[Corp. Watch] Big Content dinosaurs using monopoly tactics to fight extinction

[Corporation Watch]

Inside the TV Wars

 The battles to watch are about what you can watch

By Megan Tady

(Fairness and Accuracy in Reporting, March 2010) -- Forget Conan vs. Leno, or Olbermann vs. O'Reilly. The real TV fight to watch isn't on television; it's about television itself, and the future of online video -- a fight that pits cable and content companies against consumers.

	Instead of being glued to our favorite shows, we'd be wise to pay attention to the various battles, mergers, and back-room deals going on between big media corporations who are trying desperately to cling to a sinking broadcast media model -- and pull the public down with them.

	Broadcast and cable companies see the writing on the wall, and it no longer spells "media empire." Although a majority of Americans are still watch an average of five hours of TV a day, people are increasingly switching off the tube, and using their computers to watch their favorite shows and find alternative programming.

	Options like TiVo and DVR have given us the blessed ability to skip over ads. Advertising companies are jumping ship, heading over to the Internet or simply not placing ads in a market that can no longer guarantee as many eyeballs.

	Thanks to the Internet's open platform, anyone can create and share video, meaning viewers are no longer tethered to traditional media gatekeepers who decide what's entertaining and who gets the spotlight.

	Consumers are also realizing that they can cancel their hefty cable subscriptions and still watch the 'Daily Show' online -- for free. It's a Pandora's box that the big media corporations are trying to sit on top of, while the public wrenches the lid up from below.

	These new trends threaten the old media model, and broadcast and cable TV companies are hatching various plans to keep their stranglehold on content, control, and profits -- all to the detriment of consumers. If they get their way, we'll likely see higher prices, fewer choices, worse programming and a slow stifling of online video innovation.

	Here are three developments worth paying attention to:

1. Time Warner Cable vs. News Corporation/Fox -- The original deal accepted by the TV broadcasters and their affiliates was that they'd get free use of the public airwaves, and in return they'd give the public free programming, and make their money by interspersing the shows with ads.

	With overall ad spending down in a tight economy, the networks have been looking for a new profit model -- and enviously eyeing the cable companies' ability to get audiences to pay money for the privilege of watching ad-filled TV.

	Accordingly, News Corp's Fox Broadcasting recently demanded that cable company Time Warner Cable (TWC) pay $1 per subscriber in exchange for delivering Fox programming to viewers. In response, TWC threatened to stop airing Fox altogether.

	The squabble erupted into a public showdown, with both sides hoping to pull consumers into their camps (including creating ridiculous websites KeepFoxOn[dot]com and RollOverGetTough[dot]com), and leaving viewers in TWC markets to wonder if they'd ever see 'American Idol' again.

	In early January, the two companies came to a quiet agreement without disclosing the details of the settlement. What does this mean for consumers?

	Cable providers have long negotiated deals to carry channels like ESPN and MTV -- which are largely owned by the same companies that own the broadcast networks -- by paying monthly fees that are passed on to subscribers in ever-increasing cable bills.

	As cable companies start to pay for over-the-air channels as well (programs that cable viewers could get for free just by hooking up an antenna), they don't want to eat those costs. The same day TWC announced its agreement with Fox, it also announced new rate increases.

	This once again raises the question of why viewers can't just pay for the channels they want, rather than being subjected to these types of shenanigans? An 'a la carte' cable system would allow subscribers to pay only for the channels they choose, rather than being used as pawns in corporate negotiations.

	But both the networks and the cable companies enjoy the profits from holding viewers as a captive audience with take-it-or-leave-it bundled cable packages. And an a la carte system would not necessarily prevent a similar situation from arising: Cable operators would still have to pay broadcasters to carry their channels, and those costs would still get passed onto consumers.

	However, at least those extra costs would be for channels that consumers actually choose to purchase -- not for ones they have had foisted on them whether they want them or not.

2. "TV Everywhere" -- The unrelenting cable bill hikes, of course, only increase the attraction of online video. One way to keep consumers paying for TV content is to put barriers around it -- which is exactly what cable, satellite, and phone companies are conspiring to do.

	They've launched a sunny-sounding plan called "TV Everywhere", playing up the idea that consumers will get to watch their favorite shows anywhere they choose -- but only if they continue to pay for their expensive cable TV service.

	Companies like TWC and Comcast are making deals with content companies like TBS and TNT to "Rapunzel" their programming -- that is, lock it behind a paywall that only cable TV subscribers can access. The idea is to force consumers to keep their cable subscriptions if they want to view popular TV programming online.

	This also means that third-party online video companies trying to compete with the cable, satellite, and phone monoliths will be unable to provide popular programming. Not just goodbye Hulu -- goodbye to all the online video applications and original content we haven't even imagined yet.

	In January, on the heels of a report by the media reform organization Free Press that examined TV Everywhere, consumer groups called on Congress and federal anti-trust authorities to investigate the possibly illegal industry collusion happening to make the plan a reality.

	"This is a textbook anti-trust violation," said Marvin Ammori, assistant professor of law at the University of Nebraska and author of the Free Press report. "The old media giants are working together to kill off innovative online competitors, and carve up the market for themselves".

	"TV Everywhere is designed to eliminate competition at a pivotal moment in the history of television," Ammori said. "The anti-trust authorities should not stand by and let the cable cartel crush Internet TV before it gets off the ground."

3. The Comcast/NBC merger -- If you can't beat them, take them over. That seems to be Comcast's approach, as it positions itself to take a controlling stake in NBC Universal, giving it power over a major television network and film studio, while retaining its role as the nation's largest cable company and residential Internet service provider.

	This mega media merger would have disastrous repercussions for the public, giving one company the ability to determine what we watch and how we watch it.

	NBC Universal owns NBC, MSNBC, CNBC, Universal Studios, 27 local television stations and a handful of other properties. With Comcast controlling all of that, plus most cable and Internet service, consumers can expect higher prices, fewer program choices and far less innovation.

	The company will be able to prioritize its own shows, leaving local and independent programs to wither.If TV Everywhere doesn't kill online video, this merger sure will: Comcast can force subscribers to pay for cable in order to watch NBC shows online, and withhold popular content from other online video sources and innovators. 

	But before the companies could fully ink a deal, Congress and the Justice Department announced plans to investigate the proposed merger, and the Senate and House held initial hearings in early February.

	Sen. Herb Kohl (D-Wis.), who chairs the Senate anti-trust committee that announced the hearing on the merger, told the press, "This acquisition will create waves throughout the media and entertainment marketplace, and we don't know where the ripples will end."

Demanding change

	This is not to say that all online TV should be free, or that cable and content companies shouldn't be thinking about how to change with the times to stay in business. But all three of these recent developments show a disturbing trend toward stagnation and status quo.

	Forcing customers to retain their rising cable subscriptions in order to watch online TV, colluding to stifle video competition, and holding tight to old media models in which companies peck at each other for more profit (and pass costs down to consumers) means we're being stuck with a dying dinosaur of a system, and paying a hefty price for it.

	Throughout the 20th century, every democratizing revolution in media was co-opted by corporations that squelched its democratic potential in pursuit of profit. Will the same happen with online video and the Internet?

	Unfortunately, our media monoliths aren't ready to evolve, and they're prepared to sabotage content, creativity and innovation to avoid doing so. To get more information on these issues, visit www.freepress.net, www.consumersunion.org, and www.mediaaccess.org.