Through TV Everywhere, CBS All Access and OTT services like Sony's PlayStation Vue, the O&Os and affiliates are finally making the leap to broadband distribution. But the affiliates are still not entirely happy with the state of affairs because their streaming dreams are totally subject to the networks. Affiliates ability to dictate some terms may depend on an FCC proposal to regulate online video distributors.
Nets, Affils Move Online Not Without Strife
It has long been the dream of some network affiliates to distribute their signals via the Internet within their local markets and extend their reach into any gizmo with a silicon chip and a screen.
Jim Goodmon, the visionary owner of CBS affiliate WRAL Raleigh-Durham, N.C., was, I think, the first to advocate it nine years ago.
In a May 2007 interview with me, Goodmon said it was imperative that stations go online. “There are young people out there who never watch broadcasts, who never watch local news, who only watch stuff on the Internet. I want to introduce broadcasting to them. It’s essential to the future of the industry. We’ve got to be on this stream.”
The quote is truer today when millions have TV screens in their pockets than it was back then when online video was a desktop phenomenon.
Back then, Goodmon’s plan was to somehow persuade the U.S. Copyright Office that an online video distributor (OVD) was nothing less than a new-age cable system and thus entitled to make use of the compulsory copyright license.
With that license, WRAL would be able to retransmit its broadcast signals on the Web without having to worry about clearing the copyrights for all the networks and syndicated programming that make up its broadcast signal.
As Goodmon and others with the same idea soon learned, neither the Copyright Office nor the Congress nor the courts were interested into stretching the compulsory license to cover the Internet.
The networks and other program copyright holders were rigidly opposed to that, having seen too much value lost in the use of the license for cable and, later, satellite over four decades.
Nonetheless, the dream of putting broadcast signals on broadband networks where the young folks are is slowly coming to pass.
First came TV Everywhere. By clearing the digital rights to all or most of the programming on their schedules, ABC, NBC and Fox struck deals with cable operators allowing them to offer “authenticated” subscribers the ability to receive broadcast signals and cable networks on mobile devices.
The three networks worked their deals with copyright holders so that their affiliates will be able to cut TVE deals with cable operators within their markets and presumably earn a little more in retrans revenue. Those affiliate deals have been slow in coming, but they are coming, I’m assured whenever I ask.
CBS opted against TVE in favor of its proprietary CBS All Access, which since last fall is available not only everywhere, but to everybody. You don’t need to be a cable subscribers to receive the service — a mix of CBS current and library programming and the local CBS O&O — just a credit card to cover the $5.99 monthly fee.
As we reported Monday, CBS and the CBS affiliate board have come up with a plan to allow affiliates to participate in the service. They can add their signals to the mix within their markets and earn up to $1 a month for each subscriber they sign up.
The latest broadcast-to-broadband opportunity comes from Sony PlayStation Vue, which launched in three markets this week. CBS, Fox and NBC have agreed to make their O&Os’ signals available on the OTT service, which will comprise more than 50 channels at $50 a month.
In detailing all they’ve done over the past several years to make their programming available online, CBS and Fox told the FCC that they are working with their affiliates so that they will be able to put their signals on PlayStaton Vue if Sony gets around to marketing the service within their markets. I presume that NBC is, too.
Fox added that it intends to see that its affiliates will also be accommodated on “other new services to come.”
So, the networks will be available where they need to be — tablets and smartphones — and the affiliates will get to come along for the ride.
Everything is settled, right?
Of course not.
Judging by what they are telling the FCC, the affiliates are still not entirely happy with the state of affairs, in which their streaming dreams are totally subject to the networks. They can go broadband only where and how the networks say they can.
Earlier this month, the FCC accepted comments on how it should regulate online video distributors. In the proceeding, the affiliates agree with the FCC’s tentative finding that OVDs must get permission — retransmission consent — from affiliates they want to carry just as cable and satellite operators do.
I’ve been trying to figure out why the networks chose to stake out such a position, in light of the fact that it puts them in conflict with the affiliates.
Here’s how I figure it.
Having OVD retrans rights would simultaneously protect and empower the affiliates — in the unlikely event that the compulsory license is extended to OVDs.
Retrans would protect them because OVDs, even with the compulsory license, would still have to get permission from the affiliates before carrying their signals. It would also discourage cable and satellite operators from migrating to the Internet to avoid retrans.
At the same time, retrans coupled to the compulsory license would empower affiliates. It would put them at the table in dealing with the OVDs, in determining how much their signals are worth.
The affiliates wouldn’t be completely free of the networks since they cannot grant retrans to anybody without their OK, but they would have the strongest possible hand in the world of OTT as it opens up for broadcast signals.
In their comments, the affiliates take no stand on whether the compulsory license should be extended to OVDs. They do point out, however, that imposing retrans obligations on OVDs would not entitle the OVDs to the license, even though they go hand-in-hand for cable and satellite.
Until the copyright license is “reinterpreted or amended,” they say, OVDs will have to negotiate for private copyright licenses before seeking retrans.
Despite the disclaimer, I know some affiliates wouldn’t mind extending the compulsory license to OVDs and duplicating in broadband the retrans-compulsory copyright regime that has grown up around cable and satellite.
In their joint comments, three of the networks — ABC, CBS and Fox — argue that the regulation of OVDs is unnecessary. The marketplace is working just fine.
Since 2005, through private negotiations with distributors and copyright holders, they say they have been moving their programming on to digital platforms in a variety of ways, including most recently OTT.
The networks discussed the long odds against the compulsory license being extended to OVDs and assert that nothing the FCC does in its proceeding will shorten those odds.
That might be wishful thinking. In its comments, the Consumer Federation of America says what I think some affiliates believe (and hope) — that imposing retrans on OVDs would be a catalyst in giving them also the benefit of the compulsory license.
The FCC, it argues, is the “expert agency on communications policy, and the Copyright Office should follow its lead by allowing online providers of linear video programming to be part of the compulsory license process.”
So what else is new? The networks and affiliates often don’t agree on public policy — in this case, how to regulate OVDs. It will be interesting to see how contentious the intra-broadcasting politics become if the FCC decides to bring the proceeding to a final vote.
But at least the networks and affiliates are moving ahead for now. Broadcast signals are becoming available on the Web and on mobile devices through TVE, CBS All Access and OTT.
The dream of nearly a decade ago is finally being realized.