Are we overpaying for internet?

Quote: reno

I think Fox is bluffing. They're not going to eliminate free over the air broadcasts. Even if 90 percent of Americans pay for satellite & cable TV, that still leaves 10 percent who use the free broadcasts. Does any TV station want to see their ratings fall by 10 percent? They'll have to lower their ad rates. The local affiliates will balk, regardless of the network's views.

There are supposed to be 11 million households (roughly 10%) that get primary TV over the air. Texas has a large percentage of homes. There are 3 million homes in only 8 markets.

712,932 Los Angeles
416,552 Dallas-Ft. Worth
399,903 Houston
363,322 Chicago
309,949 Minneapolis-St. Paul
293,435 Phoenix (Prescott)
280,737 New York
208,040 San Francisco-Oak-San Jose

Fox already has a cable channel (FX networks). In addition they have the "FX Movie Channel" and they are creating the "FXX" right now. In addition they already own:

Big Ten Network (51%, with the Big Ten Conference)
Fox Business Network
Fox College Sports
Speed - to become Fox Sports 1 on August 17, 2013
Fox News Channel
Fox Soccer
Fox Soccer Plus
Fox Sports Networks (some affiliates owned by DirecTV Sports Networks)
Fuel TV
National Geographic Channel (with the National Geographic Society)
Nat Geo Mundo (with the National Geographic Society)
Nat Geo Wild (with the National Geographic Society)
Fox on Demand

So why would they save money by shifting their broadcast channel to create yet another channel? They may shift the more expensive shows to cable instead of broadcast. It is also simple to release their FOX tv shows on their website at the same time as they broadcast them (with the same commercials). Who would pay for Aereo television then?

Quote: Pacomartin

That seems extraordinarily high

Quote: reno

Tell me about it! By the way, it's no longer $72. They lowered it to $64 because I finally bought my own modem. But $64 is still a terrible rip-off. I could switch to AT&T, but they only offer 6mb/s in my neighborhood, which is way too slow. (When I read that on AT&T's website, I didn't believe it, so I called them up and they confirmed it.) I have a friend who lives 5 blocks away and he gets his internet from a company called Astound. But Astound doesn't serve my neighborhood! Comcast has a monopoly and they know it.

The Jupiter satellite was just launched by Hughes. Download speeds of 20 Mbs may be possible (they have not been announced). It may give you a third option.

Quote: Pacomartin

It is also simple to release their FOX tv shows on their website at the same time as they broadcast them (with the same commercials). Who would pay for Aereo television then?

Apparently the reason no network TV shows are online and broadcast simultaneously is because this violates the contract the network has with the local affiliate TV station. Fox would have to negotiate a big settlement with 175 pissed off local TV station owners. I'm not suggesting it's impossible, (News Corp has the re$ources) but it would be expensive.

Quote: reno

Apparently the reason no network TV shows are online and broadcast simultaneously is because this violates the contract the network has with the local affiliate TV station. Fox would have to negotiate a big settlement with 175 pissed off local TV station owners. I'm not suggesting it's impossible, (News Corp has the re$ources) but it would be expensive.

Aereo plans to move from NYC to Philadelphia now that they won their second court case. One big advantage to Aereo is that for $80 you get the channels for 15 months, + 40 hours of DVR service. So if you start watching your TV shows a half hour late, you can skip the commercials.

I am not sure if aereo will ever grow to have really big numbers. But dish network has a large installed base, and they can skip commercials with their DVR technology.

I don't know if FOX would kill it's entire over the air system or just break relationship with their affiliates. Perhaps they would continue broadcasting from their Owned and operated stations, and post material online to reach the rest of the country.

Outside of sports my brother seems totally indifferent to not having live TV. His wife likes to rent a series from Netflix and watch the entire series straight through. She doesn't mind that it's a year old or that she may have heard plotlines. He has nice televisions, but he likes paying only $30/month for internet+ $8 for Netflix.

Quote: Pacomartin

The End of Free TV is he another article about Fox threatening to become a cable network if Aereo is not stopped.

The more I think about this, the more it cracks me up. Thirty years ago, the broadcast networks only had to compete with each other. These days, the networks have to compete with Netflix, Redbox, XBox, Playstation, Nintendo, YouTube, Hulu, iTunes Instant, Amazon Instant, Facebook, basic cable channels, premium cable channels, DVDs, Blu-Ray etc. As a result, their marketshare is getting smaller and smaller, their relevance to pop culture is dwindling.

And their biggest worry is... Aereo?? I'd say their priorities are misplaced! And their solution to all this new competition is to kill their broadcast signal, their only asset which distinguishes themselves from the competition. Apparently, their new goal is to become basic cable.

I admit that perhaps in the end it won't matter, since 90 percent of Americans have cable or satellite. But killing the broadcast signal certainly won't help them fight off Netflix or video games or YouTube or Facebook.

It's like a guy who's paranoid he's going to get murdered, so he decides to outsmart the murderers by commiting suicide.

Would I be right in assuming that over-the-air TV tends to have the local NFL games on?

Now, if they expand into Detroit... can I pretend to be in Michigan?

Quote: reno

I admit that perhaps in the end it won't matter, since 90 percent of Americans have cable or satellite. But killing the broadcast signal certainly won't help them fight off Netflix or video games or YouTube or Facebook. It's like a guy who's paranoid he's going to get murdered, so he decides to outsmart the murderers by committing suicide.

I think it is obvious that cable shows make more profit.

For NBC Universal the final season of 30 Rock averaged 3.64 million viewers (high 4.88 million low of 3.04 million). Because they are famous now, Alec Baldwin is paid $300K per episode, and Tina Fey paid $380K per episode).

For NBC Universal the last season of Warehouse 13 on SyFy averaged 1.68 million viewers (high 2.14 million low of 1.32 million). Salaries are not published for cable stars, but Saul Rubinek commend "there are not network salaries here" in describing the show.

Warehouse 13 is a popular show for cable. But they do blatant product placement for automobiles, and they can do a lot more reruns. SyFy channel was getting 21 cents per household per month as their cable subscriber fee (or $21 million per month for the entire channel).

So SyFy has far less revenue than NBC broadcast, but it's profit is higher because of the subscriber fee and lower production cost + ancillary revenue.

But if the company tries to do the same thing with NBC and put them on the air, how much can they get as a subscriber fee? Exempting Comcast which owns NBC, I don't think the other cable companies will pay $2 / month for NBC when they can get half as many viewers on SyFy for 21 cents. Will Comcast fire all of it's broadcast employees? Will they stop the profitable portions of their owned and operated broadcast stations.

It seems to me that the business model of any broadcast (cable or over the air) is breaking down. Right now The Big Bang Theory reruns are being shown on MYNET TV, FOX , and TBS. But the broadcast network is secondary to the show and the time scheduled. There is no loyalty to the network. As more and more of these shows are available On Demand, there will be less and less need for so many broadcast networks.

Quote: Pacomartin

I think it is obvious that cable shows make more profit.

This can be for many reasons. One is you can re-run a cable show sooner and more often. FX saved "24" early on because Fox was showing it twice on Broadcast and once on FX to build an audience. It was a late-bloomer show, like many more intelligent shows are, and would have been canceled years ago. But someone said, "low ratings but multiple showings make money--KEEP IT!"

On cable you can re-run shows sooner and more often. Cable rarely has to pre-empt shows for breaking news.

What remains to be seen is how long it takes all the alternatives to do to cable what cable did to broadcast. I just found out I am among 5-10 million with no plans to go back to cable. At this point even if they got it to $25/month it is still more than the mix and match I can find elsewhere. And some of the indie stuff is pretty good.

Quote: AZDuffman

What remains to be seen is how long it takes all the alternatives to do to cable what cable did to broadcast. I just found out I am among 5-10 million with no plans to go back to cable. At this point even if they got it to $25/month it is still more than the mix and match I can find elsewhere. And some of the indie stuff is pretty good.

The problem is that coaxial cable is still the easiest way to get high speed internet into the home, Once it is in your home, it is tempting to add some video options.

It may very well be in 10 years that there is no distinction between internet and television content.

But, I agree, the days of purchasing 50 commercial channels mostly showing reruns will pass in favor of a video on demand option.

Quote: Pacomartin

But, I agree, the days of purchasing 50 commercial channels mostly showing reruns will pass in favor of a video on demand option.

It is more than this. It is the "water cooler effect" (or coffee machine effect if you like) that is no more.

There used to be 3 channels to choose from plus a local UHF or two with things like wrestling and PBS. But 90% of it was the big 3. At work people talked about what was on, and you were out of the loop if you didn't watch. Sure some people watched MNF and others the weekly movie the same night, but people talked about it.

This began to crack in the 1980s but not so much then. The last real water-cooler show was "Seinfeld" with maybe "Friends" to a certain extent the last few years. I think we will never see one again. Even in the 1990s cable shows didn't really compete until very late in the decade. But now they do.

So you go into work and some people watch "Las Vegas," some "Shark Tank," some "Bar Rescue" and some "Two Broke Girls."

But more and more are like me, who watch the shows but have no idea when they are on because we DVR or watch on-demand.

What may happen is someone makes a "build your own channels" app.

Think about it, you go to Hulu and pick shows you like, group them into 3-4 "channels" you like, and it lays them out is a semi-random way. So you put "Pawn Stars" and "Mythbusters" on the same personal "channel" then movies you like on another. Then you set up a random showing. This allows you to get that "I found it!" feeling when what you like is on but it is your own programming.

Quote: reno

I think Fox is bluffing. They're not going to eliminate free over the air broadcasts. Even if 90 percent of Americans pay for satellite & cable TV, that still leaves 10 percent who use the free broadcasts. Does any TV station want to see their ratings fall by 10 percent? They'll have to lower their ad rates. The local affiliates will balk, regardless of the network's views.

The Forbes article was a little more helpful. Aereo may never be much more than a niche product but if the broadcasters are forced to allow Aereo to get its broadcasting programming for free, may lead the cable companies to request that broadcast retransmission fees be eliminated or at least lowered drastically.

Aereo is effectively paving the way for the cable companies to build their own units to capture their own signal from over the air and transmit it via cable. They just have to duplicate the technology to keep it under the same legal umbrella


Even if CBS became primarily a cable company, they still have 14 "owned and operated" stations that reach roughly 39% of American TV households, including 30% of the homes that use primarily "over the air" as their medium of watching TV.

I can't imagine them closing all those stations (even if Aereo is competing in those markets)

Rank-TV Households
1 7,387,810 New York
2 5,569,780 Los Angeles
3 3,493,480 Chicago
4 2,993,370 Philadelphia
5 2,571,310 Dallas-Ft. Worth
6 2,506,510 San Francisco-Oakland-San Jose
7 2,379,690 Boston
8 2,360,180 Atlanta

11 1,842,650 Detroit

15 1,721,940 Minneapolis-St. Paul
16 1,583,800 Miami-Ft.Lauderdale
17 1,548,570 Cleveland-Akron

20 1,388,570 Sacramento-Stockton-Modesto

23 1,171,490 Pittsburgh