I awarded myself a “gap” year (you know kids who aren’t quite ready to go to college so they take off a year and travel) after I sold Oxygen last winter. My husband Kit and I have been all over the world and frankly haven’t thought that much about the cable industry. Imagine my surprise to get back to the US and see that once again the “a la carte” debate has yet another life. I thought when Michael Willner and I testified to the FCC bureau in 2005 that we had seen the last of that “oh so intriguing” notion.
My argument (as one of the last successful independent programmers) was that we would never have been able to raise the capital for Oxygen if we had not had the promise of widespread distribution. And that we could never create good content in an a la carte world.
An ala carte world for programmers ends up not being very good for
consumers. Instead of spending 80% of resources on programming and
20% on marketing, you’d need to flip that equation and spend 80% on
marketing because you’d need to continuously try to “sell” consumers on
your channel to even be in the game.
When I was briefly at Disney, I saw the problems that “a la carte”
caused The Disney Channel and worked at changing that popular network from a pay to
basic channel. As an a la carte pay service, TDC had to spend vast resources on
marketing, had a huge marketing staff, leaving few resources for
original content. Today, a dozen years later, Anne Sweeney and Rich Ross
have built the channel into one of the most valued channels on TV.
One of the great things about the history of the cable industry is that we figured out an economic partnership that worked for operator and programmer alike. Operators needed good content to build out their capital intensive technology platform. Programmers needed the assurance that they would have a shot at getting in front of all cable subscribers. Leaders on the operator side were visionary in their view that to do well, others would also need to do well.
What worries me now is that we have forgotten our beginnings. The consolidation of power on the programmer and operator side, has everyone wary about each other. Operators feel like they helped build these brands (they did) and now the programmers are merciless in their increases (some are).
Now Programmers don’t want to be tied to distribution strangleholds so
they are relentlessly” multi-platform”-- even though, by far, the lion
share of their revenues come from their cable/satellite platform.
Operators don’t want to put new applications into business that can
eventually squeeze out escalating rates.
It takes good technology and good creative to build a constantly
growing industry. The cable industry took advantage of creativity
coming from a wide spectrum of people. We never thought we should
limit the creation of content to our own companies. I worry that today,
operator and programmer alike are so concerned about ownership they may
lose the thing they all need: the loyalty of their consumers.
The economic model that enabled programmers to focus on content rather
than endless marketing was as inventive as the cable TV industry
itself. It allowed far more resources to be spent on the creation of content. Sometimes it meant that the big operators got out in front and
promised distribution so that entrepreneurial programming companies
could raise capital and invest in the future.
My hope is that operators would do the same in this stage of our industry growth. My fear is that they are not doing that, that they are holding resources close to their vests and saying things like “we can’t let this happen again.”
OMG that is crazy…can’t let what happen again…..the creation of one of the most dynamic industries ever?????
Please tell me this isn’t so. I’d love to be wrong about this.