RK
In some markets going straight to consumer could work, possibly Boston they have a high cable penetration rate. I think that was NBCU’s option of last resort if they couldn’t find anything for WBTS.
However the networks get prime ad dollars for being universal carriage and significant amount of money for reverse compensation. Local affiliates pay significant amounts of money back to the network to just: carry it (reverse compensation), retransmission consent fees (in addition to taking money for the affiliate they get a cut of the fees cable/satellite pays), provide their news sharing access, sports fees and for NBC the affiliates pay a a decent chunk of money for the Olympics (I am not sure what portion of the broadcast contract of the IOC rights contract affiliates pay).
If they went straight to MVPDS (cable / satellite / IP) they wouldn’t have near universal carriage in every market, they wouldn’t be making any where near the amount they would by having MVPDS compared to the affiliate model. Additionally they’d have to negotiate carriage with thousands of small cable companies, something that’s much easier delegating to the affiliates which know the area.
Additionally if they went straight to cable a significant portion of the industry would fall apart and tens of thousands if not hundreds of thousands of people who work at the affiliates local and corporate level. And who knows how would be lost in revenue for the affiliate, the network and in taxes.
Also this whole reverse compensation thing is relatively new. One of the first major cases of reverse compensation was in 1999/2000 with KRON in San Francisco where NBC (who wanted to buy the station but lost) threatened the new owners if NBC did not win the bid they’d have pay $10 million a year for programming where as up to then KRON was paid $7.5 million a year. Needless to say KRON which was purchased for $820 million at closing, didn’t keep the affiliation for long until 2002. Then NBC found a station in San Jose KNTV which was offering $37 million/year to carry programming and on January 1, 2002 NBC bought KNTV for $250 million and San Jose became part of the San Francisco DMA.
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I can never get my head around American local TV.
I’ve tried to understand it all. Very difficult from a simple UK perspective.
Surely now the major networks could just go straight to home 24/7 via cable and satellite.
Leave the local news stations to do their thing.
I can never get my head around American local TV.
I’ve tried to understand it all. Very difficult from a simple UK perspective.
Surely now the major networks could just go straight to home 24/7 via cable and satellite.
Leave the local news stations to do their thing.
Presumably, they don't for the same reason that ITV PLC don't just hand back the channel 3 licence patchwork in the UK - afterall, ITV own their own national multiplex, SDN, and could easily set up a single national ITV channel there, if they wanted to.
But, for what they'd gain in no longer having to provide regional programmes, deal with STV and no longer having to stick to quotas on UK-made shows, news or other public service programming commitments, they'd lose access to their favourable EPG position, universal carriage, etc. They'd also be risking having Ofcom readvertising the licences for a new channel 3 network to compete with the new ITV.
In the US one of the networks could decide to become fully cable/IPTV/satellite, but would would equally lose that universal access, the eyes of anyone unwilling or unable to pay for subscription television. It's also likely that there are other companies who would dive straight into any OTA broadcast spectrum that the current crop of networks decided to turn their backs on..
It's worth pointing out that one of the biggest networks is owned by a major player in cable TV, Comcast - if they don't want to bin off the Network/Affiliate model in favour of wholly in-house distribution, then it's clear that something still works very well for them there.
But, for what they'd gain in no longer having to provide regional programmes, deal with STV and no longer having to stick to quotas on UK-made shows, news or other public service programming commitments, they'd lose access to their favourable EPG position, universal carriage, etc. They'd also be risking having Ofcom readvertising the licences for a new channel 3 network to compete with the new ITV.
In the US one of the networks could decide to become fully cable/IPTV/satellite, but would would equally lose that universal access, the eyes of anyone unwilling or unable to pay for subscription television. It's also likely that there are other companies who would dive straight into any OTA broadcast spectrum that the current crop of networks decided to turn their backs on..
It's worth pointing out that one of the biggest networks is owned by a major player in cable TV, Comcast - if they don't want to bin off the Network/Affiliate model in favour of wholly in-house distribution, then it's clear that something still works very well for them there.
In some markets going straight to consumer could work, possibly Boston they have a high cable penetration rate. I think that was NBCU’s option of last resort if they couldn’t find anything for WBTS.
However the networks get prime ad dollars for being universal carriage and significant amount of money for reverse compensation. Local affiliates pay significant amounts of money back to the network to just: carry it (reverse compensation), retransmission consent fees (in addition to taking money for the affiliate they get a cut of the fees cable/satellite pays), provide their news sharing access, sports fees and for NBC the affiliates pay a a decent chunk of money for the Olympics (I am not sure what portion of the broadcast contract of the IOC rights contract affiliates pay).
If they went straight to MVPDS (cable / satellite / IP) they wouldn’t have near universal carriage in every market, they wouldn’t be making any where near the amount they would by having MVPDS compared to the affiliate model. Additionally they’d have to negotiate carriage with thousands of small cable companies, something that’s much easier delegating to the affiliates which know the area.
Additionally if they went straight to cable a significant portion of the industry would fall apart and tens of thousands if not hundreds of thousands of people who work at the affiliates local and corporate level. And who knows how would be lost in revenue for the affiliate, the network and in taxes.
Also this whole reverse compensation thing is relatively new. One of the first major cases of reverse compensation was in 1999/2000 with KRON in San Francisco where NBC (who wanted to buy the station but lost) threatened the new owners if NBC did not win the bid they’d have pay $10 million a year for programming where as up to then KRON was paid $7.5 million a year. Needless to say KRON which was purchased for $820 million at closing, didn’t keep the affiliation for long until 2002. Then NBC found a station in San Jose KNTV which was offering $37 million/year to carry programming and on January 1, 2002 NBC bought KNTV for $250 million and San Jose became part of the San Francisco DMA.