I'm back after a short time of attempted rest and relaxation with the family for the holidays. One of those memorable weeks -- the kids came in from out of town, my wife's family converged on New York for their now annual Christmas trek, my niece's roommate showed up from visiting her family in Indiana with an 8 week old puppy that somehow became part of the permanent guest list. Not to mention the stomach flu that affected a bunch of us.
By New Years Day, I was waiting for Chevy Chase to come crashing through my front door.
With all that going on, I also was taking some time to read the trade journals. Here are a few of the headlines I had been reading in just the last couple of days before the clock struck midnight on New Years Eve:
After a few years of this now, it appears that a new tradition has become part of the holiday season for most American TV viewers -- the threat of losing some of their TV channels. And sometimes that threat becomes a reality as Cablevision customers can confirm with the loss of all of the Scripps networks, headlined by Food Network and HGTV.
I spent my usual amount of time worrying about our own multiple year-end contract renewal negotiations in which we were engaged. With some short-term extensions in place, I'm hopeful that Insight customers will avoid such inconveniences. Unfortunately, I can't help worrying about this subject on a more global level, concerned about the skyrocketing cost of television to consumers under our present business model.
It's a model that I now think is broken.
Let's face it. Every year cable and satellite customers receive the bad news that the cost of cable is rising. It's not just us, it's all of our colleagues and competitors in the video distribution business because we're all under the same pressures of skyrocketing programming costs. I understand when customers take out their frustration on us but, to be perfectly honest, we are essentially just passing along some (not even all) of the increases we are experiencing from our programming partners.
In their defense, networks' businesses are under tremendous pressure. The cost of content is rising dramatically and advertising is in a deep slump. To stay relevant and competitive, networks are resistant to simply slashing costs so they seek new revenues from their viewers -- you -- through us.
With new ways to watch television, like online and on demand, networks find themselves in a conundrum. On one hand, they want to experiment with new delivery formats like Hulu or ESPN360. On the other hand, when they do so, they actually decrease the value of the conventional way of delivering their content on their regular networks like FOX, CBS, Discovery, SyFy, and the like. And it's those conventional networks that deliver the vast, vast majority of their revenues. Exposing those revenues to downward pressure is a disastrous breakdown in their business at a time they can least afford it.
Unfortuantely one of main the ways networks maintain their revenue is to be packaged with many other networks. They require us to do that because, as I've written about in the past, research confirms that an important percentage of TV viewing is a result of accidental surfing to a channel. And more viewing means more advertising dollars. That's why cable and satellite operators offer packages that include a fairly large number of networks for one "low" price.
Unfortunately, if the word "low" is removed from that equation, then the primary reason to maintain the current business model simply disappears.
At the dawn of a new decade, perhaps it's time to think about a new way to deliver television.