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Wednesday, February 24, 2016

FCC and Cable Set Top Boxes. Big Deal?

My exposure to cable began in college.  Yes, cable was around then.
When I moved off campus, we figured out that a Yagi or LP antenna pointed at the [what was then twinlead] cable trunk could get a decent signal. 

Cable was wide open – any subscriber (or Yagi owner) could watch all the channels on the line.  About that time, on the tech side, they switched to coaxial cable, forcing us to cough up our $1.25 a month and, on the program side, the FCC flew in the face of cable’s original raison d'ĂȘtre – providing over-the-air television to homes outside the reception area of any existing station.  This change in philosophy – more like a 180 degree flip – said that, at that point, cable operators were no longer barred from originating programming, they were encouraged (shortly to be required) to do so.

Up to that point, cable was, in fact, an extension of broadcast television stations’ coverage areas.  But as the townies said where I first experienced it, “Not na-more.”  Local operations began originating programming.  Most of it was shows like “Furls and Twirls,” a half-hour weekly feature of the local girls’ pompon group, a painful-to-watch single camera production – and I mean single “edit-in-the” camera production where the titles were inserted by panning to signs held by one of the kids and swish pans got you from one angle to another. 

Down the road, though, Time-Life would try Home Box Office (1972) in Allentown – well, actually Wilkes-Barre, – PA.  Telstar had been up for 10 years but even with the succeeding communications satellites, prices for transponders were beyond reach of all but the biggest companies.  That meant HBO was local. 

Down the road a little farther came the satellite-delivered channels and by 1983, when a battalion of cable rules forced all sorts of changes, these channels were solidly entrenched and looking for local cable systems to carry them. 

All the while, those cable systems were looking for programming that would attract more subscribers…and some system of making sure only subscribers could avail themselves of cable’s products and services. 

Programming was growing.  Bill Rasmussen and Getty had launched ESPN so, if you were, at the time, interested in the local high school swimming championships from Bristol, CT, well, you had reason to subscribe.  Then again, if you liked old movies and reruns, WTBS out of Atlanta run by that Turner guy was perfect. 
As the programming grew, so did the price.  Along with that came the impulse to, well, “share” a cable connection where someone paid for it and, after Larry left, they immediately installed splitters and amps feeding neighbors and, in a couple of cases, more distant friends.
The cable folks took steps to protect their investment.  They didn’t/don’t want siphoning of their services.  They have to protect the copyright of their content providers. So they created encryption which protected the distributed signals.  They also created tiers of service – packages that particular demos of consumers might pay for.  You can imagine the discussion: 
“OK, here’s one we can sell.  Let’s link all the ESPNs, OLN, NFL, NBA and the other sports networks in a tier.”
“Sure.  But add in Baby Channel and OWN.”
“Why?  If you have to ask why, you’re fired.  Harrumph.  If we do that, we can generate more per-subscriber billing.  Good for us even with a fraction of it going back to the content provider.”
And that conversation basically brings us to today.  Sure, Michael Powell is in there with a la carte proposals.  And “must-carry” and associated retransmission rules have taken punches from all sides, but, as far as access, cable has evolved the way the cable industry pushed it.
About the only “innovation” that could allow for more consumer control of the set top is the commission’s ruling in August of 2011 which ordered cable companies to adapt to CableCARD encryptionThis would allow receiver manufacturers to produce products that – through an inserted CableCARD – could display all of the content provided by a cable company without an additional set top box. 
We’re free!  We’re free!  Well, not so fast.  The cable company still controls the CableCARD and your access to their system.  Oh, and receiver manufacturers haven’t adopted CableCARD universally.
So, cable users are, by and large, captive to their systems, including the set top boxes which decode and display the selected channels.  Even the DVR’s are integrated for the most part with add-ons like TIVO still depending on the cable subscription to operate and using the CableCARD decoding in order to operate.
It’s a bit ironic that a former cable guy, Tom Wheeler  is moving forward with the separation of cable and the set top box.  The intent this go-‘round, put forth on February 18, is not to give the consumer free run of a cable company’s product.  Instead, it is simply to break the stranglehold that the cable systems have on set top boxes and, hopefully, reduce set top box costs to consumers.
It’s a good thing, if not an easy one.  Not too many years ago, the cable topology was different.  All of the channels the system supplied appeared at your end of the cable.  The cable box was then programmed to allow reception of the package you paid for.  (Remember when you changed the channel and it was there?  When you changed it?  Not 5 seconds later?) 1  They were addressable by the cable company and the package could be changed by them.  New systems are constructed so that only the channels you are watching are sent down the line to you.  What a bandwidth savings!  They’re encrypted, of course but you get them.  Nonetheless, it requires some really fancy integration to allow outside products to be employed as the go-between in the cable/receiver chain.
It’s back to basics – ensuring that you pay for what you get and that copyrights are protected.  It’s just a little harder to do.  In reality, though, the chip, once developed is only a few cents.  That, and the competition among suppliers, should bring consumer costs for set top boxes way down.
Well, then, why would the cable guys want to stop that?  First, take a look at your cable bill.  Are you paying a monthly fee for DVR’s or other set top boxes?  There’s reason number one.  But number two is the big one.  Third-party set top boxes can integrate cable content with Internet and other locally-originated programming.  To cable, this is pulling on that snag in a Banlon® shirt…possibly unraveling the whole sleeve.
Here’s how:  The box puts cable product on the same plane as a Hulu, Sony, and other independent and “over-the-top” (OTT) content providers.  If manufacturers make access to any given channel, say Netflix, Amazon, USA Network and CBS equally easy, the wheels start turning in the heads of the cable content providers.  “Why?  Why am I providing content to cable companies?  I can deliver direct to home.”  If I’m CBS, I don’t need affiliates feeding cable systems.  If I’m PBS, I can self-fund.  Seriously, do the math on 5¢ per view of Sesame Street country-wide.
Schedules go out the window.  Mozart in the Jungle launched when it’s released and gets watched whenever.  It may be pay-per-view, an all-you-can-eat subscription or sponsored but you make the decision.  I’ll go with my line one more time – no one cares what kind of car brings the pizza.  They care about the pizza.  And people are pretty good at finding the best pizza.  (Ray’s Famous Pizza, 7th Avenue, NYC and Pizano’s Pizza, West Division St., Chicago.   LA?  Sorry. I don’t do sushi pizza.)
For cable the ruling’s a nightmare.  Being forced to help enable your competition.  Sorta like CBS and the NFL network.  How do they keep control?  Price cuts?  No- or low-charge set top boxes?  A la carte?
For the consumer, once we figure out the boxes, we can have a lot of choices, and the price will probably come down, or at least not rise so quickly.
Hey, for promotion departments, it’s a godsend.  Those who figure out how to grow tune-in will rise to the top and there’ll be a lot bigger promotion departments for content providers getting the word out.
A quick word about one other group who stands to lose:  Advertisers.  There should be a lot fewer ad units available inside programming.  Maybe that’s wishful thinking but millennials specifically and Internet users in general don’t like the intrusions of standard in-program advertising.  They will certainly not abide by a pay business model that also supports the current level of broadcast/cable of non-program material (16+ minutes per hour). 
So look for this:  Advertisers (or agencies) develop their own programming distribution systems.  Note to large packaged goods guy:  We told you to do this in 1985.  You didn’t listen.  Now it’s going to cost you by a factor of 100.  Some other guys were a little smarter and stuck their toes in.  You may have to go big time – free “channels” – with advertising.
The available third-party boxes haven’t sold well.  But that’s because they really haven’t been promoted heavily and the cable systems have made their installation unnecessarily complicated.  Combine those reasons with the level of Internet-provided content and it’s understandable that third-party boxes haven’t taken off.  But hang in.  This ruling may help.  Internet-distributed content is on the rise.  And I’m sure there’s at least one entrepreneur out there willing to design a box that meets consumer expectations.  With that and the cooperation of cable operators in attacking their own industry, this might just take off.  Did you read that last sentence?
 1 To be fair, this is a combination of the request/fulfill and the digitization process

Saturday, December 12, 2015

I Thought it Was About Customer Service - or "Clueless Marketers"

Face it.  We’re all salesmen and saleswomen.  Sometimes it’s selling yourself in a job interview – or selling the boss on a new idea…or the stockholders on opening a new buggy whip division.  Other times, it’s selling to a broad range of customers or clients.
A recent experience brought a new word into my sales vocabulary.  Flexibility.   Now, I’d like to think that I’m flexible in dealing with others.  Different clients have different needs.
Others, apparently are not as flexible.

Now, Mrs. Riley and only Mrs. Riley...
Courtesy, Palo Vista Productions

I was calling to arrange a visit regarding, of all things, pest control.  The station cat was not doing her job pursuing mice and, sure enough, one or more gnawed through some wiring, disabling 4 channels of a fine Wheatstone console. 
Well, an acquaintance recommended a particular company.  It was a national company, franchised, and he liked the local guy. 
I looked the company up.  Dialed the number.  The first thing I heard was the “recording” warning, “This call may be monitored or recorded.”  Well.  That’s a great thing to greet a prospect with.  Seriously.  Do you really want to put a prospective customer on the defensive by making him or her wonder why they need to be recorded?
The next words were, of course, the now obligatory English/Spanish choice, followed by trying to pin down the reason for my call.  Commercial?  Residential?  Bugs?  Termites?  Rodents?  Sheep?  (OK, not sheep)
I made my selection then had to tell them whether I was an existing or new customer.  I went ahead and did that, too.  As you can guess, by now, I’m wondering why I started with these guys.  Oh!  Right.  That acquaintance who told me about the local guy.
I finally got to a person but not before receiving another “recording” warning.  I identified myself and said that I’d like to arrange for the local person to come and talk about services and pricing.
Amazingly, the lady at the other end listened, paused, and responded, “Sir, that’s not how it works.”
I backed away from the phone for a second then heard her say, “This is the national office.  I can give you all the information you need.  Now, how big are your offices?”
“I’m sorry,” I replied, “but I really want to sit with someone and talk through what I need.”
“We don’t do that.”
I was a little perturbed.  “Well, I kinda do.  I really need to have someone see the facility and the problems.”
That was followed by, “Well, then, sir, you have a nice day.”  And that was followed by an abrupt click – not by me; by her.
Now, here where the inflexibility cost them the gig:  I get it.  She’s reading prompts on a screen.  Ahhhh.  I’ll call the local office.  I find it – a different number but still toll-free.  You already guessed, didn’t you.  It forwarded to the same number.  I know because I got the same “recording” warning followed by the same choices.  I hung up.
Checking the listings, I found one with my area code.  Local!  Perfect.  The touchtones® flew through the phone... only to get me exactly the same number one more time!  That was that.
A quick search and I found a really local company.  I called the number – yep, my area code and a nearby exchange.
I explained what I wanted.  Then hit her with the fact that I was flying out shortly and was there any chance we could get together before 11AM the next morning.
She asked if she could call me back within 10 minutes.  I agreed.  In less time than that she returned, asking if 4:30 the same day would be OK. 
I agreed.  The rep showed at 4:25, half hour inspection and review of terms, signed the deal.
Now, meanwhile back at the national company, picture a bunch of marketing folks sitting on their backsides, feet up, patting each other on the back about how great their automated system is working at generating customers.  If they only knew…well, if the CEO only knew.
I guess there are two lessons here.  The first is flexibility.  Remember that “customer is always right?”  Well, most of the time, the prospective customer is right, too.  At least if you want him/her to become an actual customer.  If you can't bend your M.O. to accommodate clients, you soon will have none. 
The second is that trusting the phone tree to be a lead generator is as foolish as flipping off a driver who cut you off on the 405.  The trifecta would be if that company had been more expensive than the local one I found. Well, would you believe, it was.  Sorry national company but, in the words of Joe Pesce as Vincent Gambini in My Cousin Vinny, “I’m done with this guy."

Sunday, November 22, 2015

Turning Tech into a Profit Center

“Doggone it, every time I turn around, you’re asking for more money.  A new tube, a replacement headset.  An HD to SD converter.  What the heck is that, anyway.”
That’s the GM or owner when the station’s having technical problems.  Yeah, the tech side is definitely looked at as a “loss” center rather than one for profits.
So how do you turn that around?
I’ve touched on this before but it’s becoming more important every day as broadcasters scrape the sides of the bowl for more revenue.
Well, first, in the course of daily operation, show how you’re saving money.  Let management know.  It may take a little of your own time but put together a periodic (weekly?) status report.  In it you can list where you are on various projects.  As a part of that, how are you saving money on them?
“X equipment has three broken fahnestock clips.  Checked with manufacturer.  $2,000 each, minimum of 5.  Found at at 10 for $1.00.  Ordered.  Expected arrival date 12/10/15.”
“Saved $600 cost of new CD player for production room by cannibalizing two non-working units from storage.”
“Found reliable ‘cloud’ FTP server provider which will cut storage costs by $60 per month.”
Keep going. Don’t forget to list projects which are stalled…and give reasons.  But that’s not what this post is about.  What you’ve done is help management understand how you’re trying to save money.  Now you need to go one step further and show how you can help the company make money.
 The low hanging fruit:  
What services can the station offer that management doesn’t know about?  
  • A company that provides free dialup to listen to station streams?  There are some and at least one has provisions for a :10 preroll that the station can sell – in addition to the in-program blllboards and spots
  • The possibility of leasing tower space to cellular or other business services 
  •  Rental of a subcarrier or even leasing of an HD3 channel 
  • Others that may be specific to your station(s) 
When you present them, try to attach some value to them.  You can pretty-easily determine the value of tower space by checking the web and calling around.  For prerolls, you may have an idea of how many people may use it but you can always assume one based on listening – if you have an AQH of 5000 and you can add 100 listening on the phone, what’s the value ‘round the clock.  Then what’s the value of the preroll?
Button it up in a one-sheet.  That’s right.  One page.  No more.  Tell them what it is, what it does and what you think it could generate in revenue.  Any cost involved?  Don’t leave that out.
After you’ve picked the low-hanging fruit, what else can generate revenue?   
Think outside your own station box and see where you can generate some dollars.  Then put together those one-sheets and sell ‘em.  You start looking more like a profit center.  Just as important, you show you’re part of the team, working to move the entire business forward.

Saturday, April 18, 2015

Make Way for Programmatic Advertising Buys

I’ll admit, it was some years ago when I would get a call at 3 in the afternoon on a Friday about a particular advertiser jumping into a weekend movie or sports event and how I thought it would “do.”  It was “fire sale” time and as a full-service agency with blue chip clients, they called us at three.  Then they called the bottom feeders at 3:45 (that’s quarter of 5 in New York) with whatever the full-service guys didn’t buy.

For me, saying yes just meant that I thought the show would do as well as was being stated and wouldn’t offend the prospective client.  The media buyers (if I call them buyer-planners, you’ll figure out the shop so I won’t do that) evaluated the offer, how it fit into the plan and what was available to run.  It was great for the client but took a lot of agency time mopping up on Monday or whenever the book came out and the call about underdelivery and makegood offers were received, adjusting the schedule and sometimes “finding the money.”  They did it because it was right for the clients despite the work.  There were lots of Friday nights spent with media buyers working with account and traffic folks to get commercial material out to the integration point.

That’s a bit tongue-in-cheek except for the workload.

What’s that they say, “Sometimes, when everything changes, nothing’s changed.”  And here we are.  Programmatic advertising has a substantial foothold in the digital world and it’s making its way into broadcast.

Programmatic…an interesting term; one that doesn’t reflect its concept.  If you’re in broadcast and haven’t been following the digital side (blame it on being overworked) the programmatic world means machines talking to machines to hit demo, reach and frequency targets…and doing so in real or near-real time.
Courtesy Varick Media
Boss:  "What are you doing?"  Buyer:  "Buying."  

Machines?  No buyers phoning and asking for avails?  Nobody telling a radio sales guy, “Look, I’m buying 18-34 3 deep in the top 30.  That’s it.”   Yep, machines.

Stations are either incorporating software directly or aligning with a number of services to aggregate their inventory for sale.  In most cases, you assign X inventory to the system and it gets offered for sale.  Stations can determine the costs – well, you’d have to agree, it’s the marketplace that ultimately determines the costs – they get inserted then seller machines talk to buyer machines and it’s off to the races.  Buyers can buy in the future or real time.  Of course, wait too long and that inventory you wanted may be gone

The concept isn’t new to the digital world.  Online is available this way now.  It’s a natural extension to broadcast media.  As a consequence, traditional stations and shops are moving into the digital world, some willingly and others dragged at the hands of either unsold inventory or infrastructure costs.

Keep in mind that you get what you get.  Machines aren’t all that smart and the buy will be pretty parochial.  If you want isolation, forget it.  Protection, like keeping a Southwest Airlines out of the movie Alive, generally is not available.  And as far as post buys are concerned, that depends on the programmatic organization. 

Buyers can buy [cheap] with nothing as a post but the invoice.  On the other hand, both advertisers and stations can get nearly instant reports sliced more ways than with a Popiel Kitchen Magician.  And it all integrates with traffic, billing, operations and virtually any other area of the plant.

Think about what this gets the advertiser.  He/she can run a consistent campaign across all media, directed at exactly whatever the desired demos are, and probably buy it for a lot less than is being paid now. 

If you’re tracking my thoughts, you’ve fast-forwarded to “so who needs a national rep?” which would make you fear for the demise of the wonderful rep firms.  Well, they see the freight train coming and many have already adapted including a Katz/iHeartMedia alliance for aggregating and selling radio advertising via programmatic. 

But remember, during all of this, it can be machine talking to machine, freeing up people for more creative and entrepreneurial activity – better programming, more promotion, whatever.  Then again, it could reduce your staffing needs.  If you just sign up to sell that “excess” inventory staffing won’t change but as programmatic sales succeed – as defined by increased advertiser satisfaction – you’ll probably find yourself rolling more inventory into the programmatic world.  Especially when it makes it so easy for those advertisers to achieve their goals – and you don’t even have to care about what they are!

Your concerns become questioning what is selling versus what you’re offering then tailoring your programming to reach the very people that are being “purchased.”  That way, the computer sees you and buys you.

Is this fun or what?

Well, let me throw something out there:  How many sales guys have developed a relationship with your clients?  How many times have you been able to jump in and help move someone's product because you knew what the problems were or what challenges they were facing and you got past that?  How many times did a relationship get you a buy that was a toss-up with a competitor?  Yeah.  Wad that all up and throw it away.  And your reputation for delivering?  Tie that to a CPU somewhere in Virginia.

If you get the chance, check out,,,, and the programmatic organization,   

NB:  Did you know the Kitchen Magician made julienne fries?

Sunday, February 1, 2015

A Look at the Big Game

I think the only reason I sat down to watch the Super Bowl® was so I could write this.  Turns out it was a doggoned good game.  I didn’t have a horse in the race so really didn’t care.

OK, maybe I was a little put off by Richard Sherman.  Hey, man.  When you’re talking to the media, you’re talking to your fans…you know…those folks that plunk down those green pieces of paper for tickets, broadcast packages, advertised products, merchandise and the like.  The green pieces that you stuff in your pocket to the tune of $56,000,000.  So to hell with whatever other issues you have.  Talk to your fans.

I won’t recount the game except for a couple of comments.  First, if New England hadn’t won, Brady would probably have been run out of town for throwing the first half interceptions.  Second, the fight following the second-last play undid all of the “PSAs” (quotes around the term because they weren’t public service announcements as much as the NFL trying to trowel over its problems) they ran the entire night.

Halftime?  Interesting.  Katy Perry?  OK.  Execution?  Good but no Chinese Olympics Opening Ceremonies.  Let’s call it superficial and leave it at that.

As for the commercials, well, anyone remember Charlie Harper’s line in Two and a Half Men when he’s trying to explain why the commercial music business is in the dumper.  It was something along the lines of, “Hey, why should someone hire me to do music for a new tampon commercial when they can just go buy ‘Stuck in the Middle with You?’”  The game’s commercials helped prove his theory.  Seemed like I was listening to an oldies station during the breaks as one spot after another relied upon the nostalgia of ‘60s music to create some sort of favorable emotion.

In support of some of my earlier blogs, anyone else notice the number of times the NFL Network was mentioned, promoted, or credited?  Like I say, in a couple of years, who’s gonna need a “channel”?

Beyond that, nothing blew my socks off.  Not as many “reveal” spots trying to hide their actual sponsorship till the last two or three seconds so someone must have read my blog from a past Super Bowl.  Maybe the Doritos Flying Pig moved the needle a bit if you forgive the mediocre effects but the promos for The Blacklist scored higher in my mind than any of the spots.  I’m just sayin’.

And all you newcomers, hoping to stake your company’s claim to fame by blowing 2 to 4 million dollars, you didn’t.  None of you.  But they may have some parting gifts for you.  Maybe a ballpoint pen or Super Bowl XLIX mug or something.

Saturday, January 24, 2015

How's that Cable / Satellite Bill Doin'?

When my bill for receiving WCPO, WCHS and WSAZ went from $2.00 to $2.25, I was ready to throw in the towel.  Where would it stop.  Fact is there really wasn’t another way to get a signal in that hollow.

So, today, does it bother me that folks paying between $100 and $200 a month are about to get a 5+ percent kick in their backside?  Well, yes.  Of course.  I’m one of them. 

First, full disclosure:  When someone says it’s not about the money, it’s about the money.  So with that out of the way, I’ll go on to say that it really isn’t about the money (see immediately above) but the fact that these guys’ timing is pretty poor.

A look at the landscape:  We still have over-the-air (OTA) television.  We have access to cable, to satellite and to copper-delivered entertainment.  Beyond that, we have IPTV and OTT.  When I talk about IPTV, I mean any system that delivers content using Internet Protocol.  This could be via an infrastructure provider, e.g., a cable provider using Internet Protocol to deliver select content…VOD and live events. 

It also could be via the Internet though that has come to be called “OTT” or Over-the-Top, a term that has become synonymous with Internet delivery.  But it gets narrowed a bit in that it’s usually meant to mean content that doesn’t pass over cable or satellite or copper based services.

Confusing?  You bet.  After all, content comes over cable.  Some people have Internet delivered via cable.  But the nuance is that OTT is delivered via the Internet, itself.  If your cable company provides your Internet, the OTT content comes directly to you via Internet without the cable company “handling” it.1

Let’s throw another acronym into the mix:  MVPD.  Multichannel Video Programming Distributor.  These are the guys who distribute more than one program source at a time – the cable companies, satellite organizations and telcos who deliver the 30 to 3000 programs to your home

They’re different from the OTT guys like NetFlix and Hulu.  Both of these deliver content to you via the web directly.  Many others are getting into OTT.  As anyone who enjoys multiple types of entertainment knows, all of these acronyms have the nerve to charge something for their service.  Like their employees have to eat or something.

I’ve written a couple of times in the past about distribution and channels (see the blog just below).  Every time I do it is with attention to ever-expanding sources.  And now, the sources are starting to step on one another. 

While it may not have been the first such situation, but arguably the most famous is Sony and the BetaMax.  Sony hardware got a great product to market.  Sony software started yelping.  Now we see cable owning broadcast, broadcast owning cable, most of them providing some type of Internet, satellite, and the Internet, itself, where entrepreneurs are desperately trying to distribute all the other guys’ stuff and make a buck at it.  And it’s like a car keys party of the ‘70’s (so I’ve heard).  Who knows who’s pairing up with whom next. 

The diversity and mix makes it a regulatory free-for-all and it’s dangerous to jump in with laws and rules without realizing that the arena is one big Pillsbury Dough Boy.  You push in over here; something’s going pop out over there.  Unintended consequences hiding in the weeds everywhere and if there’s one thing the government isn’t good at, it’s planning for unintended consequences.  Yeah, oxymoronic, but you get the point.

Speaking of point, let me get to mine, finally.  Rates are going up again.  The primary driver is sports programming.  ESPN is the biggest culprit.  Here’s The Wall Street Journal’s chart developed from SNL Kagan’s numbers.

That’s 2014.  The producers are back seeking another bump.  It’s that 5+ percent I mentioned at the top.  Now, according to Kagan, program costs were up 9.1 percent in 2013 and 8.1 percent in 2014.  I’m saying 5+ percent in 2015 because it’s safe and it’s what some in the industry think will be close to accurate.  Kagan says 8.8 percent but that’s just one source. 

That begs the big question.  How much longer will people pay for things they don’t use?  I know that when I order Buffalo wings I get both ranch and bleu cheese dips.  The bleu cheese gets dumped.  Should I be able to buy the wings for 20¢ less by telling them to keep the bleu?  I don’t use the rear power outlet in the car.  Should I be able to buy it without?

You know where I’m going.  I’m paying for hundreds of channels and watching only a few.  Stop charging me for the bleu cheese and the power outlet. 

I’m not the only one.  Here’s Nielsen’s evaluation:

Looks like we’re all paying for a lot more than we’re using. 

When does that stop?  A number of factors come into play.  First:  Channels (wrote about it last time).  When folks go to a provider directly, voila.  They’ll pay.  But they’ll be the only ones paying.  You think content providers aren’t scared of this?  No?  Think again.  Second, when subscribers start demanding a la carte from operators.  Some folks equate tiers with a la carte.  Not the case. 

The tiers are stacked to pack in channels you don’t necessarily want with those you do – amortizing the per-sub costs for the operator.  A la carte will mean you choose – not from column A or B but from the entire list.  It’ll have the about the same effect as going directly to the provider.  Maybe better since Disney may well try to package all the Disney/ABC/ESPN/History/A&E/so on networks for one price.  And it’ll be up to the consumer to decide. 

The third factor is third party OTT where a Hulu manages separate streams for content providers.  Oh, wait.  Who owns about a third of Hulu?  Right.  That would be Disney.

The important thing is that some sort of a la carte is heading our way.  Most of the financial guys on the supplier side don’t see it.  They don’t want to.  Think of the dominoes that will fall.  With sports, if non-sports folks aren’t subsidizing the sports lovers with their cable/satellite bills, what happens to rights fees?  And, if rights fees fall, what happens to pro sports leagues?  And if the leagues have their revenues cut, where do those poor players turn?

Does it matter?

As an example, Thursday Night Football moves from CBS to The NFL Network after a few games.  CBS continues to produce – and to weaken its Thursday night lineup with non-sports fans – the games for the NFL.  And how long does that go on?  When does the NFL really start producing their own games, on their own budget and distribute directly at a profit.  Are there enough Thursday Night Football fans around willing to make it profitable for the NFL?

Does that matter?
If, tomorrow, the Lorre Channel launches as the only outlet for all of Chuck Lorre Productions’ fare, are CBS and all those rerunning the series in trouble?2  

Tomorrow?  No.  Next Tuesday?  Keep driving those prices up and maybe.  At a buck a show, I can watch 140 programs a month that I want and come out better than I am now.

1 Watch out here!  That pesky “net neutrality” provision could change this completely.
2 Yeah, yeah, I know, existing contracts, blah, blah.  It’s an example.