Posted on 09/25/2009 6:14:41 AM PDT by abb
Even the cable networks that are today’s multi-revenue stream darlings are destined for the same “digital destruction” as advertising-supported broadcast television, newspapers and other traditional media. It’s just a matter of time.
That likely scenario from former News Corp. president and COO Peter Chernin, represents the final blow to media conglomerates. which currently rely on their cable networks for at least 60 percent of their profits.
Whether niche cable programming can survive and thrive in a streaming on-demand video world “is the single biggest question facing the media industry,” Chernin said Wednesday during a roundtable discussion USC Annenberg School for Communications.
“At some point, it (cable) is vulnerable to the same disaggregation as everything else,” he said.
Chernin should know. Before leaving News this summer after 14 years to start his own content company, he partnered with NBC Universal to launch Hulu.com, a streaming online advertising-supported web site for mostly broadcast TV programs and some films. Despite its success, Hulu is expected to adopt a fee-based service to generate additional revenues in a digital marketplace where consumers generally can find what they want and access it on any device.
As Internet-connected TVs and streaming online video proliferate over the next several years, consumers will resist paying for cable and other content they can find online for free or individually pay for on demand. Such digital options will undercut cable’s existing business model.
Time Warner and Comcast, the two largest cable operators and owners of major cable program networks , are scrambling to get ahead of the curve by offering subscribers “TV Everywhere.” The new service — which is just getting underway — allows subscribers to access their favorite cable content on all other devices since it is not yet streamed online.
It sounds a lot like the old gatekeeper approach to media that cannot prevail in a ubiquitous digital marketplace.
One factor that could hasten cable’s fall is federally mandated a la carte pricing, according to Gordon Crawford, managing director of The Capital Group and a veteran media investor who also participated in the roundtable discussion on media’s future. Allowing consumers to pay for only the programs they want to view could mean the demise of two-thirds of niche cable channels that are otherwise assured revenues through existing bulk carriage agreements anchored by the universally popular likes of ESPN and CNN, Crawford said..
“The days you could protect those non-consumer friendly business models are gone,” Chernin quipped. His investment advice to others: Stay out of the US and western Europe, and away from broadcast, newspapers and traditional media.”
"Network evening newscasts will go dark after the '08 elections and their news divisions disbanded."
Walter Abbott, (b. 1950), Media observer, blogger and commentator
ping
Really the only reason we keep our cable is the convenience of just flipping through channels. It’s easier than figuring out which show you want to watch and typing it in online. TV is still better video quality in many cases, though that is changing.
The ability to see anything immediately rather than having to hunt for it is really the only remaining reason.
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=114305
Goodby: Forget :30 Spots, Write It On The House
http://www.theatlantic.com/doc/200910/moguls
The Moguls’ New Clothes
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=114241
TiVo: Ads Skipped In Acclaimed Shows
http://www.chicagoreader.com/TheBlog/archives/2009/09/24/sun-times-media-group-ceo-explains-it-all-to-you
Sun-Times Media Group CEO Explains It All to You
http://www.chicagotribune.com/business/chi-fri-sun-times-0925-artsep25,0,4553232.story
Chicago Sun-Times may have more time to negotiate terms of buyout
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/09/cbss-quincy-smith-want-to-make-case-against-hulu.html
CBS’s Quincy Smith wants to make case against Hulu
http://www.marketwatch.com/story/nbc-is-under-assault-and-beatles-still-no-1-2009-09-25
NBC is under assault from all sides
http://www.nypost.com/p/news/business/liquidation_threatens_debt_laden_hqD4GtA02ByK4N6eWv1MJO
Liquidation threatens debt-laden MGM
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLOtFSXxc9aU
U.S. Newspapers ‘Need Cash Now,’ Group Tells Congress
We really like our Dish system, but it really rubs me the wrong way to be paying for the left wing channels we get with our package.
It seems like each month we have more non English channels on from Hispanic to various Asian channels.
Our choices should be like what we choose in a cafeteria, not something the do gooders want for free. So I’m all for a la carte pricing for cable and satellite. All CNN channels have been blocked since we had our Dish system installed in 2000.
“One factor that could hasten cable’s fall is federally mandated a la carte pricing, according to Gordon Crawford, managing director of The Capital Group and a veteran media investor who also participated in the roundtable discussion on media’s future. Allowing consumers to pay for only the programs they want to view could mean the demise of two-thirds of niche cable channels that are otherwise assured revenues through existing bulk carriage agreements anchored by the universally popular likes of ESPN and CNN, Crawford said..
“The days you could protect those non-consumer friendly business models are gone,” Chernin quipped. His investment advice to others: Stay out of the US and western Europe, and away from broadcast, newspapers and traditional media.”
I think cable TV—especially with QAM-encoded digital channels—will survive because they won’t suffer the bandwidth transmission issues that plague Internet Protocol TV (IPTV). And because digital cable TV can offer around 150-175 channels of programming, program selection is less of an issue, too.
mainepatsfan,
Take a look at the third story. Where this is headed is that the teams will do their own advertising, cutting out the networks. At some future date, the NFL teams (and colleges and other pro sports) will have their own networks to distribute the broadcasts.
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/24/AR2009092401079.html
Mild-Mannered or Lily-Livered?
http://www.guardian.co.uk/media/pda/2009/sep/25/digital-media
Online news growth tailing off in 2009
http://www.boston.com/business/ticker/2009/09/new_england_pat.html
New England Patriots owner sells ads on ESPN website
The internet is going to destroy the satellite systems anyway. Did you see the WSJ story yesterday about how TV manufacturers are building sets with much more powerful innards which make them ‘internet ready?’
Bandwidth will continue to increase and take care of the issue. Just think of where we are today vs 10 years ago. Few had broadband back then. Now its almost universal.
It is all about control.
Dinosaur Media = you watch what we show when we show it.
New Media = you watch (or blog or surf) what you want when you want it.
Yes, you have to upgrade to get FOX News and now Fox Business.
We probably watch a dozen channels on a regular basis. There was a change in the bay area NBC stations a few years ago, and we didn’t get NBC for a few months. We didn’t know anything about the loss of the NBC channel until a visitor tried to get NBS and got the message that Dish had cancelled the contract with the local provider. He laughed.
This is offered where I live. Sounds good in theory, but it's not all it's cracked up to be. It costs $5 per channel, per month. Once you get more than a few channels, you might as well get the package.
I missed this article. “Did you see the WSJ story yesterday about how TV manufacturers are building sets with much more powerful innards which make them ‘internet ready?’”
Actually, we are hoping for that step to happen before our 20 year old RCA dies. I would like to be able to sit in my Lazy Boy with a remote keyboard and do my internet stuff on a large screen tv.
“This is offered where I live. Sounds good in theory, but it’s not all it’s cracked up to be. It costs $5 per channel, per month. Once you get more than a few channels, you might as well get the package.”
I think that once that happened across the country, we would see competition by the channels driving the cost down.
We could get by with 10-12 channels, and I’m paying a little over $50/month for my Dish package.
After 13 years with DirecTV, mainly since it was the only thing we could get more than 3 channels with where we lived and then for the NFL Sunday Ticket package, we recently switched to FIOS.
I was going to keep DirecTV for the Sunday Ticket package, but then FIOS offered the NFL Red Zone package and I said...Hmmmmm?
Nicest part...no tiers. Had to pay extra for things on DirecTV and they nickel and dimed me to death.
Seriously, or evenly seriesly, if you have access to FIOS, get it!
Whole house DVR is amazing and all the shows we like are available via "On Demand" so we don't have to use the DVR as much as we used to.
On another subject....did anyone bother to watch Modern Family and/or Cougar Town?
The previews looked extremely repugnant so was wondering how the ratings were skewed to make them appear as "Must See" shows.
That is exactly what I did, and for the same reason.
The funny twist to that is the fact that news corp ( FOX) owns DISH!
Check with your phone company to see if they offer the package.
Horse hockey.
Fox News Sues EchoStar [Dish Network] for Contract Breach (2007)
When AT&T offered this to me, I was Dish customer, and by contract with Dish, they couldn’t offer this to me until I had cancelled my Dish contract for a year.
Apparently, they are now with Direct tv, and I may go to that program.
I actually got Comcast to offer their package for $99 per month, and I told them to drop it to $90 and give me a two year contract. They didn’t say no, but I haven’t heard from them. It was really kinda weird. Our culdesac finally got Broadband, and the guy who was in charge of rigging the Broadband outside system called every home owner and offered them the package.
Friends on the other side of town in another culdesac got the Comcast $99 offer and took it. Inspite of being promised that they could keep their 30 year old AT&T phone numbers, AT&T apparently would not allow the transfer and used their numbers for someone else. So they were without their personal phones for about a week, until Comcast got them new numbers. Fortunately, they had Ipod Phones for relatives and close friends to call during the change over.
Perhaps they don't own it now, but when I got my dish, they had a major stake in it.
http://www.newspaperdeathwatch.com/
Prepare For Chaos
http://gillin.com/blog/2009/09/a-new-media-book-thats-actually-fun-to-read/
A New Media Book That’s Actually Fun to Read
I watched Modern Family because I like Ed O'Neill. Not funny. And boy does he ever look old.
I already had Dish and it didn't matter. I still got the package.
They are my DSL provider, and I got a call about a year ago, lowering my DSL rates and giving me a good deal on our local and long distance phone calls, and they have the phone lines upto and under and in our home.
The young man who helped me get the above was ready sign us up for their low cost Dish Satellite system, until he found out that we were Dish Subscribers.
and with Comcast out there p*ssing off all of their customers at the retail level, it will happen sooner rather than later
http://online.wsj.com/article_email/SB10001424052970204488304574431311916357526-lMyQjAxMDA5MDIwNTEyNDUyWj.html
Write Local: How Small Newspapers Are Surviving
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1004016053
‘New York Times’ Agrees to Consider Buyouts
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1004016063
Calhoun City ‘Monitor-Herald’ to Fold
While it may only be a weekly with 811 subscribers, that's good news that fewer tonnes of newsprint will be purchased. I can't wait to see how much the total amount of newsprint paper has declined in 2009.
http://www.editorandpublisher.com/eandp/columns/forestwebs_display.jsp?vnu_content_id=1004008576
FORESTWEB Report: U.S. Newsprint Consumption Continues Sharp Downward Trend
Newsprint consumption in the United States remained on a downward slope in July, falling by 21.4% year-over-year, according to data released by the Pulp and Paper Products Council. Inventories remain lean, but publishers’ stocks are higher.
By Debra Garcia
LOS ANGELES (September 02, 2009) — Newsprint consumption in the United States remained on a downward slope in July, falling by 21.4% year-over-year, according to data released by the Pulp and Paper Products Council (PPPC).
Through the first seven months of this year, 3.03 million tonnes of newsprint was consumed in the U.S., and this was down 25.4% from a year earlier.
Consumption by U.S. dailies showed an almost identical trend, dropping by 21.8% in July and 25.1% year-to-date, to 2.38 million tonnes. Total U.S. newsprint demand fell 24.0% in July and was off 31.1% year-to-date, to 2.86 million tonnes.
TD Newcrest, a division of TD Securities Inc., reported in an Aug. 25 research note that newsprint market conditions improved marginally as the PPPC figures show a decelerated rate of consumption decline in July compared to previous months.
As the number of Sundays for July and through the first seven months was the same in 2008 and 2009, the year-over-year comparisons are straightforward.
Another relative improvement in July was in newsprint mill operating rates. Up from June’s 64%, the North American rate was 75% in July and 74% year-to-date. This compares with 95% last July and 94% last January-July, the PPPC reported.
Output still depressed
North American newsprint production in July was down 31.5%, bringing the total through the first seven months to 4.3 million tonnes, a drop of 29.1% from a year earlier. Shipments fell 27.8% in July and were off 31.3% year-to-date, to 4.17 million tonnes.
Overseas deliveries of newsprint from North America continued to drop in July, falling 41.3% year-over-year, bringing the total through the first seven months to 900,000 tonnes, which was off 35.8% from a year ago. All markets were down year-over-year in July and year-to-date, with most of them showing dramatic drops.
At the same time, imports are up 34.5% year-to-date compared to last January-July, although there was a 7.0% decline year-over-year in July. All of the North American imports of newsprint were to the U.S.
North American mill inventories of newsprint were trimmed by 18,000 tonnes in July, ending the month at a level of 446,000 tonnes, but this was still 96,000 tonnes higher than a year earlier, according to the PPPC. While Canadian mills reduced stocks by 27,000 tonnes during July, U.S. producer inventories grew by 9,000 tonnes.
Newsprint consumer inventories, however, increased in July. All U.S. users’ stocks were up 7,000 tonnes, to 608,000 tonnes, but this was still 197,000 tonnes below a year ago. U.S. daily newspapers built up inventories by 19,000 tonnes in July, to 561,000 tonnes, which was 152,000 tonnes lower than a year earlier.
Despite the tonnage increase in consumer inventories, U.S. daily newspapers are holding 53 days of supply compared to the long-term average of 42 days, stated TD Newcrest in its Aug. 25 report.
Operating rates better
Mill operating rates improved both in the U.S. and in Canada, although much more in the U.S. Last month, U.S. newsprint mills had run at just 56%. That jumped to 78% in July, bringing the year-to-date rate to 73%. This compares with 95% for both periods in 2009.
In Canada, mills ran at 72% in July and 74% through the first seven months, both of which were down from the rates of 95% last July and 94% last January-July, the PPPC reported.
U.S. newsprint production was off 30.2% year-over-year in July, bringing the total year-to-date to 1.7 million tonnes, which was nearly one-third (32.3%) below a year ago. U.S. newsprint shipments fell in July by 31.2%, and were off 33.4% year-to-date, to 1.66 million tonnes, with overseas deliveries down 55.4% in July and off 49.5% year-to-date, both compared to year-earlier periods.
Canadian newsprint output dropped year-over-year by 32.5% in July and was off 26.8% through the first seven months, to 2.6 million tonnes.
Canadian shipments of newsprint in July were off by one-quarter (down 25.5%) versus a year ago, and the cumulative 2009 total through July was 2.5 million tonnes, which was down nearly 30% from a year ago, reported PPPC.
Exports of newsprint from Canada fell 36.4% in July, bringing the total through the first seven months to 739,000 tonnes, which was down 31.8% year-over-year.
Price erosion eases
With newsprint markets continuing to decline, though more slowly, prices have remained on a downward trend, but that is also moderating. August newsprint prices were down a relatively moderate US$20/tonne, according to Deutsche Bank’s Aug. 24 research note.
In its Aug. 25 report, TD Newcrest stated that current price of $435 per tonne for 30-lb newsprint selling in the U.S. is below cash costs for most producers.
Market analysts have said that more newsprint capacity will have to be closed permanently for the market to firm. It is suspected that producers are waiting for AbitibiBowater Inc.’s reorganization plan, which could include up to 1 million tonnes of newsprint closures in Canada, stated TD Newcrest.
In the meantime, a substantial amount of downtime is being taken. AbitibiBowater plans to take 250,000-300,000 tonnes out of production per quarter in second-half 2009. This includes the indefinite shutdown of two newsprint machines at its Thunder Bay, Ontario, mill.
In the third quarter, an estimated 750,000 tonnes of newsprint downtime is planned by North American producers, including Catalyst Paper Corp., Tembec Inc., Kruger Inc., as well as AbitibiBowater, reported TD Newcrest.
I hope some of these big conservative sites are working on their own online TV channels right now. CBN did it, National Review, FrontPage Mag and others should do it too.
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