Retransmission fights between cable companies and station owners is not a rare thing, but networks actually disappearing from the line-up isn’t common at all. It’s been almost a week since Scripps pulled their channels, including Food Network and HGTV, from Cablevision, leaving many New York City customers without access to these stations. Even more remarkable, they’ve chosen to get popular programs, such as Iron Chef, to customers by partnering with local over-the-air stations. Have the catfights between cable and programmers finally reached a level where cable just can’t cut it anymore?
Programmers want to be paid what they think their stations are worth and it’s widely believed that Scripps wasn’t getting compensated fairly. On the flip side, Cablevision doesn’t want to be forced to absorb higher costs, raise rates, or a bit of both on customers that are already getting weary of annual hikes, hikes that often well exceed inflation. The biggest problem here is that the people watching the channels don’t get much of a say in the fights at all, especially without any kind of a la carte pricing. This would normally be another “clash of the titans screws consumers” type story if not for Scripps’ efforts to find alternative ways to deliver their content. New York is a huge market and carries a lot of influential advertisers. They can’t stay off the air for long, so it’s no wonder they went to over-the-air stations for a quick fix.
But what if over-the-air is more than a quick fix? Since the switch to HDTV, a lot of stations leave their subchannels empty as can be. An enterprising programmer could start negotiating for a permanent spot in the over-the-air lineup, bypassing the regular fights with cable and satellite providers entirely. It would also greatly increase the viewership of the network and make advertising more valuable.
There’s also a lot of potential in offering over-the-top video subscription services directly to interested parties. Subscribers could shell out for access to both a live stream of a channel and an on-demand library. It’s not that far-fetched; Netflix and HBO have been rumored to be working on an over-the-top partnership for some time now. Many newer televisions can be programmed with widgets to bring in programming from network-connected sources, so it’s not confined to exotic home theater PCs and geeky set-top boxes. If Scripps thinks scoring $1/mo per subscriber from Cablevision is fair, how would they feel about someone who bypasses the cable company entirely to pay $5/mo for just their networks? It comes tantalizingly close to a la carte pricing as well.
We also can’t ignore how new video technology continues to strain cable systems nationwide. Many stations are carried in “HD”, but that often ends up being an inferior 1080i signal to conserve bandwidth. Some networks show significant motion blur and artifacting from overcompression. Even if cable plants upgrade with MPEG-4 and SDV, they’ve still got a bandwidth crunch on what they currently carry. What happens when channels start taking advantage of, say, 3D programming? Discovery Networks has already said that such programming will require another full analog channel worth of bandwidth, bandwidth that many cable operators just don’t have. Full fiber systems like FIOS can take it, but HFC systems are pretty much hosed. If cable won’t provide the space on their TV network, why not resort to over-the-top and over-the-air instead?
If consumers can easily and cheaply get the content they want on their television sets, they’ll do it. They don’t care if it’s coming from the cable company, straight from the programmer over their Internet connection, or from a team of carrier pigeons. If you tick off the programmers, they are going to find another way to reach viewers. If you tick off customers, they will find another way to the content. Either way, you risk being disintermediated.
Welcome to your dumb pipe future.