October 2010

News Corp.'s hit and run

[Commentary] Shortly after the Cablevision blackout began, News Corp. barred Cablevision's high-speed Internet customers from accessing Fox.com. Instead, they were redirected to a website presenting Fox's side of the dispute.

The ban at Fox.com also stopped Cablevision's Internet customers from watching Fox programs on Hulu.com, a popular online video outlet that News Corp. co-owns. A Fox spokesman said the company lifted the Fox.com ban several hours later after realizing that it also affected people who subscribed only to Cablevision's Internet service, not its cable TV packages. The problem isn't just that News Corp. harmed some innocent bystanders. It's that it discriminated against Internet users based on the identity of their broadband provider. The company's actions added a troubling element to the debate over Net neutrality. Until Saturday, the debate had focused on the potential power of Internet service providers like Cablevision to pick winners and losers among websites and services. Now it's clear that the power may flow in the other direction as well.

Fox and Cablevision fray marks shift in television economics

A dispute between Fox and Cablevision highlights the pinch that networks and broadcasters feel as they struggle to adjust to shifting economics in the television business.

Fox, the television network owned by Rupert Murdoch's News Corp, is demanding that Cablevision more than double the annual fees it pays to carry three local TV stations and three small cable networks, from $70 million to $150 million. The parties could be entering a battle of attrition over prime-time and other programming, as both sides face losses," wrote Stifel Nicolaus analysts Rebecca Arbogast and David Kaut. "Fox is losing ad revenues pegged to ratings and Cablevision is potentially losing cable subscribers." But Cablevision may have more to lose. "While Fox can recover eyeballs once the dispute is over, Cablevision could have a harder time winning back subscribers," added Stifel Nicolaus.

The dispute exposes rifts in the traditional business models of old media companies. Fox and other networks are looking for new income in the face of diminished advertising revenues and higher programming costs. While network content is free to be transmitted over the public airwaves, they have taken to charging hefty "retransmission fees" to cable and satellite operators to help cover costs from costly programmes such as live sport. Cable companies are trying to maintain margins in the face of new digital subscription services and the threat of so-called "cord cutting" by consumers.

Tea Party gets tough with foes in media

Members of what US conservatives call the "mainstream media" know they are viewed as opponents by the Tea Party movement. But few expect to be handcuffed when they turn up at campaign events.

However bizarre in its particulars, the arrest on Sunday of Tony Hopfinger, a journalist, by security guards working for Joe Miller, Alaska's Tea Party-backed Republican candidate for the Senate, was an incident waiting to happen. Although fueled by dislike for taxes, hatred of the "liberal media" - including virtually all channels, barring Fox News, and most print publications - is a central tenet of the Tea Party's world view. Hopfinger, who had written stories questioning aspects of Mr Miller's background for his website Alaska Dispatch, was handcuffed after he approached the candidate at what his campaign said was a private event. "I am leaving and this guy is just hounding me - he was right in front of me, blocking the way," Mr Miller told Fox News after the incident.

Like most US elections, this year's midterm race is chiefly a contest between the Democratic and Republican parties. But not far behind is the strange tussle between the Tea Party movement and the media. Tea Partiers see the media as an arm of the bicoastal liberal elites. The media, on the other hand, see the colorful biographies of people such as Christine O'Donnell, the Republican candidate in Delaware, or Sharron Angle, the Republican Senate candidate in Nevada, as unmissable stories.

Christine O'Donnell and the rise of cable TV politics: Why we're responsible

[Commentary] During the past 18 years, frequent talk show guest and current "tea party"-backed US Senate candidate Christine O'Donnell has made a lot of statements -- such as denying the separation of church and state in America -- that I consider ridiculous. But she and I are on the same wavelength about one subject: why people like her are able to use TV as a springboard to fame.

Having worked on both sides of the camera, I know why news producers are attracted to ambitious, compelling, even zany characters: Viewers enjoy the show and a big audience brings good ratings. Unfortunately, ratings rule in TV and if guests like O'Donnell can pump up ratings (and possibly get elected to the US Senate) don't expect changes soon. Critics of the system have my support, along with this advice: Leave the producers alone. They're already hard at work on an upcoming segment.

Lawmakers Request FCC to Review China's Huawei, ZTE

Lawmakers asked the Federal Communications Commission to review the security risks of domestic companies ordering network equipment from China's Huawei Technologies Co. and ZTE Corp.

The Chinese companies are in "active" discussions to supply at least two US companies, Sprint Nextel and Cricket Communications, Sen Jon Kyl (R-AZ) wrote in a letter co-signed by three other lawmakers. It's at least the second time in two months that U.S. lawmakers have prodded the Obama administration to review the risks of buying Chinese telecommunications equipment. Eight U.S. lawmakers on Aug. 18 warned that a Sprint contract with Huawei would "undermine U.S. national security." A copy of the letter -- also signed by senators Joseph Lieberman, an Independent from Connecticut; Susan Collins, a Maine Republican; and Republican Representative Sue Myrick from North Carolina -- was posted on the website of the Senate Committee on Homeland Security and Government Affairs. Sens Kyl and Collins were also signatories to the August letter.

BBC Agrees to Cut Spending and Freeze License Fee

Caving in to government demands that it cut costs in an era of drastic public-sector retrenchment, the British Broadcasting Corporation has agreed to freeze its license fee at the current rate for the next six years.

The decision represents a budget reduction in real terms of 16 percent for the corporation, which has been embroiled in tough financial negotiations with a Conservative-led coalition government that has accused it of profligacy and irresponsibility. Under the plan, the license fee -- the amount paid annually by all television owners in Britain, regardless of how much or little they use the BBC's services -- would remain frozen around $230 for six years. The license fee brings in more than $5 billion a year and provides the bulk of the corporation's budget. The agreement is to be announced today, when the government releases its plans to cut tens of billions of dollars from its budget to reduce the national deficit. Even as its income is cut, the BBC has agreed to take on about $530 million in new financial responsibilities annually. It is to use license-fee money to pay for the World Service, which costs $427 million a year and provides news and information to more than 200 million people in 32 languages. That money currently comes directly from the Foreign and Commonwealth Office budget.

Sen Kerry outlines bill to resolve TV disputes

Sen. John Kerry (D-MA) unveiled draft legislation to settle retransmission disputes. The legislation would include imposing fines for bad-faith bargaining, standstill agreements and the Federal Communications Commission as mediator, but not arbitrator. The bill would prompt parties who agree they have reached an impasse to submit the situation to the FCC for mediation. The legislation would still allow broadcasters to pull their content, resulting in blacked-out channels, but the rules would make it more difficult for them to do so.

FCC Chairman Julius Genachowski also voiced frustration with the Cablevision-Fox dispute. "I am deeply troubled that Cablevision and Fox are spending more time attacking each other through ads and lobbyists than sitting down at the negotiating table," he said. "The time for petty gamesmanship is over."

"As history has shown, 99.9 percent of these deals are reached without disruption. We don't have a broken system," said National Association of Broadcasters spokesman Dennis Wharton, "we have a broken pay-TV company that likes to play Washington games. Broadcasters and pay-TV operators share a mutual interest in reaching a fair, market-oriented carriage deal. Only when one party shifts their focus, pleading to government instead of negotiating fairly, does that mutual desire dissolve."

ITU Predicts 2 Billion People Online By Year's End

The International Telecommunications Union (ITU) predicts that by the end of the year, 2 billion people will be online, an increase of 600 million in just the past year and double the number of only five years ago.

According to a just-released statistical analysis, home Internet worldwide users have increased from 1.4 billion to almost 1.6 billion in the last year. There still remains a huge regional gap, with Europe at 65% penetration and Africa at 9.6%, obviously a factor of geography as well as other issues. The Americas, which are listed together, are at 55%. Making the point that higher download speeds are a growing requisite of accessing online content, ITU points out that at 256 kbps, it takes over 34 hours to download a "high quality" movie, and over four hours at 2 Mbps, 53 minutes and change at 10 Mbps, and only a little over five minutes at 100 Mbps. It also pointed to the price gap and the fact that it cost six times more per month for broadband in a developing country than in a developed one.

FTC To Recommend Self-Regulation, Not New Laws Says Commission Member

The Federal Trade Commission's upcoming report about behavioral advertising will include suggestions for how online ad companies can better protect consumers' privacy, but won't recommend that Congress enact new laws, commission member Julie Brill said.

"The Commission isn't calling for regulation right now," she said in a speech at a privacy conference held by the law firm Proskauer. "We're talking about a new self-regulatory framework." Brill elaborated that the behavioral targeting industry should improve its privacy efforts in several key areas. Among others, she said that companies should provide consistent and simplified notice about online tracking and ad-serving when the data is collected or used. She also said she would like to see notices focus on the unexpected uses of data, as opposed to obvious ones -- such as an ecommerce company's transfer of consumers' addresses to a shipping company.

How To Save Cable

[Commentary] One of the main choking points for the cable industry is actually the hardware, meaning set-top boxes and the remote control.

It is nearly impossible, as we have seen, to drastically improve the TV experience when the technology infrastructure in place simply won't allow this. Some conversations are about set-top boxes that are over 10 years old and still in market. Think about that for a second. We change our phones yearly, or computers every two or three years, but the device with which most people spend the most time with media might be a DECADE old. An easy example of how hardware is holding back innovation is the lack of a keyboard.

Think about the last time you tried to type a word into your cable box. Most likely you were given a cursor and used the arrows on your remote control to move to each letter. How is content supposed to become interactive with this hurdle for usage? How can there be a consistently better user experience? And, maybe most importantly for this audience, how can marketers better engage consumers without rapid innovation?