spotify, a music-streaming service created by Swedish programmers that has grown at an astonishing rate, is trying to move from dependence on advertising to subscriptions. Whether it succeeds will depend partly on the record labels. At the moment they view such upstarts as a handy way of weaning customers from illegal file-sharing websites. If they come to view them as competition for CD sales and digital downloads, the music-streaming sites are in trouble.

Even the mighty pay-television business is showing signs of strain. Cable and satellite operators have tolerated the shrinking margins that come with higher carriage fees so far, but will not do so for ever. Yet they may find it hard to pass price increases on to customers. Mr Moffett reckons the finances of the poorest 40% of American households have been so stretched by the recession that they have little money left for entertainment. Unemployment in California has reached 12%; in Michigan it stands at 15%. It may be that people will have to unplug both their refrigerators and their cable boxes.

Then there is the looming threat of the internet, with its tendency to disintermediate content from carrier. Consumers can already obtain many broadcast-television programmes online, and the worry is that they will eventually drop their cable and satellite services. Jeff Bewkes, the head of Time Warner, is leading a charge to prevent that. He envisages an authentication system that could be used to restrict access to some online content to those who subscribe to multi-channel television. The fear of “cord-cutting” may also underlie Comcast’s ambitious and, given the dismal history of media mergers, risky attempt to acquire a controlling stake in NBC Universal, a content company now owned by General Electric and Vivendi.

For a glimpse of a brighter future look at Denmark, where the biggest cable company not only allows subscribers to watch some television on their computers but also allows non-subscribers to pay a monthly fee to watch some of its programmes online. YouSee offers 18 channels at present, including biggish ones like CNBC Europe and Nickelodeon, and the number is rising. So far there is no evidence that this is cannibalising YouSee’s cable business, according to Anders Blauenfeldt, its head of product development. Anyway, he says, “It is better to cannibalise yourself than to lose customers.”