AT&T Just Donated $500,000 to Locast

[NashGuy]

Of course one unsolicited white paper doesn't settle anything. But it does present some interesting legal viewpoints, which is why I posted it. I never said Locast had an airtight case. I've said all along it will be interesting to see what an eventual lawsuit is based on though. Anything short of a significant change to the law looks like it could be a tough battle for the broadcasters. They sure didn't wait this long to go after Aereo, did they...

I'll admit that Locast is probably a tougher case for the broadcasters than Aereo was, given that Aereo was a for-profit company.

Here's an interesting thought experiment. Let's say the broadcasters sue Locast and Locast completely and totally wins. What happens then? Would Congress intervene to change the law? How so? And if it didn't, how might the TV business evolve?

 

[NYDutch]

I'll admit that Locast is probably a tougher case for the broadcasters than Aereo was, given that Aereo was a for-profit company.

Here's an interesting thought experiment. Let's say the broadcasters sue Locast and Locast completely and totally wins. What happens then? Would Congress intervene to change the law? How so? And if it didn't, how might the TV business evolve?

I have no idea how Congress could format a law the singles out just one translator service without affecting the many others that would pass legal muster. Since Locast is only reaching those viewers that are within the stations tower coverage, ignoring those few of us that "cheat", I don't see that the TV business would see any significant change beyond what's occurring anyway in this cord cutting era. Worst case, it'll drive the broadcasters back to more reliance on the ad supported format they started with. The reality is that there will still be cable, sat, and streaming providers paying retransmission fees, just not for as many subscribers.

 

[Juan]

If locast wins.. the broadcasters will switch the majority of their expensive content i.e.sports to cable channels...atleast that was the threat against aereo winning.. aereo had a cloud dvr and carried 40+ ota channels in nyc market....locast only does 16 or so....aereo also had hd signals...it was a much bigger threat than locast with its SD stuff.. not quite apples to apples...nobody ever challanged slingbox. ..i had them for years and years...then dish duscontinued the standalone version

I'll admit that Locast is probably a tougher case for the broadcasters than Aereo was, given that Aereo was a for-profit company.

Here's an interesting thought experiment. Let's say the broadcasters sue Locast and Locast completely and totally wins. What happens then? Would Congress intervene to change the law? How so? And if it didn't, how might the TV business evolve?

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[NYDutch]

If locast wins.. the broadcasters will switch the majority of their expensive content i.e.sports to cable channels...atleast that was the threat against aereo winning.. aereo had a cloud dvr and carried 40+ ota channels in nyc market....locast only does 16 or so....aereo also had hd signals...it was a much bigger threat than locast with its SD stuff.. not quite apples to apples...nobody ever challanged slingbox. ..i had them for years and years...then dish duscontinued the standalone version

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If the networks switched sports to just the cable channels, I wonder how their advertisers would feel about losing all those OTA eyeballs...

Note that Locast carries 45 channels in the LA market, and 48 in San Francisco. They've also been back filling with the sub-channels in other markets. NYC is currently at 19.

 

[NashGuy]

I have no idea how Congress could format a law the singles out just one translator service without affecting the many others that would pass legal muster.

Just ban translator services that use internet protocol, saying that they are explicitly prohibited from passing on broadcast signals without the broadcaster's consent. I'm not sure how that could be found unconstitutional or outside the bounds of Congress's authority.

Worst case, it'll drive the broadcasters back to more reliance on the ad supported format they started with. The reality is that there will still be cable, sat, and streaming providers paying retransmission fees, just not for as many subscribers.

If locast wins.. the broadcasters will switch the majority of their expensive content i.e.sports to cable channels...atleast that was the threat against aereo winning

Yeah, this is what I'm thinking too. And frankly, with or without Locast, I tend to think that several years from now -- due to the evolution of the marketplace, or a change in the law, or both -- we're going to see broadcast TV shifting back to being completely, or almost completely, supported by ad revenue. And I think we may ultimately see a breakdown in, or a significant change in, the whole national network/local affiliate model.

At some point, I think the public and regulators are going to realize that having lots of local OTA broadcasters isn't the best use of our shared wireless spectrum. The whole system just doesn't make sense in the age of the internet and on-demand content consumption. Why should Disney/ABC need local OTA broadcasters to get their paid content to viewers? I get that some content, such as NFL football, benefits from large-scale audiences and all of the advertising dollars that brings in. But free ad-supported TV is shifting to the internet too.

As the 2020s roll on, I think it's going to become increasingly apparent that the whole broadcast TV system exists only because "it's always been this way," plus the existence of retransmission payments made possible by a law passed in 1990. (There are already some in Congress who are questioning whether that whole idea should be revisited.) Meanwhile, as 5G grows, there will be a call for more of the long-range, building-penetrating signals that are still being used by UHF TV stations. Will Americans really think that free OTA access to ad-stuffed linear channels airing reruns of old shows and movies is a better use for precious spectrum than providing better, faster internet access?

 

[Juan]

They would be losing roughly $2 per cable sub per month if they didn't

If the networks switched sports to just the cable channels, I wonder how their advertisers would feel about losing all those OTA eyeballs...

Note that Locast carries 45 channels in the LA market, and 48 in San Francisco. They've also been back filling with the sub-channels in other markets. NYC is currently at 19.

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[NYDutch]

They would be losing roughly $2 per cable sub per month if they didn't

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They'll lose more than that when their ratings numbers drop the ad fees without the OTA count.

 

[NashGuy]

They'll lose more than that when their ratings numbers drop the add fees without the OTA count.

I think maybe 17% of US homes now use an OTA antenna. The number has crept up a few points over the past few years. But I would say that those OTA viewers are generally less desirable to advertisers because they're not as affluent, on average, as those who subscribe to cable/satellite TV.

 

[Juan]

Its over 14% per nielson...nielson provides the numbers advertisers use...it doesn't matter if they are wrong...its the benchmark advertisers use

The Nielsen Local Watch Report

I think maybe 17% of US homes now use an OTA antenna. The number has crept up a few points over the past few years. But I would say that those OTA viewers are generally less desirable to advertisers because they're not as affluent, on average, as those who subscribe to cable/satellite TV.

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[NYDutch]

Ok, how happy will the sports advertisers be if the stations drop 14-17% of the potential audience because they're in a huff over Locast? It isn't Locast that the OTA viewers will be mad at.

 

[slice1900]

Ok, how happy will the sports advertisers be if the stations drop 14-17% of the potential audience because they're in a huff over Locast? It isn't Locast that the OTA viewers will be mad at.

Where do you get this "drop 14-17%"? Locast has only a few hundred thousand users, it isn't even a rounding error to Nielsen. Stopping Locast doesn't mean all OTA broadcasts would stop.

If they let it expand and get huge and kill it 3-4 years from now, then they might lose a significant number especially if Directv is really making heavy use of them, but if the law is changed to make it go away it'll probably happen within a year before more than a few percent of people have even heard of them.

 

[ncted]

Ok, how happy will the sports advertisers be if the stations drop 14-17% of the potential audience because they're in a huff over Locast? It isn't Locast that the OTA viewers will be mad at.

Seems like the stations wouldn't be losing viewers if the viewers are watching on Locast. Since there is no DVR, those viewers would see the ads. It is up to the ratings folks to figure out how to measure them. When I was a Nielsen household, they measured everything, including my Roku and AppleTV and the apps I ran on those. I am not sure why Locast would be any different.

 

[NYDutch]

Where do you get this "drop 14-17%"? Locast has only a few hundred thousand users, it isn't even a rounding error to Nielsen. Stopping Locast doesn't mean all OTA broadcasts would stop.

If they let it expand and get huge and kill it 3-4 years from now, then they might lose a significant number especially if Directv is really making heavy use of them, but if the law is changed to make it go away it'll probably happen within a year before more than a few percent of people have even heard of them.

The discussion is about the broadcasters losing a Locast lawsuit and moving their sports programming from their OTA stations to cable/sat only in retaliation. The potential audience loss would be OTA viewers nationwide. Dish and DTV both include the Locast app on their receivers, some cable companies have promoted Locast as an alternative for retrans disputes, and Locast's ability to expand indicates a significant number of donations are being received.

 

[NYDutch]

Seems like the stations wouldn't be losing viewers if the viewers are watching on Locast. Since there is no DVR, those viewers would see the ads. It is up to the ratings folks to figure out how to measure them. When I was a Nielsen household, they measured everything, including my Roku and AppleTV and the apps I ran on those. I am not sure why Locast would be any different.

Refer back to Jaun's post about the networks moving sports programming from OTA stations to cable/sat only.

 

[ncted]

Refer back to Jaun's post about the networks moving sports programming from OTA stations to cable/sat only.

Yeah, I get that. I guess my point was, if Locast allows them to still reach their audience with their ads like an antenna would, that would be better than what happens now with retrans disputes where they get no viewership of those ads while their channels are off cable or satellite.

 

[NYDutch]

Yeah, I get that. I guess my point was, if Locast allows them to still reach their audience with their ads like an antenna would, that would be better than what happens now with retrans disputes where they get no viewership of those ads while their channels are off cable or satellite.

I agree! That's why I'm not sure what the legal basis would be for a broadcasters lawsuit? Aereo was a different story, since their intent was to profit from the retransmissions. Locast is prohibited by law from profiting beyond covering their costs.

 

[Juan]

He was responding to one of my comments...back when ""aereo"" was around..the networks threatned to pull all the good stuff from OTA if it was found legal and put it all on cable channels

Where do you get this "drop 14-17%"? Locast has only a few hundred thousand users, it isn't even a rounding error to Nielsen. Stopping Locast doesn't mean all OTA broadcasts would stop.

If they let it expand and get huge and kill it 3-4 years from now, then they might lose a significant number especially if Directv is really making heavy use of them, but if the law is changed to make it go away it'll probably happen within a year before more than a few percent of people have even heard of them.

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[NashGuy]

Yeah, I get that. I guess my point was, if Locast allows them to still reach their audience with their ads like an antenna would, that would be better than what happens now with retrans disputes where they get no viewership of those ads while their channels are off cable or satellite.

I agree! That's why I'm not sure what the legal basis would be for a broadcasters lawsuit? Aereo was a different story, since their intent was to profit from the retransmissions. Locast is prohibited by law from profiting beyond covering their costs.

The reality of the situation for the broadcast networks is this: "Free OTA distribution is a legacy system that's always been there and it's not something we can easily walk away from. Ideally, no one would watch our content for free via OTA but instead they'd subscribe to us via a multichannel pay TV (i.e. "cable TV") package, or through our own direct-to-consumer streaming service. Because that way, we're getting some amount of subscription fee passed onto us from viewers, in addition to the ad revenue we make. Yes, if you're not going to PAY to watch our channel, then we'd rather have you watch us for free via OTA because you're at least bumping up our ad revenue that way."

Now think about that situation and decide if you believe it's in ABC, CBS and NBC's best interests (from a profit-maximization perspective) to expand free access to their live broadcasts. ABC has Hulu. CBS has CBS All Access. NBC has Xfinity TV plus an OTT competitor to Hulu launching in 2020. And all of them still gets LOTS of reverse retrans comp paid to them from their local affiliates (the largest of which they actually own outright).

So OF COURSE those networks don't like the idea of folks conveniently launching the Locast app to watch their broadcasts for free. If cord-cutters want to conveniently stream that stuff at home or on-the-go, they should get Hulu, CBS AA, YouTube TV, PS Vue, etc. and actually PAY for it! If they insist on free, well then, they're going to have to deal with the hassle of an antenna and iffy reception (thanks, ATSC 1.0) and watch on their living room TV! And if they want to watch that stuff when they want, they'll have to fool with the expense and bother of an OTA DVR (which, let's be honest, is and always will be for a certain niche breed of consumer).

So what does this portend for the next-gen OTA standard, ATSC 3.0, which promises not only better picture and sound quality, but also easier, more reliable reception, including in cars and even perhaps on phones? It's not surprising, is it, that the biggest cheerleaders for ATSC 3.0 are the owners of local broadcast stations -- Sinclair, Nexstar, etc. -- who do not own any significant content (just local news, really). We hear very little at all from the big 4 networks about ATSC 3.0. Yes, they've made small indications that they may support it but you can understand why they're not enthusiastic about it. Why encourage more FREE consumption of the popular content which they expect to get PAID for?

 

[Juan]

Did you see this little note?



Because ATSC 3.0 is likely to be incompatible with current broadcast systems, it must provide improvements in performance, functionality, and efficiency significant enough to warrant implementation of a non-backwards-compatible system.

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[ncted]

Why encourage more FREE consumption of the popular content which they expect to get PAID for?

If I have to watch a commercial to see content, it is absolutely not free to me. Every time I watch a commercial, I get that much closer to death, and another brain cell (at least one) dies. That is a very high cost in my estimation. I am all for paying for what I view, but price is often too high to justify when ads are involved based on the actual entertainment value of the content.