Broadband Cable Association of Pennsylvania


October 9, 2012

Sports fans face the growing threat of being cut off from watching their favorite teams on television after federal regulators relaxed rules for the sharing of programming between rival pay-TV providers.

Until now, cable companies that own content like local sports networks have been required to sell the channels to competitors like satellite broadcasters on reasonable terms. That rule expired Friday and the Federal Communications Commission unanimously agreed not to renew it. Instead, competitors will have to file individual complaints if they feel a cable operator is unfairly denying access to a channel. Consumers are already familiar with contract disputes that cause them to lose popular channels. The disputes generally pit media companies seeking higher fees for their content versus television providers trying to hold down costs. Broadcast stations now routinely threaten to pull their channels if cable operators don't pay them enough. Dish Network Corp.'s 14 million subscribers haven't been able to watch AMC Networks Inc. channels for more than three months because of a fee dispute.

According to the FCC, cable providers now own or co-own 57 regional sports networks, up from 18 in 2007. Comcast Corp. owns sports networks in Philadelphia, Houston and New England, among other places. The ability to watch local sports teams live is an increasingly important part of pay-TV packages since other content is often available free online. Those calling for an extension of the rule included satellite broadcasters DirecTV and Dish Network as well as smaller cable operators and phone companies AT&T Inc. and Verizon Communications Inc., which both offer pay-TV service. Google Inc. joined them, arguing that large cable companies have an incentive to block access to regional sports channels to stifle competition. Google has started a pay-TV service in Kansas City, Mo., as part of an experiment to provide ultra-high-speed Internet access.

Comcast, Time Warner Cable Inc. and other large cable operators argued the rules had become obsolete because the pay-TV market is now more competitive. They also said they had financial incentives through advertising and subscription fees to ensure their channels are as widely viewed as possible. The FCC said it would tackle any complaints within six months and put the burden of proof in disputes over channel access on cable operators. FCC Chairman Julius Genachowski said the "expeditious, case-by-case review" would prevent anticompetitive behavior. Republican FCC Commissioner Ajit Pai said the ban was no longer necessary because the pay-TV market had changed. Despite the rise in cable-owned regional sports networks, he said only 14% of programming networks overall are affiliated with cable companies, down from 35% a decade ago. "The market has changed, and our rules must follow," Mr. Pai said.

Representatives of Comcast and the National Cable & Telecommunications Association, the cable industry's lobbying group, declined to comment on the FCC's decision. The American Cable Association, which represents smaller cable operators, said in the FCC's action was "less than ideal" but said it appreciated the agency's effort to keep some protections for smaller competitors. Wall Street Journal

Google Inc.'s YouTube is expanding world-wide a program under which it could pay hundreds of millions of dollars to media companies and celebrities to produce professional-grade content for the video website, as it aims to attract more advertising dollars.

YouTube said Sunday it has signed deals to pay cash advances to video producers in Germany, France, the U.K. and the U.S. to create more than 60 original "channels" on the site in categories such as sports, health, and comedy. The moves add to the roughly 100 U.S.-focused channels that have launched so far. The expansion into Europe had been anticipated, but Robert Kyncl, vice president, global head of content at YouTube, said the site also wants to fund content creators in many of the 49 countries where YouTube is tailored to local audiences, such as India, Brazil and Japan. While he didn't discuss financial details, the move means YouTube over the next few years could end up spending hundreds of millions of dollars for the professional content, which it would aim to recoup by selling advertising on the new channels.

The new funded channels are designed to produce high-quality shows that are "brand safe" for advertisers, which pay a premium to put ads there. Many large advertisers are wary of advertising next to YouTube's amateur content, which can be unpredictable. Mr. Kyncl also laid out YouTube's road map for the next 10 years as it transitions its focus away from lower-quality user-generated videos and "viral successes" like the "Gangnam Style" music video to those that can build "sustained audiences." YouTube and online-video rivals such as Yahoo Inc. hope to shift advertisers away from TV. Last year, marketers spent about $60 billion on television advertising in the U.S., dwarfing the $2 billion spent for online video advertising, according to eMarketer Inc.

Many media executives believe a shift is inevitable as the amount of time Americans spend viewing online video has increased, while time spent on watching programs on traditional TV sets has declined. Internet-based video also is becoming available on more Web-connected TVs. Citigroup analyst Mark Mahaney has estimated that YouTube, which Google bought in 2006 for $1.6 billion, will generate $3.6 billion in revenue this year, up 50% from $2.4 billion last year. Around 55% of that amount gets paid to video creators, with YouTube keeping the rest.

YouTube started the "channels" program this year in the U.S. market, where it paid more than $150 million in cash advances to content creators such as comedian Amy Poehler, Hollywood director Jon Avnet, and musicians such as rapper Jay-Z, who launched his "Life + Times" YouTube channel on Saturday by live-streaming his concert in New York. After the initiative expands globally, Mr. Kyncl said, YouTube would shift into the "next gear" by identifying the most successful channels and providing them with even more resources, which could include further cash advances. Eventually, Mr. Kyncl said he expected that ad dollars flowing to the site would be enough to sustain the launch of high-quality channels without any financial help from YouTube. The European expansion by YouTube involves a few big content producers, including Endemol NV, which produces shows such as "Fear Factor" and "Big Brother," and French media group Lagardere SCA. Owners of traditional TV channels, including the BBC and Euronews also are creating YouTube channels.

In the U.S., Walt Disney Co.'s ESPN will create an online video channel based on its "Grantland" sports site and comedians Sarah Silverman and Michael Cera will launch the "JASH" channel, among others, YouTube said. While YouTube has impressed observers by getting some big advertisers to buy into the strategy in the U.S., it may have a tougher time in Europe, where the online video-ad market is considered less developed. Wall Street Journal

Google's ongoing efforts to unify all its products and become an all-encompassing media behemoth are taking a big step forward this month with the news that Google TV is set to get content from Google Play, including movies, TV shows and music. Google TV launched initially back in 2010, a service co-developed by Intel, Sony and Logitech. Now, in an announcement on its blog Monday, the Internet giant said it would be rolling out the content on its smart TV platform over the coming weeks, starting Monday.

This means that you can buy or rent content directly through Google Play on your TV, while any existing purchases you've already made through other platforms will be imported when you connect your Google account. Titles will also be discoverable through its TV & Movies app, which reels in recommendations for shows and movies available on live TV, as well as other apps such as Netflix, Amazon, and now Google Play. Back in June we reported that Google TV was finally launching outside of the U.S., arriving in the UK with the launch of Sony's new NSZ-GS7 Internet player and NSZ-GP9 Blu-ray player. Following its UK rollout, both devices were introduced in Canada, Australia, France, Germany and Netherlands, with the NSZ-GS7 Internet player also becoming available in Brazil and Mexico. Google Play content should be arriving on Google TV later today. USA Today