While all the broadcast networks are working on some form of streaming service, CBS’s version unveiled yesterday is different. It combines its on-demand offerings and station streaming into one service marketed directly to consumers. CBS is creating a whole new revenue stream for itself as well as its affiliates who choose to stream their signals locally on the platform.
JESSELL AT LARGE
CBS All Access A Smart Move For Net, Affils
With little trouble, I managed to sign up for CBS All Access (one week free!) last night, but so far I can only get it on my desktop. All efforts to get the app to function on my Samsung smartphone have been for naught. But I’m hopeful. I’ve learned that if you keep poking at a recalcitrant app it will sometimes kick into gear.
Of course, because it was Thursday night, my first experience with “Live TV” on CBS all Access — the real-time feed of WCBS — was disappointing.
The flagship and the rest of the network were broadcasting NFL football and CBS has yet to clear the online rights for the games. So instead of the Jets and Patriots, I got a slide: “The program currently on-air is not yet available for live stream. Please check back soon.”
I will. CBS CEO Les Moonves says that he is working on getting the necessary rights and I believe him to the tune of $5.99 a month.
This morning I came back to the site and clicked into CBS This Morning just in time for a discussion of the service with media editor Peter Lattman of the New York Times. The service worked smoothly. I will be curious to see how often I use it.
Reaction from the affiliates to All Access has been positive and it’s easy to understand why. They just might make a buck or two on the deal.
BRAND CONNECTIONS
All the broadcast networks have recognized the importance of getting their programming onto the Internet and the wireless networks to keep up with younger viewers wherever they happen to be.
To get to the second and third screens, three of the Big Four — ABC, NBC and Fox — have moved in lock step. They took stakes in Hulu, a two-tiered, on-demand service that offers old programming on an ad-supported basis and current network programming (one day after its broadcast airing) for $7.95 a month.
Then, the three adopted the TV Everywhere approach for the streaming of their stations. The approach involves what amounts to a partnership with cable and satellite operators. Broadcasters make their signals available for free, but only to “authenticated” local pay TV subscribers in good standing. Cord cutters and cord nevers are out of luck.
ABC has launched its TVE service bundled with some on-demand offerings as ABC Watch. I have downloaded that apt and, when my Samsung is not balking, I can get WABC New York on it. Several Fox O&Os and many Fox affiliates have TVE services up and running, but neither Fox nor the affiliates do much to publicized the fact. After a few delays, NBC is now promising to unveil its TVE service by the end of the year.
CBS All Access springs from a significantly different strategy, one independent of the other networks and the pay TV operators. CBS is combining the on-demand offerings and station streaming into one omnibus service and selling directly to consumers.
By cutting out the cable and satellite middlemen, CBS is creating a whole new revenue stream for itself as well as its affiliates who choose to stream their signals locally on the platform.
“CBS will handle all the billing and affiliates will get a piece of the revenue this generates in market,” Nexstar CEO Perry Sook told us after the news broke yesterday. “It demonstrates the power of the network-affiliate model.”
Sook and others with whom we spoke said they don’t yet know what their cut of the $5.99 might be, but any money flowing from network to affiliate is a remarkable and welcome change after years of the networks pressing affiliates for more and more in football subsidies and reverse comp.
Affiliates of the other Big Four networks can theoretically make money by charging cable and satellite operators extra for TVE rights in retransmission consent negotiations. But many affiliates may not be able to get it. And I’m told that ABC and NBC expect its affiliates to pay them a fee for participating. That sounds like a wash at best.
It is important for TV stations to be available online so that they can continue to claim they are the only TV medium that reaches every American, including those who eschew pay TV because of the cost and are so enthralled by their iPhone 6 they can’t figure out how to use an antenna.
Viewership of broadcast signals via TVE or All Access may be slow to grow, but it will grow as more people get comfortable with watching TV on their tablets and smartphones and someone figures out how to make a frictionless interface between the Internet and the big TV in the living room.
CBS wasn’t the only old-line media company to make a bet on Internet distribution this week. A day before CBS, HBO announced plans for an OTT service unencumbered by old pay TV allegiances. That was a perfect pre-endorsement of the CBS initiative.
And here’s a bonus for CBS broadcasters on the All Access platform. If retrans negotiations break down and they have no choice but to yank their signals off of cable systems, they can point affected viewers to All Access and tell them to sign on so they don’t miss their favorite shows or the big game. They might even offer the service for free for the duration of the blackout.
We posted a story in February 2013 discussing CBS’s streaming experiments with Syncbak. Since then, the network has been extremely guarded in talking about the service. I was beginning to think it had given up on the project.
So it was good to see the announcement of CBS All Access on Thursday — good for the network and good for the beleaguered affiliates.
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 (31)
Joe Jaime says:
October 17, 2014 at 4:04 pm
Harry if I interpret your article correctly…. CBS “all access” will carry CBS only network programming only..no local news or other affiliate programming ……and the affiliate will get a small piece of the monthly fee. If so that helps add a new affiliate revenue stream but does little to ad value to the local brand and promotes network viewing by by-passing the local network affiliate. Long term is this really a benefit? No local spot carriage..no local promotion etc..just a few cents on the dollar to offset reverse comp…. and it opens the door to the network using mobile or desktop devices to eliminate the need for the local station . How can that be attractive to an affiliate? What am I missing?
Joe Jaime says:
October 17, 2014 at 4:12 pm
As I re-read your …. article it appears the network (CBS) will carry the station’s full program schedule.. if so, then it would make it a good opportunity for both station and network.
Sandy Hinkle says:
October 17, 2014 at 4:22 pm
How can CBS, its affiliates, the broadcast TV press, @NABTweets and @TVFreedomOrg extol — with a straight face — the virtues of CBS All Access (a stand-alone, direct-to-consumer, a la carte service), while at the same time — with the same straight face — denying consumers the right to Local Choice (a stand-alone, direct-to-consumer, a la carte service) on broadcast TV, claiming Local Choice will bring about the DEATH OF FREE TV AND LOCALISM? Ironic, at least, and purposely disingenuous and hypocritical, at worst, but hey, what’s wrong with having your cake and eating it too, as long as consumers are paying for it? Follow me @MATTatACA
Ellen Samrock says:
October 17, 2014 at 5:38 pm
OMG! Not the broken record about Local Choice again.
Wagner Pereira says:
October 17, 2014 at 6:19 pm
As stated previously, different platform. ACA members bundle the platforms….video and internet. Both platforms are priced and delivered according to the platform norms. This is a new platform and new revenue stream.
Don Thompson says:
October 17, 2014 at 5:27 pm
ACA To CBS: Don’t Cable TV Subscribers Deserve Same Rights As ‘CBS All Access’ Customers?
PITTSBURGH, October 17, 2014 – American Cable Association President and CEO Matthew M. Polka issued the following statement regarding CBS’ announcement launching “CBS All Access,” a $5.99 a la carte service available only to broadband Internet customers:
“ACA has a simple message for CBS: Why won’t you give cable subscribers the same rights you’re evidently giving broadband customers under the ‘CBS All Access” plan? “Based on what we know so far about the ‘CBS All Access’ plan, consumers will soon be able to decide for themselves whether they want to pay to view online the content broadcast by CBS O&O stations and participating CBS affiliates. Consumers will be able to choose to subscribe to the CBS service without having to subscribe to the other broadcast networks. “Consistent with ACA’s advocacy in support of the Rockefeller-Thune Local Choice proposal, ACA believes that cable customers should have the same viewing rights that broadband customers will soon have. Cable customers should no longer be forced by regulation to subscribe to all broadcast stations carried by a cable operator as a condition to receiving any broadcast station. “The inability to opt out of subscribing to a TV station is caused by a broken and archaic retransmission consent regime imposed by Congress decades ago. Broadcasters should allow consumers to buy broadcast signals from cable operators on a la carte basis in the same way that CBS is offering its streaming service to broadband customers on a la carte basis.” About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing about 850 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit http://www.americancable.org/ Please follow me on Twitter @TedatACA
Don Thompson says:
October 17, 2014 at 5:29 pm
Dear CBS,
Please sell us your spectrum so we can stream your “TV stations” to our mobile customers.
Best regards, AT&T and Verizon …………. ><< Please follow me on Twitter @TedatACA
Shenee Howard says:
October 17, 2014 at 5:29 pm
Everyone is saying this is the death of cable and satellite – I say bull. Here is my thinking. Many of us bundle internet, phone and cable together. There are not always internet and phone options at the same speed available – for example Verizon FiOS is NOT available for my complex, and Verizon has no plans for extending service further. So I’m with cable. I watch tv, so I would want at minimum 5 networks (ABC, CBS, NBC, Fox, CW). At 6 bucks a shot, that is already $30 monthly. On top of that there are several cable networks I want – say another 6 – 10, so add another $36-$60 a month. Now theoretically I am at $90 per month. Now add HBO and Showtime, and I’m probably signifiantly over $100, more than the cable portion of my bill. On top of that, I like sports, I follow a specific baseball and football team. Neither MLB or the NFL will give up the internet rights without major fees. I could pay for MLB, so add another $45 or so to get MLB.tv. Then comes the NFL – who are the biggest rights pigs in the world. They just made a major deal with AT&T/DirecTV that will eventually allow internet viewing beyond ST subscribers, but for how much? And how will ESPN charge us? Again, this all assumes they adopt the CBS model. The model that ABC, ESPN, HBO, Showtime that provide the online versions for free to pay TV customers makes more sense. I would never consider paying 2X the price of cable to cut the cord. It makes no sense economically to the consumer. Now, if this does result in a-la-carte, great, as I am already putting Cablevision on notice that a I will drop every single shopping and religous channel.
Wagner Pereira says:
October 17, 2014 at 6:14 pm
It’s finally sinking in what I’ve said all along. As you seen from your own pricing, a la carte will result in 10 or so channels for about as much as your current cable bill. Heck, ESPN alone would be close to your current entire cable bill now. Unfortunately, the models that you noted (ABC,ESPN are all part of the same Disney deal) and their mile high combined rates make them not to go the CBS route, while Showtime and HBO are already a la carte now.
Ed Brandon says:
October 19, 2014 at 10:40 am
Good points. Now it makes sense that big four hated Aereo. Bet broadcasters regret killing that service. Would have included local commercials. Let’s see how this plays. For those who think your going to save money on your cable bill, I offer this advise. You’ll pay at least as much but, you’ll just be paying different companies.
Ellen Samrock says:
October 17, 2014 at 5:52 pm
My concern would be data restrictions from the gatekeeper cable and telco companies that provide the internet service. I can see this turning into as big a war as negotiating retrans fees. At some point, broadcasters are going to have to control the entire pipeline, end-to-end. ATSC 3.0 holds that promise but broadcasters are going to need their UHF spectrum to make it happen, all of it.
Wagner Pereira says:
October 17, 2014 at 6:16 pm
Of course, cable would need revenue to replace what they lose if cable tv went away (or significant subs). MVPD see these fees from content providers as an attempt to supplement their revenue.
Keith ONeal says:
October 17, 2014 at 11:10 pm
Hey, D BP, that sounds like another call to the FCC to CANCEL their stupid spectrum auction. NOW!!!
Ellen Samrock says:
October 18, 2014 at 1:33 am
Yeah, but I’m afraid it is a call in the wilderness, FlashFlood. The Obama/Wheeler FCC will not be denied it’s incentive auction. The only thing that can stop it is further legislation from Congress (not very likely) or a lack of participation from qualified broadcasters (very possible). The FCC is trying its best to get them on board with exaggerated enticements of big money. I see the noncoms doing it along with a few sickly independents but that’s about it. Let’s hope it’s not enough to make an auction.
Keith ONeal says:
October 18, 2014 at 8:34 pm
Amen to that!
Don Thompson says:
October 17, 2014 at 6:49 pm
Soooooooooooooooooooo…………. Local Choice is wonderful for broadband subscribers but terrible for cable TV customers. I’m struggling to see the logic.
Here is what the NAB said about the Rockefeller-Thune Local Choice proposal in memo circulated on Capitol Hill in August:
“Significant questions remain about how such a system would be implemented, the resulting impact on broadcast programming and localism, and the treatment of broadcast channels relative to cable programmers. Such a drastic change in
the broadcast TV laws should not be considered in the context of a STELA reauthorization.”
Looks like Air Marshal Moonves answered all the remaining questions about the impact on “broadcast programming and localism.”
And the head of the CBS affiliates group could not be more please with CBS (Almost) All Access.
“CBS affiliates board chairman Michael Fiorile on broadband Local Choice offered by CBS All Access: ‘I keep looking for a fault in the plan and I don’t see it,’ says Fiorile. ‘I think people are generally pretty pleased.'”
So if Local Choice for broadband customers is so wonderful, why isn’t it also for cable subscribers.
For CBS to provide its stations a la carte on the Internet a month after NAB killed the Rockefeller-Thune Local Choice proposal will be remembered for a long time. And let’s not forget, the Satellite Television Access and Viewer Rights Act (STAVRA) is still a live product and open to amendment.
Please follow me on Twitter @TedatACA
Trudy Rubin says:
October 17, 2014 at 7:53 pm
The big difference with this app and what cable can offer, is over 6500 episodes. All of what is in the CBS library. Ted can cable offer me that, for $5.99 ? If they could, I might suscribe again. Instead Time Warner is offering me all broadcast channels and HBO for a year @ $29.95. I got an antenna and Netflix.
Wagner Pereira says:
October 17, 2014 at 10:11 pm
No Ted, its the difference in an a la carte or prix fixe restaurant and an all you can eat restaurant. Cable was designed as an all you can eat restaurant. You cannot change the restaurant concept and business model for some if not all. It is the equivalent of being “a little pregnant”. The Internet concept certainly is not all you can eat, but more of a prix fixe restaurant. Two different concepts. Two different restaurants. As much as you want to crap on TVNEWSCHECK, you know you will never get local choice with out a 100% model change to a la carte. And even with a la carte, you know your ACA members will give everyone HSN, QVC and all the shopping channels that most would rather not have.
Tony Alexander says:
October 18, 2014 at 11:52 am
Harry,
A couple of points:
First, nearly always when broadcasters launch something on the web they build these fences around parts of the landscape that are not very consumer friendly. In this case, there are two obvious limitations. No NFL football. Perhaps this one will be resolved in future CBS-NFL agreements. The other one is that there is this continued protection of in-market stations and only distributing the O&O’s and affiliate signals within their markets. To most consumers and most savvy web people, this never makes much sense even though there are quite obvious reasons why local broadcasters want to be protected from out-of-market stations and why the entire program rights system for terrestrial broadcasting is a vestige of legacies from 50 years ago and bears no relationship to how the web is used today. The world wide web should know none of these restrictions, but only broadcasters could make this so complicated and confusing that it almost fails right out of the gate. I would pay, probably $10 per month or more, if I could receive out of market stations on the web or on my smartphone. I’d love to watch WCBS in New York or stations in Los Angeles or even the CBS affiliate in Tupelo. But, for me, I’ll get the same CBS affiliate that I can already receive on cable, satellite, OTA,etc. Nothing new for me. I am always amazed that when I say that there are probably 10,000 households in Los Angeles that would pay to see OTA stations in New York, the broadcaster response is that “we don’t want that” or “it can’t be done,” but this is a huge pile of money. If one thinks about all of the viewers that could be collected for New York OTA stations from around the country, the amount of “subscription” money is astounding.
The second point is that in web deals the devil is in the details. Any company that has done deals on the web will attest to the need for carefully constructed agreements. Harry, you don’t review the details of the CBS/affiliate agreement on this only to say that the affiliates will get some of the revenue from the subscriptions. This is not the most important point. I don’t know the details of the agreements between affiliates and CBS, but I’m guessing these agreements are wildly in favor of CBS. One of the most important details in web deals is who fulfills the transactions and I’m guessing that this will be CBS with almost no oversight or involvement of the local affiliates. This will be good for CBS but potentially not very good for affiliates.
This deal is about data and the use of that data. I’m speaking of the data compiled from the subscribers. This is EXTREMELY valuable data. CBS will likely get the data and probably the affiliates will have little access to the data and even less likely to be able to use this data. Before you say that you don’t understand why the data is useful, think about how Google, Amazon, Apple and other savvy web companies compile and use the data. The value is in the relationship that is built between the end user (the subscriber) and the collector of that data. Once we have this relationship established there are all kinds of ways that the data can be used to generate additional revenue. I’m guessing that the affiliates will see none of this “other” revenue, only a portion of the basic subscription that comes from their coverage area.
One of my mantras has been that broadcasters have no relationship with the end user. They claim to do so, but they do not…at least not in the same sense that Amazon, Google, Apple, cable MSOs, and now CBS, have. OTA broadcasters have relationships with their customers and their customers are advertisers, not individual consumers. Broadcasters do not have billing systems, they do not have customer care systems, they do not have “subscribers.” They collect viewers and sell them to advertisers. They don’t have any idea who these viewers are. So, this system will be good for CBS. Even in retransmission agreements, broadcasters don’t collect money from subscribers, they collect money from cable and satellite companies who collect the money from their subscribers. CBS knows this. The affiliates, I’m guessing, are mostly clueless in this regard and probably their agreement with CBS on the All Access is that CBS owns the data. CBS MIGHT share some of this data with the affiliates but almost certainly there will be restrictions on the use of the data.
I am constantly amazed that Les Moonves brags about how much their retransmission revenues will grow in the coming years. They will grow not just because of the CBS O&Os but largely because the affiliates will be paying a growing percentage of their retransmission fees to CBS.
The good part of this announcement is that CBS is acknowledging that web distribution is a good thing and that they might as well be in the business as opposed to riding along with some other company. I am far less certain that this agreement will be that valuable for local CBS affiliates except to make them more beholding to their network.
Keith ONeal says:
October 18, 2014 at 8:50 pm
The way I see it, BroadbandisBest, is that if the people on the West Coast can get WCBS or any other O&O in the Eastern or Central Time Zones, they could watch the Prime Time shows at 5 PM Pacific Time, and use THEIR OWN Prime Time (8 PM Pacific) to watch the other networks (ABC, NBC, FOX, The CW, etc.)
Wagner Pereira says:
October 19, 2014 at 3:50 am
Incorrect, they will only be allowed to view the local station while in the geo-fence.
Wagner Pereira says:
October 19, 2014 at 3:56 am
Furthermore, as the NFL contracts are essentially done until around 2022, do not expect to see the NFL on CBS via the web anytime soon.
Angela Foreshaw says:
October 18, 2014 at 7:46 pm
This is probably the worst deal ever.
kendra campbell says:
October 19, 2014 at 8:54 am
Who in their right mind is going to fork over $6 a month for CBS programming? Fantasy time.
Ed Brandon says:
October 19, 2014 at 11:18 am
Netflix scaled that wall nicely. 6 bucks seems like a no- brainer to me.
kendra campbell says:
October 19, 2014 at 11:22 am
CBS is available for free. Netflix is not.
Wagner Pereira says:
October 19, 2014 at 5:09 pm
This gives CBS an advantage when MVPD chose to not pay up and drop the programming. They can claim to the FCC as it is still available over the web for $6 as the local MVPD is not paying for it. Likewise, it also gives a figure that a customer should demand that their cable bill be credited for lack of availability. Many more reasons for this than just direct distribution.
Don Thompson says:
October 19, 2014 at 8:07 pm
In Aug. 2013, Time Warner Cable CEO Glenn Britt (who is deceased) made this offer to the head of CBS, who unveiled CBS (Almost) All Access: “We would also be willing to resume carriage by allowing CBS to make its stations available on an a la carte basis and on terms of its choosing, with 100% of that price remitted to CBS. This way, rather than debating the point, we would allow customers to decide for themselves how much value they ascribe to CBS programming.”
CBS CEO Air Marshal Moonves issued this reply: “Anyone familiar with the entertainment business knows that this is an empty gesture.” < Please follow me on Twitter @TedatACA
Wagner Pereira says:
October 20, 2014 at 12:48 am
And it is an empty gesture – unless you are not familiar with the entertainment business. The only chance is 100% a la carte. And after 15 requests for an answer, we notice you have not stated how much the ACA Systems would cut the service cost for the customers to wanted “local choice”….unless you were planning to pocket the money yourself (which is probably the case as you have refused to answer).
E B says:
October 20, 2014 at 3:29 pm
“$6 for just channel 2? I don’t watch that and I can get it for free.” That will be the reaction.
Wagner Pereira says:
October 21, 2014 at 1:21 am
Actually the reaction when Ted and Matt says Moonves wants $2 per sub, one looks at the $6 pricing and thinks $2 is a really good deal – which it is. A typical price game that is played every day in the retail sector – Anchor Pricing.