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Fox's Web strategy aims to appease cable, satellite distributors

July 27, 2011 | 11:59 am

Fox Broadcasting has made great headway in getting pay-TV distributors such as Time Warner Cable to cough up so-called retransmission consent fees in return for carrying its programming.

Now it's payback time.

The announcement from Fox on Tuesday that it would require consumers to prove they have a subscription with a multichannel video programming distributor (MVPD) -- what we used to call cable operators -- is being done primarily to appease the folks who own the wires that pipe programming into homes. The first big MVPD to sign on with Fox is Dish Network, the satellite broadcaster with 14.2 million subscribers.

In years past, broadcasters such as Fox were not able to get cold, hard cash from distributors. Instead, they launched new cable channels and got paid for them instead. Now with Fox, CBS, ABC and NBC desperate for new revenue streams and a glut of cable channels making the need for new ones nonexistent, the broadcast networks are finally getting compensated for their content.

If the MVPDs are paying broadcasters, then it is only natural that they won't want those same broadcasters to then put that content on the Web for free. In the case of Fox's new approach, content will stay behind a pay wall for eight days after it airs on the network. After that, it will be available to all. Don't be surprised if ultimately that eight-day window goes away too.

This approach is not very different from the one distributors take with cable networks such as USA or FX, and if broadcasters want to start getting paid the same way cable networks do, then they will have to play by the same rules.

Much has been made about what Fox's strategy says about the future of Hulu, the online video site launched by Fox parent News Corp. along with Walt Disney Co. and NBCUniversal. Hulu used to give everything away for free and now is moving toward a pay model.

Hulu was developed not only to give the entertainment industry an online platform; it was also built to reduce piracy even if it meant giving it away for free.

Like Woody Allen's character in his old movie "Take the Money and Run" who keeps getting his glasses broken by bullies until he finally starts breaking them himself when confronted, the entertainment companies figured if they were going to be pirated anyway, they might as well do it themselves.

It is likely that the other broadcast networks will adopt a similar approach to what Fox is doing. Otherwise, they will have a hard time getting those big retransmission consent fees from distributors.

There is, of course, concern about content that was once free online now being available only to those who pay.

"This development is very unfortunate for consumers and ultimately will be self-destructive for the TV industry," said Gigi Sohn, president of media advocacy group Public Knowledge, who added that the move will invite "consumers to go back to stealing content."

However, there is no law that says content that is paid for on one platform must be free on another.

On top of that, Fox and the other broadcast networks are still available free to consumers who don't subscribe to an MVPD. Just make sure to watch when it is on or you will have to wait a week or so to watch it online. There are worse things in life.

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-- Joe Flint

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