Tuesday, June 17, 2008

Media Infighting Over Your Money

Look out folks. Lack of any organized defender looking out for your interest is providing another opportunity for media conglomerates to pick our pockets. As with all these opportunities, things begin as internecine squabbling.

Big media has discovered "revenue distribution" problems derived from their own unregulated cross-platform ownerships. This is leading to the curious situation where a Viacom decision to make available complete episodes of "The Daily Show" and "The Colbert Report" on its Comedy Central web site and through Hulu has resulted in ruffled feathers at Time Warner Cable.

But before we explore this potential "dustup" in the biz, let's digress to refresh our memories with some background. The word "media" is the plural of "medium." In considering the singular, Dictionary.com lists 6 definitions giving context before it gets to how we use the plural (emphasis added):

  1. a middle state or condition; mean.
  2. something intermediate in nature or degree.
  3. an intervening substance, as air, through which a force acts or an effect is produced.
  4. the element that is the natural habitat of an organism.
  5. surrounding objects, conditions, or influences; environment.
  6. an intervening agency, means, or instrument by which something is conveyed or accomplished: Words are a medium of expression.
  7. one of the means or channels of general communication, information, or entertainment in society, as newspapers, radio, or television."

For further clarification, the "means" relate to the creative source expression which generally include the written word, audio which includes the spoken word and music, graphics and pictures, and video and movies.

In the past the "channels" (not those numbered things with call letters) included: print media such as books, magazines and newspapers; audio media such as radio, records, and compact discs; and video media such as theaters and television.

To further break it down, the "channels" for television in the past generally have included broadcast TV, cable TV, and satellite TV.

Now we have another "channel" - the internet - you know, those "pipes" that funnel into your home and office the written word, the spoken word and music, graphics and pictures, and video and movies - virtually all forms of media "means".

(It does get even fuzzier, like when your cell phone provider delivers a "wireless" signal through which you can interact with the internet and through which they can send you music and video.)

This brings us back to the Viacom - Time Warner Cable dispute. According to Wikipedia Viacom "is an American media conglomerate with various worldwide interests in cable and satellite television networks (MTV Networks and BET), and movie production and distribution (the Paramount Pictures and DreamWorks movie studios)." Until 2006, Viacom also included CBS (including over-the-air broadcasting), but the two were split.

Time Warner Inc., according to Wikipedia is "the world's second largest media and entertainment conglomerate" which includes "among its subsidiaries are AOL, New Line Cinema, Time Inc., Time Warner Cable, HBO, Turner Broadcasting System, The CW Television Network, UBU Productions, Warner Bros. Entertainment, Cartoon Network, CNN, and DC Comics." But now Time Warner Cable is being spun off which led to some interesting comments from its CEO in the Wall Street Journal about how to gain access to revenue.

What would Viacom and Time Warner Cable have to fight about over the Comedy Central web site? On the face of it, the dispute is simple. Time Warner Cable pays a subscription fee to Viacom in order to provide the Comedy Central channel to its cable TV subscribers who receive Comedy Central. If Viacom provides the most popular content from Comedy Central for free on the web, then Time Warner Cable internet customers get the content without any extra payment to Time Warner. Viacom's Comedy Central can derive ad revenue from The Daily Show web hits.

Oh my! A big potential fight. Yeah, right!

This would make sense in the abstract, but in the context of the real world the only concern here is how to get more money out of you and me.

First of all, we do not get the option of paying or not paying for Comedy Central. Cable TV is not a la carte. When we subscribe to the cable (or satellite) TV package that includes Comedy Central, we are forced to buy a group of channels most of which any one individual won't watch, though collectively we as small groups of viewers do watch. Viacom and Time Warner as cable channel providers insist on this - depending upon your social philosophy - "ripoff approach" or "access assurance approach." It makes them the most money.

Second, Time Warner subsidiaries have web sites that provide streaming content of current and past TV shows. Check out The CW Web Site or the new The WB.com. Are these Time Warner subsidiaries being assaulted in the press by Time Warner Cable executives? Not that I've seen.

So let's back up here a minute. In a Teddy Roosevelt "trust busting" world or a Franklin Roosevelt regulated utility world, we would have a regulated cable company that couldn't be in the media content production business. It would derive it's revenues from providing (a) cable TV signals for monthly subscription fees paid by you and me, (b) access to the internet for monthly service charges paid by you and me, and (c) telephonic communications services for monthly service charges paid by you and me. Their competition would be the regulated land-line phone companies, regulated satellite companies, and regulated "wireless" companies. These would be technology companies not in any way involved in TV channels nor media production.

Because the world isn't like this, Liberty Media Corporation which is in the cable TV business also owns DirecTV which is a satellite TV company and also owns cable TV channels and also is in media production. It's hardly the most obvious conglomerate which is why I used it as an example.

Let's look at a different example. In it's own effort to survive, Comcast which is a cable company previously only in the cable TV, internet service, and phone service businesses, is now delivering content through its own web site Fancast.com through which it delivers content from its partner Hulu (NBC Universal, New Corp. and now Viacom) supported by advertising. But Comcast issued a news release May 19 headed

Fancast.com to Stream Additional Programming from MTV Networks and BET Networks, Including COMEDY CENTRAL's "South Park," "The Daily Show with Jon Stewart" & "The Colbert Report"

Back to the real world. Time Warner Cable are the nice folks that on June 5 began testing its internet service pay-for-what-you-use system in Beaumont, TX. Subscription tiers are being offered that will range from $29.95 a month for relatively slow service at 768 kilobits per second and a 5-gigabyte monthly cap to $54.90 per month for fast downloads at 15 megabits per second and a 40-gigabyte cap, with overages being charged at $1 per gigabyte. Downloads and uploads will count toward the monthly cap and prices cover the internet portion of bundles that include tv and/or phone service. Remember, until this year it was the cable company of the Time Warner conglomerate. That conglomerate owns AOL which uses its own partnership with Hulu to promote itself. And if Time Warner Cable viewers get hooked on sites like Hulu or its partners, then the cable system capacity starts getting stretched. But with the tier system, it will become very profitable. But if it starts promoting Hulu-like use before it gets the tiered rates up and running nationwide, people might start getting testy about these speed and gigabyte limits.

So here's the big picture right now all you viewers out there. The media biz conglomerates are struggling a bit to be properly organized to get their hands on your money. And there is nothing new about how they are doing it.

The basic source, of course, is advertising (think newspapers and magazines) the cost of which is included in the price you pay for the products advertised. The other source is monthly charges - starting with newspaper and magazine subscriptions plus phone service and now for cable TV and internet service. Even pay-per-view is really a variation on buying one issue of a newspaper or magazine at the news stand.

I guess I have to figure out how to get in on this, or at least how to pay the least for the most.

Thursday, June 12, 2008

Your favorite show got canceled. Whose fault is it?

On my favorite satellite TV forum, someone complained about a show being canceled because it obviously had a following. The thought was that the fault lies with the ratings.

I guess we lose sight of why there are Nielsen ratings at all?

Nielsens are used to sell advertising. Remember you, the viewer, don't pay anything to watch OTA networks. So to cover the cost of buying the show, owning and operating a TV broadcast network, and owning and operating a TV station, advertising is sold.

The networks recently went through the "upfronts" for the new season, which means that they sold ads slots upfront. The most "valuable" slots are primetime Sunday through Thursday, other than special events. The problem is the broadcast networks are in trouble. To sell ads, they used to have to convince advertisers that someone watched the show. Now, with the advent of DVR's, the focus is on whether someone watches the ads.

When you hear "Jericho is brought to you by Frisbee" that is literally the truth of the matter. "Frisbee" is paying all the basic costs based upon the premise that someone is watching the ads and will buy a "Frisbee." The only evidence they have that anyone watched is the Nielsens or data from another source.

Consider this. Typically Jericho in its first season had average ratings between 20% to 25% of American Idol. Jericho probably cost double per minute to create. If nearing the end of the first season CBS said to Paramount Network Television we can generate enough revenue to pay you 20% of your production costs, the Paramount folks have to consider: "Will we be able to generate enough revenue through DVD sales and syndication recover our money and make a profit?" As you now know, the answer was "no."

Consider Friends. Any half hour show shot on a set is cheap to produce except for stars salaries which initially weren't out of the ordinary. During the last season, members of the cast were getting 7 figures per episode. How could a network cover those costs with ad sales in a 30-minute show? American viewers of episodes during all seasons were huge: 25 million, plus or minus. Buying a 30-second spot was an expensive buy.

But NBC didn't pay all the costs incurred by Warner Brothers Television for the last season of Friends. Syndication revenues worldwide for the show were huge. Even in America we started seeing episodes from early years in syndication while the last few seasons were being produced. And syndication is still hauling in the dough. DVD's were released to big sales and rereleased for continuing sales and released in box sets.

It's all about the money. Nielsens? Advertisers (you remember, the folks who bring you the show) now want second-by-second info from boxes. They want to know if you watched the ad, not the show. The show is irrelevant. If a show gets 6 million live and a 7-day 40 million DVR viewing, the assumption is likely to be that it had a live equivalent advertising influence of 7 million, maybe. We time shifters are killing OTA TV.

Those of us who prefer scripted TV have to start hoping that the average per-episode production budget for scripted shows get realistic. At the outset they need to be budgeted for cable-level Nielsens on USA, ABCFamily, Fx, or SciFi, assuming some potential for syndication and moderate DVD sales.

Yes, we watched Jericho. We'll never watch it in syndication as we saw all the episodes. We'll never buy the DVD's. And we didn't even buy some peanuts to send to CBS.

If there is a Nielsen household representative of ours, the fact is sometime within the week they appeared we watched Jericho and the shows opposite it. Our representative households skipped the ads on all of them if they did what we did. So if all those shows get canceled it's the fault of we viewers.

Saturday, June 7, 2008

Rosenberg's Last Gasp - Soon We Will All Be Worse Off

In attempting to undo what the DGA, the WGA, and AFTRA have done, SAG President Alan Rosenberg has my sympathy. Unfortunately his problems are the result of his own lack of foresight.

Last fall when AMPTP effectively engaged in a lockout of actors, directors, and all others by forcing WGA members into a strike, an effective countermove would have been for SAG members to state they were negotiating their new contract as of November 1, 2007, and walk out in sympathy and solidarity. That's what the labor movement is all about. And then, the two striking unions could have ignored the efforts of the middle management non-union association, the Directors Guild.

Rosenberg is representing the needs of "the rank and file", not the likes of Tom Cruise or even Kyra Sedgwick.

SAG should represent the people struggling to get enough work as the "interviewed gawker on the sidewalk" on the CSI or Law & Order franchises. These are the people whose current income could derive in a small way from DVD revenue perhaps such as Meilinda Soerjoko and Lindsey Ginter who appeared in respectively three and two episodes of Lost. These are the people who need health insurance, for instance. Like the rest of us.

They have joined the WalMart workers of the entertainment industry, which includes all those in crafts and trades except the stars. And they all are going to lose ground. So will we.