Ted Sarandos, TV ratings, retransmission fees and TCA

[fudd71]

For those interested, in such things, here are some interesting notes from and few opinions from some of the things that came out of TCA and an issue being looked at by the FCC.

The most talked about thing from the events was certainly NBC’s reporting on possible Netflix viewership numbers and Ted Sarandos reaction to that. Alan Wurtzel of NBC cited a audio soundtrack recording survey (similar to the Arbitron Portable People Meters recorders) done to estimate the viewership of streaming content.

NBC exec outs Netflix Ratings

Personally I found Netflix head of content acquisition Ted Sarandos reactions and statements much more interesting and in many ways they highlight the different between streaming and broadcast television

Sarandos blasts NBC’s Netflix ratings as remarkably inaccurate

Couple of my opinions, while I’m sure the numbers Wurtzel presented aren’t completely accurate I’m willing to bet they are a lot closer than Netflix would like to admit. As both Wurtzel and Sarandos were quick to point out, Netflix runs a completely diffent business model where ratings are not as important as they are on say broadcast television. Netflix has a long standing policy of not revealing viewing number to anyone, including their own investors. Their argument is it doesn’t matter, they sell a service and the only number that matters is paid customers. Much like Sports Illustrated only talks about magazines sold not how many people read each article. For the most part I tend agree that Netflix “ratings” are irrelevant as long as they produce enough of whatever it is that keeps people from cancelling their subscriptions Netflix is doing its job.

Another very interesting bit of television new from last week was AT&T’s comments to the FCC regarding retransmission fees and the reauthorization of STELA.


Filing by AT&T to the FFC

While this is a rather lengthy document filled with much legalese page 9 shows a very interesting chart that shows how television ratings have declined almost 50% over the last ten years while retransmission fees have gone up over 3,000% in those same ten years.

Both of these items (the Netflix rating story and the FCC filing) are interesting but I think go to a single point. “Free television” is simply going to go away. Since the birth of television the vast majority of it has been paid for by advertisers, but as the audience fragments to more and television options and finds more and more ways to avoid the ads that pay for it all, ad sponsored television appears to be dying. I don’t really have an opinion yet as to if this is good or not. On one hand when you pay for your television you get a lot more choice and programing focused to your likes and dislikes, on the other hand as ad dollars leave the system, what we each pay for our television content will continue to get more and more expensive.

[drew]

While this is a rather lengthy document filled with much legalese page 9 shows a very interesting chart that shows how television ratings have declined almost 50% over the last ten years while retransmission fees have gone up over 3,000% in those same ten years. Both of these items (the Netflix rating story and the FCC filing) are interesting but I think go to a single point. “Free television” is simply going to go away.

crazy swing of numbers there - wow. I would hate for free tv to go away, its probably a long way off since we still see sky high prices for commercials on the super bowl and other big event programs along with the top viewership shows

[erickowabunga]

as the audience fragments to more and television options and finds more and more ways to avoid the ads that pay for it all, ad sponsored television appears to be dying.

When television programming companies finally get to the place where I can choose what channels I get based on what I want - we could see some very drastic swings in how many channels live on. For my wife and I, we watch less than 10% of the channels we get through our uverse package. Now, if I could pay 10% of what I pay, and get those only . . . fair trade off for the few times I stray from my favorite channels.

Further more, I would even be inclined to purchase a "family" of channels if I needed to, (History, H2, etc.) to slim down what I am looking for.

[fudd71]

as the audience fragments to more and television options and finds more and more ways to avoid the ads that pay for it all, ad sponsored television appears to be dying.

When television programming companies finally get to the place where I can choose what channels I get based on what I want - we could see some very drastic swings in how many channels live on. For my wife and I, we watch less than 10% of the channels we get through our uverse package. Now, if I could pay 10% of what I pay, and get those only . . . fair trade off for the few times I stray from my favorite channels.

Further more, I would even be inclined to purchase a "family" of channels if I needed to, (History, H2, etc.) to slim down what I am looking for.

This is something that has been talked about ad nauseam by a whole variety of really smart people from business people, to television critics, to television actors writers and production people, network executives, cable/ satellite providers, fans and even politicians. John and I may even discuss this on a future television episode. Lots of extremely smart people have looked at this a million times. Most don’t think it will ever happen, and if it does the consumer would be much worse off then they are now. Many channels would simply disappear and the remaining ones would just increase fees. The big issue is there are essentially only 6 content providers: CBS, Disney, NBC Universal, News Corp, Time Warner & Viacom. Those six providers essentially own all television channels and force cable companies to carry all or most of their channels to be allowed to carry any. The idea of ordering of buying channels by “family” would turn into buying all of the channels from one or more of the six companies. If law were to force all channels to be sold a la carte, 3-4 (ESPN, local sports nets, USAS & Fox News) channels would make a fortune and increase their fees dramatically ($10-$20 per month each) because they could, another 4-6 ( TNT, TBS, FX, Discovery, AMC, A&E, E!, CNN) would continue to exist but with middle fees ($4-$8 a month each) and dramatically reduced budgets. Most other non children’s channels would cease to exist. The kid’s channels (Nick, Disney, ABC Family now calling themselves Freeform) would be the most interesting, a few would cease to exist a few would survive and then thrive eventually ending up in the higher $7-$12 month range. All in all for most people to get the same 6-8 channels they watch normally they would pay a similar bill and probably lose a few of the channels they care about because they would cease operation. Free broadcasting as we know it would most likely go away too with some $8-$15 per month option to keep receiving the current broadcast networks. Unfortunately while the a la carte model sounds great to many people the reality would most likely not be to anyone’s liking.

The I only watch 10% so I should only pay 10% unfortunately would not happen, you would pay the same or similar and end up with much less.