JESSEL AT LARGE

Washington, Industry Should Listen To Carey

News Corp. CEO Chase Carey's declaration that it will turn its broadcast network and stations into cable channels if Aereo is not stopped sends a message — a warning really — that Aereo is a menace to the broadcasting business and to the millions of viewers who enjoy and rely on the over-the-air service. But there are other options for Fox in the fight against online pirates: live streaming and mobile DTV. Establishment of those services won't leave much room in the marketplace for third parties waving another monthly bill in front of consumers.

From this reporter’s perspective, Fox stole the show.

Chase Carey, CEO of parent News Corp., captured the spotlight of the NAB convention during the opening session. In an on-stage interview with NAB President Gordon Smith, he declared that Fox is prepared to turn off the broadcast transmitters and convert its O&Os and affiliates to pay channels if the courts or Congress or somebody doesn’t squash Aereo, the Barry Diller-backed venture that believes it can stream broadcast signals online without permission of copyright owners. “We won’t just sit idle and let people steal our signal,” Carey said.

Then a day later, in another move that could also be seen as motivated by Aereo loathing, Fox officials told its affiliates that it is ready to give them permission to stream their signals so they can be received on mobile devices in TV everywhere partnerships with cable and satellite operators.

At the very same time Fox was meeting with its affiliates, during a panel session I moderated, Fox business development exec Erik Moreno made a strong argument for mobile TV and called on all broadcasters to pony up and begin broadcasting mobile DTV signals. “We could build a network nationwide with $300 million. That’s less than it takes to light the bulbs of a Verizon LTE network. You pay for the spectrum, build out a cell tower, it’s north of $25 billion.”

The Carey remarks were carefully orchestrated. Key affiliates were tipped off beforehand, Smith dutifully provided the set up and Fox sent out a confirming statement immediately after Carey spoke. Affiliates and NAB were on hand to voice full support.

Fox wanted to send a message loud and clear — not so much to the NAB  attendees, but to the regulators and lawmakers in Washington and perhaps even to the federal judges who may one day decide the legality of Aereo.

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The message — a warning really — was that Aereo is a menace to the broadcasting business and to the millions of viewers who enjoy and rely on the over-the-air service. If Fox can’t control the distribution of the programming it broadcasts, it will simply stop broadcasting. And if OTA viewers suddenly couldn’t find their favorite Fox programs, it would be the fault of overly permissive courts and a Congress that failed to defend Fox’s broadcast copyrights.

I do hope Washington gets the message.

In his amplifying statement, Carey said that converting Fox to a pay channel is just “one option” for stopping Aereo. I would call it the defensive option.

The offensive options are live online streaming and mobile DTV. If Fox and its affiliates put their signals online or broadcast them using the mobile DTV standard and don’t charge extra for them, there won’t be much room in the marketplace for Aereo and other signal pirates waving another monthly bill in front of consumers.

That Fox and at least two of the other major networks, ABC and NBC, are proposing to pursue live streaming in league with cable operators as part of their TV everywhere initiatives is also smart. As partners, the operators won’t be tempted to use Aereo technology to create IP packages of local broadcast signals and circumvent retransmission consent payments to broadcasters.

In moving their signals online, broadcasters would be doing precisely what outgoing FCC Chairman Julius Genachowski told them they should be doing during his appearance at NAB — that is, streaming their “great national and local content ” on the broadband platform.

But, not surprisingly, Genachowski took it a bit far, turning the suggestion into another argument for allocating more spectrum, presumably TV spectrum, to broadband. “If we don’t solve that [broadband spectrum shortage], the opportunity to take advantage of interactive video on the mobile platform won’t be there.”

Fox’s Moreno had a better idea. Instead of pumping more spectrum into the bottomless pit of broadband, use mobile DTV to deliver video and ease the demand on the broadband networks, he said. Now that wireless carriers are charging consumers for data by how much they use, mobile DTV makes all the sense in the world.

If a consumer watches Fox on his tablet all day long via broadband, he could end up with a data charge of several hundred dollars.  If he watches via mobile DTV, he would “not get a penny of bandwidth charge.”

Mobile DTV has been a long time coming. It has been difficult for a lot of broadcasters to keep the faith. Our survey of chief engineers last February found that 48% of them didn’t think mobile DTV had much chance of making it and another 33% didn’t know what to think.

But listening to Moreno Tuesday, you want to believe again. He makes a powerful case.

One of the big obstacles to mobile DTV has been the steadfast opposition of the wireless carriers. Without the support of the carriers, smartphone vendors are not going to equip their phones with mobile DTV receivers.

But Moreno said they may come around if the broadcasters start getting close to establishing a national mobile DTV footprint. “If we get to 80% … you might be able to cut a deal.” Right now, coverage stands at about 57%.

Renewed growth in mobile DTV coverage would certainly help win back this skeptic, but, as I said in my first column of the year, I would also like to see the top leaders of the industry put their names and reputations behind the technology.

On Monday, Chase Carey had center stage and his chance.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or[email protected]. You can read earlier columns here.


Comments (3)

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c munc says:

April 12, 2013 at 4:10 pm

There are 27 FOX O&O stations, but only 17 of them are FOX affiliates, the rest carrying secondary networks which FOX has interests in. Of the 17 O&O’s, 16 are in the top 50 DMA and 14 of those are in the top 20 DMA. What this means is that FOX could off-load these stations in the upcoming voluntary incentive spectrum auctions and generate a huge payday and free themselves of huge OPEX costs. In 9 of those markets they have duopolies so they could easily enter the auction with them all and use those funds to finance their MVPD and OTT plays. They also would not have to share their retrans fees with any affiliates in those top-markets, meaning a huge on-going revenue stream which they now share. Throughout the rest of the country, that is, some 180+ markets, there would be no effect and their affiliates would still be on OTA and they would share the retrans with them. Or would they?

How much does FOX really make from national advertising that it would not make as a pure MVPD and OTT play? They would then get ALL revenues from national avails and actually pick up the local avails for those top 16 markets where they let go of their O&O’s. Somebody has done the math and it adds up quickly, very quickly. Now if all of the major networks did the same their would be huge amount of spectrum freed up, affiliates would prosper, and of course the viewers in those top markets would be forced to pay someone for the hit FOX shows.

go for it FOX….

    Keith ONeal says:

    April 13, 2013 at 11:11 pm

    Let’s get this correct; FOX owns 27 Stations. 17 of them carry FOX and the other 10 carry the FOX Owned My Network TV. These stations are O&Os, NOT affiliates. I live in a market where the FOX and MyNet stations are O&Os. The ION and TBN stations here are also O&Os. The ABC, CBS, CW, NBC, and PBS stations here are Affiliates. So, FOX has a duopoly here, but wait there’s more! Hearst and Cox also have duopolies here as well.

Ellen Samrock says:

April 12, 2013 at 6:10 pm

Right on the money, Harry. However, another problem (and it’s similar to the one that has dogged HD Radio) is a lack of consumer awareness. Heck, most still don’t know they can get free HDTV over the air on their home monitors, let alone their iPads or phones. So whoever is spearheading the push for Mobile DTV has got a real publicity challenge on their hands. One goal is to make having a mobile DTV dongle on a pad or phone appear “sexy” and desirable. Dongles don’t require the support of the wireless providers so turning it into a “must-have” accessory is important.


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