Category: Television

My New Article – Media Moguls Risking It All

I have written a new article on the issues of media management and bad behavior – from harassment to lesser forms of bad behavior that causes possible injury and jeopardy to not only the victims, but also to their company’s very existence, and sometimes other collateral damage.  Naturally, I suggest that a good “morals clause” be in the contracts of all executives so the board of directors can take quick action.  I discuss recent public events and the current cases.

This article crosses the boundaries between entertainment law and labor law and, and I think you will find it an interesting read.

It is published by the Arizona State Sports and Entertainment Law Journal and here is a link to their site where you can read the entire article for free: Link to Media Moguls Risking It All

“Media Moguls Risking It All: Contract Clauses In The Entertainment Business in the Age of #MeToo,” 9 Ariz St. Sports and Ent. L.J. 1 (2019)

7 Things a Start-up Business Can Learn from the Shark Tank Television Show

The ABC television show Shark Tank is a show about entrepreneurs – about budding business people looking for a hand up in developing their business.  The participants who are entrepreneurs of a start-up company, appear before a panel known as the “sharks,” composed of successful business people who have money to invest.  The sharks are well-known millionaires and at least one billionaire who receive a pitch from the participants for an investment in their business.  The hopeful participants/entrepreneurs ask for an amount of money that varies from around $30,000 to well into six figures for a “percentage of their company.” The typical ask would be for “$150,000 for 10 percent of my company,” that the participant would propose would help to move their company along by enabling them to buy a new machine for production, buy inventory, or other make another important business development.

The sharks ask questions, perhaps even grill the participants, to figure out the viability and prospects for the business.  There are five sharks, each with interesting and unique perspectives and during the pitch it is clear that the sharks also offer business advice.  The contestants hope for at least one shark to be interested and the producers seem to show perhaps more failing proposals than successful ones, but the successful proposals and the discussions between the contestants and the sharks yield a wealth business advice.

The show is now in its fifth season and I think I have watched almost all 77 episodes.  Each episode has a blend of good pitch ideas and bad ideas, of sure things and nutty participants.  After watching carefully for this long, I have taken away seven important business principals that apply in the circumstances that these start-ups are in:

You need to know your numbers cold.  If you do not know your cost-of-goods-sold, your cumulative revenue, your recent revenue trends, your profit margins on each sale, etc. you have no business being in business and the sharks will find a way of telling you that.

          If you have a physical product – intellectual property protection is key.  If you have a physical product, you are much more likely to receive an investment if there is some aspect that is protectable by a patent or copyright, etc.  Even a trade secret like a secret recipe will work.

      The sharks know a lot about manufacturing and distribution chains and they are very practical.  If your idea is not patentable or protectable, they will ask what you think will keep someone from producing the same thing cheaper.  If you cannot come up with a reason that others cannot copy your idea, you are much less likely to get an investment.

      Your markup needs to be enough to interest the investors.  If you are making something for $1 dollar, you need to be able to sell it for $3 dollars.  This is a rough generalization, but profit margins that are too small don’t interest investors.  From watching a lot of episodes, my guess is that a 3 times markup is good, but of course it does not necessarily apply in all cases.  But a lot of the products pitched retail in the under-$100 category and in that price range there needs to be wiggle room.

The markup is not all for the entrepreneur and the shark, but rather because many products also need a distributor and the distributor will need some profit too.  Note that in the real world, there are many products that don’t have 300% markups – automobiles, computers, etc. might have a markup of 25%, 40%, 60% etc.  But if you are pitching an investor, you need to know how everyone in the distribution chain can make some money.  This also means you need to be thinking about what the ultimate distribution chains might be.  It is one thing to sell a few items online where you can have small margins, but it is another to place a product in a national distribution chain where distributors will want a markup, the retailers will want a markup, and you will also want to make a profit.

      Be bold and decisive.  You have come to sell a part of your company.  Deal with the emotions of what that means and what you will be parting with before you see potential investors.  The sharks have their pens and paper pads and are making calculations.  Cold, hard calculations using the facts you give them.  They make offers based on those facts.  Whether you are getting a good deal is only a case of mathematics at this point.  Leave your emotions and attachment to your company behind, don’t vacillate or waffle.  Yes, sometimes they offer a bad deal, and sometimes the contestants negotiate for a better deal, but that is all based upon the math and the perceived value.  Whether in the shark tank or in real life, in the heat of the deal, the shark tank teaches us to rely on the facts and use the data to your advantage.

          You need to be personally “all in.”  If you are going to be taking someone else’s money, they want to know you are committed.  It often becomes apparent that an entrepreneur is doing this as a side business.  They have a day job and are not fully committed to the business.  It never takes the sharks too long to figure that out.  And those that are not fully committed are unlikely to get a deal.  Some will, especially if the shark can just buy an idea outright or figure out a way that the person pitching is no longer key to the deal, but overall, investors want to see commitment.  This is true in anything in life.  If you are going to do something, do it with excellence and true commitment.

          Sales are the most important thing you can have in business.  Investors might not care about whether you are profitable yet, but they do care about sales.  A business that seems to have a “good idea” but very few sales do not seem to get much attention from the sharks.  Even if the company is losing money overall, sales mean that people are interested in your product.  Sales are what the sharks are looking for.  That also means that it is unwise to look for much external money until you have a track record.  Sure there are some VC firms that want to invest in ideas alone and sure a person can always get their friends and relatives to invest in the early idea phase, but it becomes quite clear that it is easier to attract money if there is at lease some “smoke” whether or not there is yet some “fire.”

          Some businesses are good for an individual, but just won’t attract investors.  Certain businesses work for the individual entrepreneur but don’t really scale in a way that it makes sense for outside investors.  An entrepreneur should not be afraid of these businesses, but rather should just realize the limitations.  Businesses that relay on an individual (say personal training) or that are good but unprotectable ideas can work on a modest scale but are very difficult to roll out on a large-scale basis.

The Shark Tank can be full of lessons, and this is my reading of some things I have taken away from the show.  But of course they do a lot for drama and for the good of the show that might not be good universal business truths, but watching the show can result in some interesting perspectives.  This show is clearly more “drama” than “how-to,” but there are reports that the investments resulting from the show have exceeded $20 million, so somewhere real-life intersects with this drama.

Late Night – Again

If you look at the blog posts below, you will see that this blog started about the time that Jay Leno and Conan O’Brien were battling it out for the Tonight Show several years ago. Today we are on the doorstep of the next transition in the Tonight Show – Jimmy Fallon will take over as host shortly after the 2014 Sochi Olympics in a few weeks. I look back on the prior posts, and I was pretty much right on. Jay needed to move on, and that is proven once again in the decision by NBC to install Jimmy Fallon as host, and late night will change again. This time, though, there seems to be less animosity than the last time. And I think NBC is making a smart move with a new host who is loaded with talent.

Jay has not been doing bad since his return. In fact, the one point I was not correct on is that Jay did return to dominate late night. He won every week’s rating’s since he returned. But I was correct on all of the rest including the fractured audience, the heavy competition from other talented people, and I think my compliments of Fallon as a rising star. The competition now includes Arsenio Hall who was a trend-setting talent the last time he was in late night. And Fallon’s talent has been demonstrated by his outstanding work on Late Night. His range of talents, his active participation in songs, skits, and comedy bits makes him a force. He has had huge success with his friendships with Justin Timberlake, Stephen Colbert, and others who have come on his show multiple times and performed in duets, both vocal and comedic, with Fallon. Fallon himself has been no stranger to ratings success – winning many weeks of the ratings competition in his timeslot.

Fallon will move the Tonight Show from the west coast back to NYC. That should be a refreshing and interesting development. I don’t know how long that will last, after all our friend David Letterman has been controlling the television traffic on Broadway quite capably for years now. But it is an interesting development and a wonderful idea. The Tonight Show started in New York and returning to its roots will add some spice to the new show. I remember when I started working at NBC years ago one of the first places they took me to see was the “Tonight Show” mockup set that they would take the tours to see in 30 Rock; even though the show had moved to the west coast, the folks in NYC still had love for the program.

Jay and his consistent, funny, and relevant monologues have entertained me for decades (wow, has it been that long?), but I am ready for something new. Welcome Jimmy Fallon! #FallonTonightShow

Social Media? Still a small deal

And so the Super Bowl is over, and more importantly the commercials of the Super Bowl.  What do people watch? Still television has the most impact.  Yes, the ratings of the networks are going down.  Yes there is increasing fractionalization of the audience.  But if you want to launch or promote a product of general interest (car, hamburger/food, beer, stock brokerage), the best place to advertise is still in the mass media.  That is not to say the social media is not important, it is, but it might take months for a million views of even the most popular shared viral video on You Tube, and NBC’s Olympics is reaching 10 million, American Idol reaches 19 million, and the Super Bowl reached more than 50 million.

Bye Bye Coco

And so last night was the last Conan O’Brien Tonight Show.  I have been watching this week – it was Conan’s best week ever.  He let loose and did real comedy.  His guests were free-wheeling and able to say almost anything.  Conan packed his show full of comedy.  And what happened? His ratings went up.  To the highest levels ever.  Sure the news gets people to tune in, but programming gets them to stay.  So in his final week, he showed the network what they will miss, and it was, unfortunately, what he should have been doing all along.  But the show was good.  Conan had still not developed into the top-flight host that Jay and David are – Conan STILL interrupted his guests (here’s a hint Conan: When you have Tom Hanks on, he is funnier than you are and your audience wants to hear him – just let Tom Hanks talk! Don’t interrupt him!) Even with Conan-interruptus, it was one of the best segments all week.

So is putting Jay back on the Tonight Show the right thing for NBC?  This is just a long-time television observer’s opinion, but Jay has done damage to himself.  Can he win the late-night ratings? Maybe.  But it won’t be like it used to be with Fortress Jay dominating late-night.  People have had a chance to tune around and see what else is available and the young, hip comedians are creative and interesting.  Jimmy Fallon is showing his range (he can even sing a bit) as an entertainer. Craig Ferguson (a bit older, but still new to the scene) is showing that he is a terrific interviewer. Chelsea Handler is a stealth but powerful force.  Jay now needs to look over his shoulder.  As of today, Jay is the definition of old-school.

Good luck to Conan on his future career moves.  Good luck to Jay.  Now that the battle is over, it is time for this viewer to surf the channels and find something interesting to watch in late night.

The FCC and “The Future of Media”

The FCC (www.fcc.gov) has started a proceeding examining “the future of media.” The public notice lists 42 questions covering everything from the state of journalism to traditional radio and television to the Internet.  The FCC welcomes is requesting comments and they have started a new website at http://www.fcc.gov/futureofmedia.

For more information on cameras in the courtroom, read our book chapter on “Court TV”

I worked with my colleague Chuck Kleinhans at Northwestern University on a media study of the cable channel “Court TV.”  While the current channel “TruTV” has roots in Court TV, they are really nothing alike.  Court TV was owned by a lawyer and went courtroom-by-courtroom across the country fighting for access for cameras to the courtroom.  They learned how to “do it right” in the broadcast of court proceedings – no easy feat.  You don’t want to just dump any set of technologists into a courtroom and expect everything to be alright.  Judges became experienced in how to handle cameras.  The legacy of their early successes remain in most states today.

Chuck and I watched Court TV for ten years to do our study.  It is humanities-oriented (ie not quantitative) and a fun read. Court TV provided live gavel-to-gavel coverage of fascinating cases from divorces to small claims court.  It provided post-trial interpretation by experts and in the early years, it even had continuing-education programs for lawyers.  Court TV was not able to sustain sufficient ratings and transformed into the popular-cime-drama/docu genre that it is now.

Here is the citation: Chuck Kleinhans and Rick Morris, “Court TV: The Evolution of a Reality Format,” Startling! Heartbreaking!Real! Reality TV and the Remaking of Television Culture, Laurie Ouellette and Sue Murray, eds., (New York: NYU Press, 2004), 157-175  Note that this is the FIRST  edition of the book.  Laurie and Sue went on to do a second edition and Court TV had transformed into TruTV by then so our chapter did not make it through to the second edition.

Proposition 8, real-time streaming, and the US Supreme Court

When I heard that the US Supreme Court had ruled against real-time streaming of the Proposition 8 trial in California, my first reaction was “what are they thinking, this is a new century, shouldn’t we finally be able to see important cases on television and shouldn’t the people have access to the courts?  But I was so wrong in this case.  After I read the actual text of the case, a person like me who backs cameras in the courtroom in most cases, thinks that the USSC made the right decision.

By the way, in case you are not following the issue: Proposition 8 is the California provision that voted to overturn same-sex marriage in California.  Certainly a lot of people on both sides of the issue are interested in it, and I presume would be interested in watching the trial proceedings.

The US Supreme court case is  Hollingsworth v. Perry, 558 U.S. _____ (2010).

“Cameras in the courtroom” has always had the attention of the public, the news media, and the academic community for years.  Wouldn’t cameras in the courtroom create a more informed and engaged public? Wouldn’t there be greater learning about the judicial process? Wouldn’t it be nice if the press and the public had more opportunities to see when the judicial system does not function optimally? Although virtually all court proceedings are open to the public who want to attend in person, it is not easy to either attend nor discuss what happened and cameras in courts make both easier.

Many states permit cameras in the courtroom and the USSC does have audiotapes of its arguments available (the famous Oyez project at Northwesten University helps make those tapes available).  But federal courts have been resistant to cameras in the courtroom for trials.

Why? Perhaps the O.J. Simpson trial.  What could have been a breakthrough for cameras in the courtroom created a lot of concern within the legal community and among the public.  Every side and position can find something to be concerned about cameras in the courtroom after that trial.

So why do I think the USSC is correct in its ruling in Hollingsworth?  The subject matter has no sway in my opinion,  I am a reasonably liberal professor-type. But my concern, and the Court’s concern, goes mainly to the process.  The 9th Circuit and its trial court attempted to change its rule basically a the last minute (in December for a January trial, although discussions of televising this trial started a couple of months earlier) and without public comment.  If there is anything that even today in 2010 that is frought with issues and deserves due consideration, it is cameras in the courtroom. Instead, in this case the 9th Circuit and its trial court tried to rush through rules without what the Court found to be enough consideration.

In particular, I can see questions of when witnesses should not be televised (rape victims/witnesses?), or when entire trials should not be televised. Also, rules need to be established in the 9th circuit on lots of operational issues like what cameras can look at (juror’s faces?) and there is a whole host of other questions.  The USSC notes that in this case same-sex couples will be testifying, and that some parties have already received what appears to be threats of violence against them.   Both types of parties, among others might not want their testimony televised.  There needs to be a full procedure for considering those issues before the court moves into the arena of cameras in the trial courtroom.  And moments before a major case does not seem to be the right time.

No doubt that the 9th Circuit has been considering cameras in the courtroom for a long time.  But the record before the USSC gave them pause that this is not the moment.  Note that the majority opinion is written “per curium” but that the dissent is signed by four justices (Breyer, Stevens, Ginsberg, and Sotomayor).  That presumably makes this a 5-4 decision.  The Supreme Court could not be more split.

The federal courts need to get moving with permitting cameras in the trial courts.  They need to adopt their rules after public comment and the judges need to get experience with interpretation of the rules and how to best respond to requests of the parties for protection.  And the court staff needs to have practice on how to handle the real-time exigencies of broadcasting.  It is hard enough to know what to do when broadcasting a live awards show, and unlike cameras in the courtroom, no one will receive the death sentence after the show is over.  The stakes are high, but our judicial system and our democracy is the best in the world.  And cameras in the courtroom have the promise to make both stronger.

Conan and the end of the road at NBC

It seems as if Conan has made his “personal choice” (see my blog entry below) and will not host a 12:05AM Tonight Show.  And all there is left for him to do is work out an exit strategy.  One blog reports that Conan was owed $60 million if he could not host the Tonight Show.  He will probably settle for much less and he will need to get a release from the network for a reasonable time for him to start a competing show.  There is no doubt that Conan has competing offers.  Other sources also report that Conan is working out some help for his staffers who moved to LA with him just a few months ago.  In this economy, they do need some protection from becoming part of the huge amount of collateral damage.  Imagine trying to sell a house you bought 7 months ago or getting a new job as a comedy-show staffer in this environment?  Jay already has a staff and a studio.

So what went wrong?  This observer believes that both Jay and Conan are responsible for their own ratings failures.  Let’s start with Jay.  Jay tried to take his version of the “Tonight Show” and move it to primetime with a little more flash.  Who is he kidding?  Any student of television (except perhaps the brass of NBC?) knows that the homes using television are much higher in primetime and that the audience is different.  Carrying over the same show is a recipe for failure.  While some of the new bits were charming (the Dan Band) more often than not the new segments were pace killers.  The “earn your plug” segment stopped the show in its tracks and were not amusing, they were almost like watching an old Gong Show segment, except the poor celebrity clearly was not having as much fun as a Gong Show contestant.  And the electric car segment was cute a time or two, but it was also so clearly a show-stopper that when Arnold Schwartzenegger was on, they just had him blow up the car al la the Terminator.  This observer thinks that the old Johnny Carson show would have appealed to a broader audience and had higher ratings in primetime.  Johnny Carson had something for everyone; he was almost a variety show  – depending on the night, he did some monologue, brought out a guest, brought out an animal act, brought out a comedian (notice Jay rarely had on a “competing comedian telling jokes), and ended with a big musical act.  Even if that is not the tastes of the audience in 2010, it is an example of a much broader-appealing show that if reconceived in 2010 might be broad enough to attract more of the pre-news audience.

And what about Conan’s Tonight Show? Same exact issue, he tried to move from a place where he had an audience that loved him to a new place without changing the show.  Dick Ebersol, a legend himself in late night (Saturday Night Live) stated in an inerview in the New York Times that he tried to get Conan to broaden his show’s appeal ( http://www.nytimes.com/2010/01/15/business/media/15conan.html).  although Mr. Ebersol defends Jay, my opinion is that Jay committed the same sin.  The ratings of both shows tell the same story.  Audience appeal is measurable by the ratings every day in timeparts of 15 minutes or less (so a show can tell if a single segment isn’t working!) and neither show could find the right mix to bring in the audience.

And what were the NBC brass thinking? The last time there was a host change on the Tonight Show (Carson to Leno) it took over a year before it found its audience with the famous Hugh Grant interview that finally pulled it ahead of Letterman in the ratings.  From this perch in middle-America, it appears as if they did not have plans for how to make the long-haul to success.  NBC took years to build up its primetime success in the 1980’s and 1990’s and years to lose it; if there is any organization that should, in theory, understand long-term audience development, it should be ?NBC.

What next for Conan? Both Jay Leno and David Letterman are absolute masters of the late-night format.  They are both are superb comedians.  If Conan tries to compete directly with a re-engineered Jay-vs-David late-night landscape, it will be a difficult road for him.  Just my opinion.

Comcast v. FCC, net neutrality, and homework

In Comcast v FCC, the FCC is attempting to sanction Comcast for interfering with internet services – and interfering with internet services is against the principles of “net neutrality.”  However, Comcast is defending on what this author believes is a very effective ground – that the FCC does not have authority to regulate net neutrality.

The FCC is given its authority by the Communications Act of 1934, as amended many, may times over the years including by the Telecommunications Act of 1996.  The problem for the FCC in this case is that the Communications Act has not been amended to empower the FCC to address net neutrality.  The FCC normally needs explicit jurisdiction, granted by Congress and the President, in order to regulate communication subjects.

Of course there are some exceptions.  For example, when the subject is “reasonably ancillary” to a subject that the FCC has explicit authority over, the courts have held that regulation is OK.  Even so, the FCC can go too far in that regulation.  The reasonably ancillary doctrine was applied to cable television cases.  US v. Southwestern Cable 392 US 197 (1968).  However, the FCC went too far in its “ancillary regulation,” and the courts rejected additional regulation in FCC v. Midwest Video. The jurisdiction of the FCC over cable television was eventually cleared up in the Cable Communications Policy Act of 1984.

So which will it be in this case? The appeals court has yet to rule.  So this is an instance where FCC regulation is not certain.  In cases where the FCC overreaches, or where the FCC does not “do its homework,” the courts are not afraid to overturn the FCC’s rules.

Conan, contracts, and character

Conan has taken an interesting approach to the late-night fiasco – refusing to be on a “Tonight Show” that airs after midnight and follows a half-hour of a Jay Leno Show.  In late-night, the Tonight Show has always been the gold standard.  It was the show all comedians aspired to.  It was a show that during the Carson years launched or helped most of the new comics get a start (including Leno and Letterman).  The venerable show has been on since 1954 and has only had five permanent long-term hosts.  To give that up, and the money that comes with it, is an amazing position.  What surprises does Conan’s contract hold? Perhaps he wants to be released from his non-compete clause so he can go to Fox? The last thing late-night would need is a three-way race between Jay, David, and Conan.  Conan says that the show itself is too important to destroy.  Is that character, or something else?  More developing.

Letterman is having the most fun with the situation.  The last two nights he has had a lot of jokes and commentary on the situation.  Of course Letterman is no stranger to late-night drama.

Leno’s show has to move.  It si costing the affiliates too much money.  But more importantly, it is killing the Owned and Operated stations.  That directly affects NBC’s bottom line.  It is one thing to hurt the affiliate’s bottom lines, it is another to be hurting your own, especially as GE is trying to sell NBC off to Comcast and would like to get a decent dollar for the Network and all that goes with it.

The end of the Jay Leno Show as we know it….

A short time after my last post, the news sources began carrying the news that the Jay Leno show was indeed being canceled.  No doubt that NBC will try to keep both Jay and Conan.  But competitors (esp. Fox) will be waiting in the wings.  The next steps are mostly a matter of personal preference; the contracts can be broken at a price.  so I will pause on this thread until there is more law and business strategy to comment on.

Will the Jay Leno Show survive – part 2

As discussed in a previous post (Dec 22) the Jay Leno show has been at risk due to low ratings.  Yesterday Jay made light of the current cancellation rumors.  Video clip here: http://www.thejaylenoshow.com/video/clips/leno-talks-cancellation/1191249  There are lots of business reasons for the potential re-working of late-night television.  Reports seem to indicate that Jay would go back to late-night where he is a dominant figure and has been for 17 years.  Why the problems with low ratings?  NBC knew that the Jay Leno show would not attract as many viewers as its prime-time offerings.  The problems are that the low ratings are destroying affiliate and O&O stations’ new ratings as well as having a deleterious “halo effect” on prime-time.  One could say that everyone is losing money on the deal.

Taking one money-losing portion at a time: First the local affiliates and their newscasts.  A broadcast network actually owns the stations that cover a large portion of the country, up to approximately 35%, varying slightly by network and NBC’s percentage is 27% owned-and-operated coverage.  That leaves approximately 73% of the country that is covered by affiliate stations and the cable systems that pick them up. the local stations depend on the network for a good lead-in to their news to get good ratings.  The problem for the networks is that people tend to “fall in love” with their local newscasters and have a very high loyalty to a local news team.  If NBC is effectively chasing away viewers to other stations, the viewers have a chance to “fall in love” with another news team.  The effects would take a long time, perhaps years to undo.  So the affiliates want the problem fixed and fixed fast.

The O & O stations have a similar problem and the O & O stations deliver a lot of profit to the networks.  But if the network was making money otherwise, it could take the decrease in revenue from its O & O newscasts.  It sometimes happens during special events (the Olympics, etc.) that the network might take a brief hit to the O & O newscasts for the greater good of the network.  But a long-term hit might take years for the O & O stations to undo, the same as for the affiliates.  News is a very competitive business.  The other stations will be doing all they can to attract and keep the disaffected network viewers.

Most important, however, to the network is the developing “halo effect” – all of NBC’s primetime ratings are falling.  Is it due to the Leno experiment? Or partially due to the Leno experiment? It is hard to tell but ratings for NBC have clearly fallen to very low numbers.  NBC’s primetime was not doing well before Leno (http://www.huffingtonpost.com/2009/05/28/nbc-primetime-ratings-hit_n_208518.html) and had already hit lows.  So it is difficult to sort out the reason for the Fall decline, but various outlets are reporting that NBC has as many as 18 pilots in the pipeline for next year – a possible sign that they were preparing to bail on the Leno experiment a while ago. (http://www.forbes.com/feeds/ap/2010/01/08/entertainment-broadcasting-amp-entertainment-us-tv-jay-leno_7261171.html).

Back when I worked at NBC, the two big revenue generators for the network were primetime and latenight. Primetime ratings are in the tank and Conan has not kept the same latenight ratings that Leno had when he ran the “Tonight Show.”  My guess is that NBC is hurting and changes are coming very soon.

What about re-transmission consent? (Time Warner v. Fox)

What is retransmission consent an why is it importnat to me?  The current story about Time Warner and Fox prompts this post.  Once upon a time (prior to the cable act of 1992) cable systems (your local provider who brings a cable into your home) could just take the programming of the local stations and put it on the cable system along side of programming that the cable system owned and spent money on or purchased, often from other cable providers.

So a typical channel lineup cost (pre-1992) might look like this: ESPN $2.00, CNN Networks $1.00, Lifetime, E!, A&E, etc. $.25 each, local origination channels $0 but the cable system might spend hundreds of thousands of dollars installing equipment for a local studio, hiring staff to run/coordinate the operation, etc, and then come the local television stations ABC $0, NBC $0, CBS $0, Fox $0.  Where was the viewing at that time? Seventy-five percent, perhaps more, of the viewing was on the networks and the cable channels had yet to blossom into what they are now.  At that time, a cable system could plan on spending approx 25% of its subscriber fees (what you pay for basic cable) on programming costs, with the most of any single network going to ESPN.  So cable systems received value (popular programming) from the networks for which they did not have to pay.

Enter the cable act of 1992 (technically the Cable Television Consumer Protection and Competition Act of 1992) and Congress changed the landscape by requiring cable systems to pay television networks in the same manner as it paid ESPN and the others.  This resulted in reasonably large payments to the networks.  However, the balance is a complex one, for example, TBS carries the series “Friends” which is much more valuable since it aired on the networks.  So while cable has eroded the audience share of the television networks, it is oftentimes with programming made successful on the networks.

With this audience share erosion  of the television networks (and therefore networks are hard-pressed to raise advertising rates), there seems to be a karmic-like balance with the cable systems having to pay the networks for the programming that helps people to decide to subscribe to cable.  The network shows are still popular and bring in audience.  For example, at stake in the Time Warner vs. Fox case was whether Time Warner subscribers would be able to receive shows such as  “American Idol” and “The Simpsons.”

Does the cost of paying the networks raise the cost of a cable bill? Perhaps.  But there are a lot of other things in your cable bill that are management decisions like how fast they upgrade their systems for features you and I are not subscribing to, and what profit they will make and even the amount of their executive compensation.  Since the busines particulars are beyond our control, I will not go into detail on them.  the central question is whether content creators are deserving of getting paid.  Content is expensive to produce, so my answer is “yes, certainly in this case.”

Does this mean I might lose access to my favorite programming? Probably not in the long run.  It is in the interest of both parties (the network and the cable system) to reach an agreement.  The cable system wants the programming and the programmer/network can’t survive without enough people seeing its programming.  So in the event that programming is pulled from a cable system (and it has happened in the past), it will probably be back in the near future.  The pulling of programming means that the proper marketplace value of the programming and the distribution channel did not reach equalibrium, or at least close enough that the two sides could sign a contract.

This is a complex topic and causes the eyes of law students all over the country to glaze over.  But is is important.  Hundreds of millions of dollars change hands each contract cycle on retransmission consent and lots of local consumers are played off by both sides during negotiations.  the cable systems try to gain consumer sympathy by saying bills are going up and the networks try to gain consumer attention by telling them that the cabe system is te reason they are going to lose their favorite programming.

Advertisements for television networks in movie theatres

In an interesting twist on traditional media norms, the advertisements in te movie theatre that I went to over break were for television and cable networks.  Of course, the tradition was that advertising from television and cable networks drove audience into theatres.  Now it appears as if the audience is being driven back to the networks from whence it came.  Of course in the age of Tivos and DVRs, it makes some sense that DVR-able neworks is looking for a captive audience with no fast-forward button.

Television in Poland

I was thinking today about my Christmas 2007 trip to Poland.  As a media scholar for the last nineteen years, it was interesting to see the modern Eastern European media culture.  First, the structure of television: Poland and most European countries are primarily government-run stations.  Poland had two national channels and one local channel.  The main town I was visiting was Lublin, which was a big enough city that the television station was located in Lublin.  I was able to walk by the studios during my tour of the city.

The content of the government-run stations was something like: Channel 1 – entertainment and variet programming; Channel 2 – News and documentary programming; and then there was Channel 3, the local programming which was a variety of genres including local news, much as a local station here in the states would offer.  In the newscasts they have a vigorous offering of global news.  In fact, I was surprised that while I was in Lublin there was a story about a station that I worked with in Chicago – a car attempted to run through the window of the new street-level studio.  The story from Chicago showed up on Lublin television.  What a surprise!

I also noticed programs of traditional holiday music (it was Christmastime during this visit), movies, lots of news, as well as game shows as popular fare.  The daily range of programming was about the same as in the US.  A trained viewer would notice that the graphics/effects were not as slick as in the US, and the presentation was much more influenced by the style of the BBC than the style of the American networks, but the content was quite good. 

In addition to the terrestrial stations, there is a vibrant offering of satellite stations.  All of Europe is covered by satellite offerings and Poland is no different.  A number of packages are available.  The television that I watched had CNN English in its package available 24 hours, so I did not feel alone or disconnected. The numbers of channels are not as prolific as in the US  yet – my satellite service has 250+ channels here, but rather it seemed that something in the double digits (ie 20 to 80 channels) was typical for a multi-channel video provider.  

All-in-all my stay in Poland was wonderful and the chance to do some comparative media study was a terrific opportunity.

Will the Jay Leno show survive?

This week’s Broadcast and Cable magazine had an article on The Jay Leno Show.  B & C reports that some affiliates are disatisfied with the ratings.  The Jay Leno show is running approximately half of the ratings of the previous shows.  This is a major problem because the Jay Leno Show airs five nights a week.  It is not the same as a primetime show failing, this means a good portion of all of primetime is failing.  Networks usually make most of their money from primetime programs.  More importantly for the distribution realpolitik though is the satisfaction (or lack thereof) of the affiliates who count on primetime programs to provide good lead-in ratings to their newscasts.

Does a network need affiliates? Many would argue that in today’s world of technology, networks could do without affiliates.  On the other hand, affiliates still deliver virtually all of the networks’ viewers.  so the balance is delicate.  The network is arguing that Jay Leno is a 52-week strategy, where Jay Leno will outperform the other networks once those shows go into reruns and Jay Leno still has original and fresh programs.  Which side will win?

The FCC and broadband spectrum

The FCC is considering new spectrum for wireless broadband.  In lay/market terms, the 2G and 3G spectrum is filling up and carriers want to launch 4G and 5G with higher download speeds.  All reasonably usable spectrum is assigned and has been for years.  So the FCC has two basic choices 1) Make the current wireless broadband providers turn over their 2G and 3G spectrum to new 4G and 5G uses, or 2) find new spectrum from other sources and re-allocate it to the use of wireless carriers.  Unfortunately, the FCC is once again looking at taking away broadcast spectrum.  They already did that once with the conversion to HDTV.  This time around, the broadcast service to the public is likely to decrease.  Where do you tune in to in case of local emergency (snowstorm, hurricane, tornado, etc.)? ATT? Sprint? or your local broadcast station? Answer: your local broadcast station.   Watch this proceeding carefully.  The FCC website is http://www.fcc.gov.