Presentation on Sports Telecommunications Issues

      In the last few days there have been several significant developments in the IPTV and sports/entertainment marketplace.  The FCC may treat Over the Top video programmers as multichannel video programming distributors (“MVPDs”) if they offer a stream of content rather than on demand access. If the Commission pursues this initiative ventures like Aereo may achieve legitimacy and the opportunity for a true marketplace test. 

      As an MVPD, Aereo would qualify for a compulsory copyright license, but have to negotiate for the legal right to transmit broadcast television station signals.  This is pretty much the same deal that cable television operators secured in 1984.  Previously community antenna television systems won court cases affirming their right to receive and retransmit broadcast television.  Cable operators agree to pay for the privilege to secure legitimacy, and so will Aereo and ventures like it.

 

      In addition to the HBO initiative to offer its content without requiring an MVPD subscription, the FCC recently eliminate its sports black out rules that prevented MVPD carriage of games that had not sold out 72 hours before broadcast.

 

     You might have interest in a slide presentation on sports telecommunications issues I will present at the Ole Miss Law School; see  http://www.personal.psu.edu/rmf5/Ole%20Miss%20Telecom%20and%20Sports%20Oct.%202014.ppt.

 

HBO and Extreme Disintermediation

      HBO announced today its intention to offer access to its content via the Internet without proof of a cable or satellite television subscription.  See http://time.com/3510434/hbo-online-streaming/.  This decision could trigger more “disintermediation” of cable and satellite television i.e., reduced or eliminated subscriptions as consumers eliminate the intermediaries.

     Until now premium sources of content largely closed ranks with multichannel video programming distributors (“MVPDs”) presumably because they perceived higher returns by jointly sharing a portion of subscription revenues.  By offering direct access, HBO seeks to serve the growing numbers of cord shavers, who have cut down on MVPD programming tiers and monthly subscription rates, cord cutters, who have abandoned their MVPD subscriptions entirely and cord nevers who have solely relied on broadband options.

     MVPDs may soon have reassess the value proposition they offer subscribers, particularly the tiering of content represented by dozens of networks.  Consumers have grown weary of paying hundreds of dollars annually for channels they never watch.  Using the Netflix $9 price point and the average $6.04 monthly rate paid by MVPDs for ESPN, an a la carte option to select and pay for specific content sources may work.  It will take many selected channels to total the bundled tier now costing $50-75 monthly.

     MVPDs have asserted that a bundled option offers greater value and lower prices.  Maybe not.