Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :

“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

(05-13-2013 10:48 AM)eaglerock Wrote:  Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :

“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

I agree with the sentiment. Other than providing local news to specific markets and having "boots on the ground" for news stories in said markets, what do the big networks gain by affiliating with, rather than owning their stations? Are the affiliate fees that important in this day and age? Networks have more power now than individual stations, and viewers usually side with the network when preemptions occur

(05-13-2013 10:48 AM)eaglerock Wrote:  Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :

“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

Yup. Thats kind of strange because for years the networks moved away from the owned and operated model. They owned and operated just a handful of markets like New York, Chicago, LA, Washigton DC--the rest were just affiliates. FRankly, from what I can tell, the tv/cable model is going through alot of upeaval right now.

Personally, I think the big money in the future will not be in the delvery system. The content providers are about to be the future big money makers and the delivery systems are just going to be a cheap comodities--often little more than a website.

I think the reason for the local affiliates was preferred is the same reason why most restaurant chains are franchises. The HQ is willing to sacrifice the profits for a guaranteed cut of the revenue, while still maintaining a good deal of control. That way, they make money regardless of whether or not the franchisee does. Plus it limits the exposure of the HQ in liability.

However, this news of Fox buying a local affiliate makes sense in one regard - carriage fees. Here in Orlando, we've already had the Fox and CBS local affiliates each go through a contentious carriage fee battle with the local cable company, and in both cases the negotiations went down to the wire but were able to avoid a blackout. If Fox turns each local affiliate into a corporate station, it would have more leverage with the national cable providers. Just thinking out loud on this, but that could be the case here - to move to a model where local affiliates can band together to get more carriage fees for the network.

(05-13-2013 11:20 AM)CommuterBob Wrote:  I think the reason for the local affiliates was preferred is the same reason why most restaurant chains are franchises. The HQ is willing to sacrifice the profits for a guaranteed cut of the revenue, while still maintaining a good deal of control. That way, they make money regardless of whether or not the franchisee does. Plus it limits the exposure of the HQ in liability.

However, this news of Fox buying a local affiliate makes sense in one regard - carriage fees. Here in Orlando, we've already had the Fox and CBS local affiliates each go through a contentious carriage fee battle with the local cable company, and in both cases the negotiations went down to the wire but were able to avoid a blackout. If Fox turns each local affiliate into a corporate station, it would have more leverage with the national cable providers. Just thinking out loud on this, but that could be the case here - to move to a model where local affiliates can band together to get more carriage fees for the network.

Could also be tied into the spectrum auction. They want to be secure in these markets. If their affiliate were to sell their license back to the government, there could be a scramble to get an affiliate again. Groups are buying up independent stations with the thought of selling the license.

I thought there was a limit on the number of local stations a network could own?

(05-13-2013 11:42 AM)Wolfman Wrote:  I thought there was a limit on the number of local stations a network could own?

i believe the limit is on a per market basis.

(05-13-2013 10:48 AM)eaglerock Wrote:  Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :
MAILTO
“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

NBC did the same thing in the Bay Area. They bought a cheap low power indy station for their NBC affiliate and dumped their longtime local station a few years ago.

CommuterBob - You hit the nail on the head with the carriage fees. That's exactly why networks are buying up affiliates because it's MUCH more profitable to be able to get carriage fees on top of ad revenue than just as revenue alone. That gives credence to the OP's comment about Fox wanting to buy up any stations in markets with NFL teams. If there's one thing that can force carriage agreements quicker than anything else, it's a market missing the games of its home NFL teams. Any cable carrier that doesn't come to an agreement with Fox in the Milwaukee and Green Bay markets, for instance, could quite honestly go out of business (or at least do irreparable harm to its subscriber numbers) if it misses just one Packers game (much less multiple games). What the OP's friend said makes a ton of sense.

Throw in another wrinkle: 5G. It is being reported today that Samsung has made some major breakthrough in 5G technology that will allow wireless data speeds 100x faster than LTE. http://mashable.com/2013/05/13/samsung-5g/ That's gigabit speed, which would basically allow you to download a high def movie in a minute or less.

Cord cutters, over the air digital channels, could be why Fox is doing this.

Also, if you own the affiliates, it is much easier to create a Fox, CBS, NBC, ABC "Light" version for OTA and have all your premium content exclusively for the paid version of the channel.

CBS and FOX hinted towards a model such as this when they were discussing the case against Aereo.

If the Big 4 owned their affiliates, they could justifiy keeping an OTA signal up for news and weather while the quality programming would not be available unless you subscribe with a local video provider. That way local stations would still be able to cover their markets, only they would be getting a much higher subscriber rate to do so.

that would suck for cord cutters like myself

(05-13-2013 02:51 PM)solohawks Wrote:  Also, if you own the affiliates, it is much easier to create a Fox, CBS, NBC, ABC "Light" version for OTA and have all your premium content exclusively for the paid version of the channel.

CBS and FOX hinted towards a model such as this when they were discussing the case against Aereo.

If the Big 4 owned their affiliates, they could justifiy keeping an OTA signal up for news and weather while the quality programming would not be available unless you subscribe with a local video provider. That way local stations would still be able to cover their markets, only they would be getting a much higher subscriber rate to do so.

that would suck for cord cutters like myself

Yeah, I think it's exactly the opposite of what buffdog is saying. This isn't to appease chord cutters at all, but rather a mechanism to (a) stem chord cutting and (b) maximize carriage fees from people that haven't cut the chord. Note that Fox, Disney (ABC) and Comcast (NBC and Telemundo) are all extremely dependent upon their sister cable networks for revenue, too. ESPN alone provides almost as much profit as everything else in the Disney empire combined (which is pretty stunning considering how much they own). Network executives have pretty blatantly stated that there's no way for them to be profitable (or more to the point, as profitable as their shareholders need them to be) under the old pre-cable advertising-only model.

(05-13-2013 03:00 PM)Frank the Tank Wrote:  

(05-13-2013 02:51 PM)solohawks Wrote:  Also, if you own the affiliates, it is much easier to create a Fox, CBS, NBC, ABC "Light" version for OTA and have all your premium content exclusively for the paid version of the channel.

CBS and FOX hinted towards a model such as this when they were discussing the case against Aereo.

If the Big 4 owned their affiliates, they could justifiy keeping an OTA signal up for news and weather while the quality programming would not be available unless you subscribe with a local video provider. That way local stations would still be able to cover their markets, only they would be getting a much higher subscriber rate to do so.

that would suck for cord cutters like myself

Yeah, I think it's exactly the opposite of what buffdog is saying. This isn't to appease chord cutters at all, but rather a mechanism to (a) stem chord cutting and (b) maximize carriage fees from people that haven't cut the chord. Note that Fox, Disney (ABC) and Comcast (NBC and Telemundo) are all extremely dependent upon their sister cable networks for revenue, too. ESPN alone provides almost as much profit as everything else in the Disney empire combined (which is pretty stunning considering how much they own). Network executives have pretty blatantly stated that there's no way for them to be profitable (or more to the point, as profitable as their shareholders need them to be) under the old pre-cable advertising-only model.

yes which is why CBS and FOX threatened to pull their signals OTA. While that is probably never going to happen, if the Big 4 owned their affiliates, it would be much easier for them actually follow through with pulling the signal

(05-13-2013 10:54 AM)solohawks Wrote:  

(05-13-2013 10:48 AM)eaglerock Wrote:  Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :

“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

I agree with the sentiment. Other than providing local news to specific markets and having "boots on the ground" for news stories in said markets, what do the big networks gain by affiliating with, rather than owning their stations? Are the affiliate fees that important in this day and age? Networks have more power now than individual stations, and viewers usually side with the network when preemptions occur

The old cut out the middleman argument. The problem is more often than not the middleman adds value in one form or the other. In this case who's going to sell the local advertising, FOX inc? And in agricultural areas probably the most important employee of a local affiliate is the weatherman. I know that's the case in the Fresno/Visalia market. Meterologists who miss bad freezes make the news and get fired here.

(05-13-2013 04:39 PM)CPslograd Wrote:  

(05-13-2013 10:54 AM)solohawks Wrote:  

(05-13-2013 10:48 AM)eaglerock Wrote:  Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :

“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

I agree with the sentiment. Other than providing local news to specific markets and having "boots on the ground" for news stories in said markets, what do the big networks gain by affiliating with, rather than owning their stations? Are the affiliate fees that important in this day and age? Networks have more power now than individual stations, and viewers usually side with the network when preemptions occur

The old cut out the middleman argument. The problem is more often than not the middleman adds value in one form or the other. In this case who's going to sell the local advertising, FOX inc? And in agricultural areas probably the most important employee of a local affiliate is the weatherman. I know that's the case in the Fresno/Visalia market. Meterologists who miss bad freezes make the news and get fired here.

The way i see it only the owner would change which would allow consolidation in management. Stations would be broken into regions and managed accordingly. Local news would still be provided on a market basis but sales and management of the station would be less localized. Long term this would allow the networks to pick and chose what they allow on the ota signal vs. What is available on the cable and satellite version of the local station

Of course they want a station in every NFL market.

Fox Sports 1 is about to hit the air. Why send a reporter and camera crew to say Charlotte to cover the Panthers, or Bobcats for the news show? Own the local station, send the reporter out to cover the story which being big local news will be fairly long for broadcast TV. Send the content to Fox Sports 1, edit it for a shorter window and broadcast it nationally.

No expense to send some to Charlotte for the story or in the alternative, no one sitting around in Charlotte with no work to do because there are no nationally significant stories to do that day.

Fox gets the content for less cost.

Being a large market, the station likely has a satellite production truck. No need to drive your own truck to Charlotte or lease a local truck. You use the one you already own in Charlotte. They probably use local guys for some of the less critical camera work already now instead of paying them to do the NFL telecast, they tell them to take Monday off and work on Sunday instead keeping them under 40 hours of work.

Throw in the carriage agreement revenue and bundle the local carriage agreement with FX, Fox Movie, Fox Sports, Fox Business, National Geographic, etc, etc, it becomes a juggernaunt come negotiation time.

(05-13-2013 04:53 PM)solohawks Wrote:  

(05-13-2013 04:39 PM)CPslograd Wrote:  

(05-13-2013 10:54 AM)solohawks Wrote:  

(05-13-2013 10:48 AM)eaglerock Wrote:  Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :

“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

I agree with the sentiment. Other than providing local news to specific markets and having "boots on the ground" for news stories in said markets, what do the big networks gain by affiliating with, rather than owning their stations? Are the affiliate fees that important in this day and age? Networks have more power now than individual stations, and viewers usually side with the network when preemptions occur

The old cut out the middleman argument. The problem is more often than not the middleman adds value in one form or the other. In this case who's going to sell the local advertising, FOX inc? And in agricultural areas probably the most important employee of a local affiliate is the weatherman. I know that's the case in the Fresno/Visalia market. Meterologists who miss bad freezes make the news and get fired here.

The way i see it only the owner would change which would allow consolidation in management. Stations would be broken into regions and managed accordingly. Local news would still be provided on a market basis but sales and management of the station would be less localized. Long term this would allow the networks to pick and chose what they allow on the ota signal vs. What is available on the cable and satellite version of the local station

I hear you. And it's a legitimate argument. Just not sure I agree with it. Why would a station in Jacksonville or Fresno being managed better from Miami or Frisco than locally?

(05-13-2013 05:36 PM)CPslograd Wrote:  

(05-13-2013 04:53 PM)solohawks Wrote:  

(05-13-2013 04:39 PM)CPslograd Wrote:  

(05-13-2013 10:54 AM)solohawks Wrote:  

(05-13-2013 10:48 AM)eaglerock Wrote:  Could this be the slow march toward television access revolution?

Disney's ABC to Launch Live Streaming

As content distribution models continue to evolve you have to ask how much value local affiliates actually provide the networks. Talking to a family member that runs a local Fox affiliate and he told me about Fox buying a local station in Charlotte and cutting out the existing affiliate.

Shakeup in Charlotte

He basically said that Fox scooped up a low value property and will not renew its content agreement with the existing company. From the article :

“Losing the affiliation significantly reduces the value of the station. A lot,” said Jim Hefner, who has managed television stations, including WRAL in Raleigh, and now teaches communications at UNC Chapel Hill. “I wouldn’t be surprised if it cut it 40 to 50 percent.”

The network basically gave a local television company a $40 - $50 million devaluation and transferred it to a new corporately owned station. My family member said FOX wants to own stations in every NFL market.

These two stories together have me wondering why a network even needs a local affiliate except for local news production. Why do the networks even bother with local distribution when they could feed directly to cable/satellite providers and cut out the affiliate all together? I feel like the local cable/internet providers have some leverage in that they provide so much of the infrastructure for delivery of the content, however, if I own a local television station, I am seriously shaking in my boots.

I agree with the sentiment. Other than providing local news to specific markets and having "boots on the ground" for news stories in said markets, what do the big networks gain by affiliating with, rather than owning their stations? Are the affiliate fees that important in this day and age? Networks have more power now than individual stations, and viewers usually side with the network when preemptions occur

The old cut out the middleman argument. The problem is more often than not the middleman adds value in one form or the other. In this case who's going to sell the local advertising, FOX inc? And in agricultural areas probably the most important employee of a local affiliate is the weatherman. I know that's the case in the Fresno/Visalia market. Meterologists who miss bad freezes make the news and get fired here.

The way i see it only the owner would change which would allow consolidation in management. Stations would be broken into regions and managed accordingly. Local news would still be provided on a market basis but sales and management of the station would be less localized. Long term this would allow the networks to pick and chose what they allow on the ota signal vs. What is available on the cable and satellite version of the local station

I hear you. And it's a legitimate argument. Just not sure I agree with it. Why would a station in Jacksonville or Fresno being managed better from Miami or Frisco than locally?

Certain operations could be centralized, like sales, program management, etc, but some could not. I see it as a central office for x number of regions creating a programming schedule, negotiating syndication programming, selling advertising, among other things while individual stations still produce their own news with their own anchors. local news is the main reason why each market willl need to retain some form of individuality

(05-13-2013 11:50 AM)solohawks Wrote:  

(05-13-2013 11:42 AM)Wolfman Wrote:  I thought there was a limit on the number of local stations a network could own?

i believe the limit is on a per market basis.

No limit to the number of stations but no one entity can exceed 39% of total US TV households.

I would think a station in all NFL cities would exceed the 39%.