Football Direct TV -vs- Fox. No Superbowl

BIG_DADDY · 01-30-2011, 08:27 PM

This is pretty much the end of the line with me and Direct TV. First they start dumping stations like VSs. Then this battle with Fox. Now they have the audacity to want to raise my rates. I have 2 areas I want to get information on addressing this. 1. Can anyone else save me the trouble of doing my own due diligence on this fued? 2. Those of you effected by it what are you doing to go around it?

**The Bad Guy** · 01-30-2011, 08:29 PM

I have no idea what the issue is with Fox/DTV to be honest. I have DTV and didn't know the SB was in jeopardy.

BIG_DADDY · 01-30-2011, 08:36 PM

Quote:

Originally Posted by The Bad Guy

I have no idea what the issue is with Fox/DTV to be honest. I have DTV and didn't know the SB was in jeopardy.

Apparently it only effects certain areas. For example, we get Fox in the bay area as a regular channel so we get it down here. Up in Southern Oregon though where we don't get Fox as a regular channel it has been cut. People are all running around getting antennas so they can see the game. Flipping ridiculous.

tk13 · 01-30-2011, 08:38 PM

It most likely has something to do with the company that owns that particular FOX station... not the Fox network itself.

**BigMeatballDave** · 01-30-2011, 08:54 PM

Quote:

Originally Posted by tk13

It most likely has something to do with the company that owns that particular FOX station... not the Fox network itself.

Pretty much. Some local Dayton affiliates were having contract issues with TimeWarner.

WV · 01-30-2011, 09:20 PM

You'll take my DirecTV when you pry it from my cold dead hands!

Al Bundy · 01-30-2011, 10:20 PM

I noticed that AT&T Uverse moved all Fox Sportsnet's that are not in my area (Fox Sports MW, Fox Sports MW2 and Fox Sports KC stay) to their HD Premium tier. No SD or HD for Fox Sports Bay Area/Fox Sports detroit and on and on. So I am not sure what is going on with Fox.

HonestChieffan · 01-30-2011, 10:28 PM

**CrazyPhuD** · 01-30-2011, 10:42 PM

Actually in almost 100% of the cases blame the networks.

**CrazyPhuD** · 01-30-2011, 10:45 PM

Today’s Cable TV “Revenue Split” and Why Over The Top Likely Can’t Be Ad-Supported Only

By Bill Niemeyer on May 10, 2009

http://billniemeyer.tv/2009/05/10/to...upported-only/

Unsurprisingly, the ABC/Hulu deal of two weeks ago got my attention (some interesting insights on that from Bob Iger in the transcript of last week’s Disney earnings call). But, one aspect of the deal in particular got my quantitative interest. It was the long-form TV content online deal ABC elected not do – with YouTube. Several press articles (including "Disney’s Hulu Deal Raises Questions About YouTube Model" via the WSJ) indicated ABC decided not do a long form deal with YouTube in part because they offered a revenue share only agreement – YouTube not being willing to pay fees or provide equity participation.

This prompted me to consider, towards a compare/contrast with online TV content deals – what’s the "revenue share" in television? I put that in quotes because most TV agreements are based on advertising inventory shares (known as an avail split), often combined with fees. Avail splits keep the parties involved from having to get into each other’s business – you sell your inventory and I’ll sell mine. Avail splits also support national and local sales forces doing what they do best.

Nonetheless, what is the "effective" TV revenue share – where do the dollars come from and who gets them? And what does that tell us about whether or not online TV content models – especially with respect to "over the top" platforms (Internet delivered video to TVs) – can be viable with advertising revenues alone or must they go "dual revenue" as cable TV has, namely charge subscription fees as well?

A warning… the quantitative analysis can get messy quickly. But the qualitative takeaway becomes evident even more quickly – so I’ll present it first.

Because such a large share of cable TV revenues ultimately come from multichannel subscriber fees (and broadcast TV is increasingly moving to an analogous model via retransmission fees), TV content likely cannot be monetized online via advertising models alone as online video use grows. Especially as "over the top" platforms come to market and Internet delivered TV programming moves from being additive to being cannibalistic (as it inevitably must as share of viewing increases) – it’s probable the dual revenue model of advertising plus carriage fees must follow from TV platforms to online.

Here’s a stepwise back of the envelope look at the numbers for cable networks.

Version #1 – revenue split – cable network/operator – advertising only

It’s 81/19. Cable networks national ad sales in 2008 were $21 billion (estimate from Magna Global). Multichannel operator sales of cable network local avails in 2008 were $4.7 billion (based on an NCTA estimate for cable and my estimate for satellite and IPTV). A total of $26 billion – the networks get $21B or 81%.

But… that doesn’t include cable network carriage fees.

Version #2 – revenue split – cable network/operator – advertising and carriage fees

It’s 90/10. My estimate is cable networks got $24 billion in carriage fees from multichannel operators in 2008. Added to a total 2008 cable network ad market of $26 billion (see above), that’s a revenue base of $50 billion and the cable networks got 90% of that ($45B total – $24B in fees and $21B in national ad sales).

But… that doesn’t include the revenues multichannel operators get from subscriber fees.

Version #3 – revenue split – cable network/operator – advertising, carriage fees and operator subscriber fees

It’s 63/37 – maybe. Multichannel operators generated $83 billion in video subscriber revenues in 2008 (NCTA says cable was $52B, DIRECTV reported $17B, DISH reported $12B, I estimate AT&T plus Verizon was $2B). I say we should subtract fees paid for premium channel subscriptions and pay-per-view – I estimate that’s about $15 billion. That leaves $68 billion. Now things get fuzzy. You need to figure out what share of the remaining $68 billion is being paid for access to cable network content, add that to the advertising revenue base, and split it out. Here’s a simple (and probably wrong) way to do that. I estimate cable networks are about 2/3 of total TV ratings points in multichannel households (using Nielsen data via the CAB web site). 2/3 of $68 billion in subscriber fees is $45 billion – add that to the overall cable ad revenue of $26 billion (see version #1) for a total revenue base of $71 billion. Cable networks get $45 billion in national ads and carriage fees (see version #2) for a share of 63%.

You could do this calculation much more rigorously (estimating consumer perceived value of cable networks, fees for set-tops and DVRs and so on) but here’s the good news – towards the topline question of whether or not "over the top" business models will likely need to include subscriber fees – I don’t think you have to.

That question seems to have been answered by the version #2 calculations. Cable networks are getting over 50% of their revenues from carriage fees paid by operators. If an online TV platform wanted to go "ad only," it could double the advertising revenue production per viewing hour of cable TV and it would still have to give it all to cable networks to provide them close to the same revenue they get from TV platforms.

Online platforms that provide additive viewing for cable and broadcast networks have a lower bar – they don’t need to match TV in revenue. But as Internet-delivered viewing of TV programming gains market share via platforms like "over the top" – it will necessarily draw viewers away from traditional TV platforms to get that share.

Certainly, advanced digital video advertising techniques need to be employed to drive better revenue generation than linear 30 second commercials can provide (see this past Niemeyer Review newsletter for more). But in order to provide the "dual" revenues that currently support cable (and increasingly broadcast) TV programming, it seems likely that "over the top" platforms will also have to charge subscription fees. How those platforms can provide value to customers to gain subscription fees, while delivering added value for marketers to drive advertising revenues, are two key topics to be addressed for "over the top" business models.

kcxiv · 01-30-2011, 11:00 PM

no way will i get rid of it as long as they have sunday ticket. I wouldnt have to worry about fox the superbowl and the Chiefs. We wont make it there anyways. lol

**CrazyPhuD** · 01-30-2011, 11:04 PM

So WTF does my last post actually mean in layman's terms.

More and more money for content is being gained not through advertising but actually through subscription fees. Since they can't charge more for advertising, how do they raise revenues, they raise retransmission fees that they charge the cable companies/satellite providers. OR they will add new channels. Well most people wouldn't give a shit if they got ESPN 8 blacked out because the carrier didn't want to add the channel to the package or raise their subscription fees. SO they bundle groups of channels together when popular channels come time to be renewed. They say you must add these channels or increase the fees on these channels or we'll remove the popular channels from your network.

So often it has nothing to do with the channel being removed it's all the crap they want the company to add with that channel that causes the issue. If you think about it we have a really ****ed up TV system. In effect you subsidize a shit ton of channels that you never watch which results in your cable bill being likely higher than it should be. Many channels might not survive if you actually got to pick which channels you wanted to pay for and were charged appropriately. This actually isn't a bad place to be. You'd kill bad channels but you wouldn't kill good content, good content will find a network.

BIG_DADDY · 01-30-2011, 11:12 PM

Quote:

Originally Posted by kcxiv

no way will i get rid of it as long as they have sunday ticket. I wouldnt have to worry about fox the superbowl and the Chiefs. We wont make it there anyways. lol

I picked up the Chiefs games online just fine this year. I got copies and watched those too. When I am at home I do that. When I am at work on a weekend I go to sportsbar which I can hit with a rock from my work which a seriously killer setup and some Chiefs fans. Saved some $$$$ this year.

Frosty · 01-31-2011, 07:59 AM

The Spokane FOX station is in a pissing match with DirecTV. I called DirecTV and bitched about it and they ended up turning on the LA feed for me (Channel 399). Later on, I got an e-mail that said they were turning on both the eastern and western feeds, so I think they ended up doing it for all of the affected area. You might check those channels (398 and 399) and see if they did the same for you.

Stewie · 01-31-2011, 08:04 AM

These disputes aren't unique to DTV. TW, Comcast, etc. have occasionally gone through these gyrations. Didn't NYC miss some World Series games last fall due to a dispute with Fox and a cable company?

01-30-2011, 08:27 PM
BIG_DADDY THE RED MENACE Join Date: Aug 2000 Location: Texas Casino cash: $5068410	Direct TV -vs- Fox. No Superbowl This is pretty much the end of the line with me and Direct TV. First they start dumping stations like VSs. Then this battle with Fox. Now they have the audacity to want to raise my rates. I have 2 areas I want to get information on addressing this. 1. Can anyone else save me the trouble of doing my own due diligence on this fued? 2. Those of you effected by it what are you doing to go around it?
Posts: 32,384

01-30-2011, 08:29 PM	#2
The Bad Guy Scott Pioli Join Date: Jan 2001 Location: The Copacobana Casino cash: $9373645	I have no idea what the issue is with Fox/DTV to be honest. I have DTV and didn't know the SB was in jeopardy. __________________
Posts: 23,212

01-30-2011, 08:38 PM	#4
tk13 ... Join Date: Nov 2001 Casino cash: $1972500	It most likely has something to do with the company that owns that particular FOX station... not the Fox network itself.
Posts: 54,950

01-30-2011, 09:20 PM	#6
WV Veteran Join Date: Feb 2010 Location: In the Holler Casino cash: $10004950	You'll take my DirecTV when you pry it from my cold dead hands!
Posts: 4,983

01-30-2011, 10:20 PM	#7
Al Bundy Damnit Peg Join Date: Jul 2006 Location: Overland Park Casino cash: $5381831	I noticed that AT&T Uverse moved all Fox Sportsnet's that are not in my area (Fox Sports MW, Fox Sports MW2 and Fox Sports KC stay) to their HD Premium tier. No SD or HD for Fox Sports Bay Area/Fox Sports detroit and on and on. So I am not sure what is going on with Fox.
Posts: 23,316

01-30-2011, 10:28 PM	#8
HonestChieffan Seeking the Truth daily Join Date: Jan 2006 Location: In the Country in MO Casino cash: $2214309	dish __________________ “Make no mistake. If you try anything to raise the cost of vishessavatubs, I will veto it.” - Joe Biden, SOTU 2023
Posts: 53,348

01-30-2011, 10:42 PM	#9
CrazyPhuD Meow Join Date: Jun 2005 Casino cash: $10005050	Actually in almost 100% of the cases blame the networks. __________________ "Political correctness is a doctrine, fostered by a delusional, illogical minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a t*rd by the clean end"
Posts: 8,523

01-30-2011, 10:45 PM	#10
CrazyPhuD Meow Join Date: Jun 2005 Casino cash: $10005050	Today’s Cable TV “Revenue Split” and Why Over The Top Likely Can’t Be Ad-Supported Only By Bill Niemeyer on May 10, 2009 http://billniemeyer.tv/2009/05/10/to...upported-only/ Unsurprisingly, the ABC/Hulu deal of two weeks ago got my attention (some interesting insights on that from Bob Iger in the transcript of last week’s Disney earnings call). But, one aspect of the deal in particular got my quantitative interest. It was the long-form TV content online deal ABC elected not do – with YouTube. Several press articles (including "Disney’s Hulu Deal Raises Questions About YouTube Model" via the WSJ) indicated ABC decided not do a long form deal with YouTube in part because they offered a revenue share only agreement – YouTube not being willing to pay fees or provide equity participation. This prompted me to consider, towards a compare/contrast with online TV content deals – what’s the "revenue share" in television? I put that in quotes because most TV agreements are based on advertising inventory shares (known as an avail split), often combined with fees. Avail splits keep the parties involved from having to get into each other’s business – you sell your inventory and I’ll sell mine. Avail splits also support national and local sales forces doing what they do best. Nonetheless, what is the "effective" TV revenue share – where do the dollars come from and who gets them? And what does that tell us about whether or not online TV content models – especially with respect to "over the top" platforms (Internet delivered video to TVs) – can be viable with advertising revenues alone or must they go "dual revenue" as cable TV has, namely charge subscription fees as well? A warning… the quantitative analysis can get messy quickly. But the qualitative takeaway becomes evident even more quickly – so I’ll present it first. Because such a large share of cable TV revenues ultimately come from multichannel subscriber fees (and broadcast TV is increasingly moving to an analogous model via retransmission fees), TV content likely cannot be monetized online via advertising models alone as online video use grows. Especially as "over the top" platforms come to market and Internet delivered TV programming moves from being additive to being cannibalistic (as it inevitably must as share of viewing increases) – it’s probable the dual revenue model of advertising plus carriage fees must follow from TV platforms to online. Here’s a stepwise back of the envelope look at the numbers for cable networks. Version #1 – revenue split – cable network/operator – advertising only It’s 81/19. Cable networks national ad sales in 2008 were $21 billion (estimate from Magna Global). Multichannel operator sales of cable network local avails in 2008 were $4.7 billion (based on an NCTA estimate for cable and my estimate for satellite and IPTV). A total of $26 billion – the networks get $21B or 81%. But… that doesn’t include cable network carriage fees. Version #2 – revenue split – cable network/operator – advertising and carriage fees It’s 90/10. My estimate is cable networks got $24 billion in carriage fees from multichannel operators in 2008. Added to a total 2008 cable network ad market of $26 billion (see above), that’s a revenue base of $50 billion and the cable networks got 90% of that ($45B total – $24B in fees and $21B in national ad sales). But… that doesn’t include the revenues multichannel operators get from subscriber fees. Version #3 – revenue split – cable network/operator – advertising, carriage fees and operator subscriber fees It’s 63/37 – maybe. Multichannel operators generated $83 billion in video subscriber revenues in 2008 (NCTA says cable was $52B, DIRECTV reported $17B, DISH reported $12B, I estimate AT&T plus Verizon was $2B). I say we should subtract fees paid for premium channel subscriptions and pay-per-view – I estimate that’s about $15 billion. That leaves $68 billion. Now things get fuzzy. You need to figure out what share of the remaining $68 billion is being paid for access to cable network content, add that to the advertising revenue base, and split it out. Here’s a simple (and probably wrong) way to do that. I estimate cable networks are about 2/3 of total TV ratings points in multichannel households (using Nielsen data via the CAB web site). 2/3 of $68 billion in subscriber fees is $45 billion – add that to the overall cable ad revenue of $26 billion (see version #1) for a total revenue base of $71 billion. Cable networks get $45 billion in national ads and carriage fees (see version #2) for a share of 63%. You could do this calculation much more rigorously (estimating consumer perceived value of cable networks, fees for set-tops and DVRs and so on) but here’s the good news – towards the topline question of whether or not "over the top" business models will likely need to include subscriber fees – I don’t think you have to. That question seems to have been answered by the version #2 calculations. Cable networks are getting over 50% of their revenues from carriage fees paid by operators. If an online TV platform wanted to go "ad only," it could double the advertising revenue production per viewing hour of cable TV and it would still have to give it all to cable networks to provide them close to the same revenue they get from TV platforms. Online platforms that provide additive viewing for cable and broadcast networks have a lower bar – they don’t need to match TV in revenue. But as Internet-delivered viewing of TV programming gains market share via platforms like "over the top" – it will necessarily draw viewers away from traditional TV platforms to get that share. Certainly, advanced digital video advertising techniques need to be employed to drive better revenue generation than linear 30 second commercials can provide (see this past Niemeyer Review newsletter for more). But in order to provide the "dual" revenues that currently support cable (and increasingly broadcast) TV programming, it seems likely that "over the top" platforms will also have to charge subscription fees. How those platforms can provide value to customers to gain subscription fees, while delivering added value for marketers to drive advertising revenues, are two key topics to be addressed for "over the top" business models. __________________ "Political correctness is a doctrine, fostered by a delusional, illogical minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a t*rd by the clean end"
Posts: 8,523

01-30-2011, 11:00 PM	#11
kcxiv In Search of a Life Join Date: Mar 2005 Location: Central Valley, Cali Casino cash: $8807996	no way will i get rid of it as long as they have sunday ticket. I wouldnt have to worry about fox the superbowl and the Chiefs. We wont make it there anyways. lol
Posts: 29,110

01-30-2011, 11:04 PM	#12
CrazyPhuD Meow Join Date: Jun 2005 Casino cash: $10005050	So WTF does my last post actually mean in layman's terms. More and more money for content is being gained not through advertising but actually through subscription fees. Since they can't charge more for advertising, how do they raise revenues, they raise retransmission fees that they charge the cable companies/satellite providers. OR they will add new channels. Well most people wouldn't give a shit if they got ESPN 8 blacked out because the carrier didn't want to add the channel to the package or raise their subscription fees. SO they bundle groups of channels together when popular channels come time to be renewed. They say you must add these channels or increase the fees on these channels or we'll remove the popular channels from your network. So often it has nothing to do with the channel being removed it's all the crap they want the company to add with that channel that causes the issue. If you think about it we have a really ***ed up TV system. In effect you subsidize a shit ton of channels that you never watch which results in your cable bill being likely higher than it should be. Many channels might not survive if you actually got to pick which channels you wanted to pay for and were charged appropriately. This actually isn't a bad place to be. You'd kill bad channels but you wouldn't kill good content, good content will find a network. __________________ "Political correctness is a doctrine, fostered by a delusional, illogical minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a trd by the clean end"
Posts: 8,523

01-31-2011, 07:59 AM	#14
Frosty Go Beavers! Join Date: Jan 2001 Location: Warshington Casino cash: $5668243	The Spokane FOX station is in a pissing match with DirecTV. I called DirecTV and bitched about it and they ended up turning on the LA feed for me (Channel 399). Later on, I got an e-mail that said they were turning on both the eastern and western feeds, so I think they ended up doing it for all of the affected area. You might check those channels (398 and 399) and see if they did the same for you.
Posts: 14,498

01-31-2011, 08:04 AM	#15
Stewie MVP Join Date: Oct 2006 Location: West of the Equator Casino cash: $1899901	These disputes aren't unique to DTV. TW, Comcast, etc. have occasionally gone through these gyrations. Didn't NYC miss some World Series games last fall due to a dispute with Fox and a cable company?
Posts: 13,606