Out of Control Policy Blog

The End Of Broadcasting As We Know It?

The Variety link Anthony Randazzo provides below is worth checking out for reasons other than it being yet another prospective bailout case.

In the article, author Michael Schneider puts forth a number of scenarios of how the four broadcast networks might react to shrinking revenues and loss of viewers to other media.

Among the most provocative is the idea that the networks may abandon over-the-air broadcasting and become cable networks. This arrangement, among other things, would provide them with two revenue streams–advertising dollars and subscriber fees.

It's not too far-fetched. The Big Four, or their parent companies, all own cable networks already. A few years back, the networks began experimenting with repeating broadcast content on cable outlets. Earlier this year, NBC Universal moved one of its franchise shows, Law and Order: Criminal Intent (my favorite of the bunch), to USA Network. Slowly but surely, the networks have been losing their cachet as the sole place for top-tier programs. Monk, The Shield and Battlestar Galactica are just three titles that have had enormous success on cable networks in terms of quality and audiences. Now comes news that ESPN won the rights to broadcast the BCS college bowl games beginning in 2011.

The upcoming digital TV conversion in February could be the deciding factor. Right now, it's the networks' local over-the-air broadcast infrastructure that accounts for their ratings margin over cable, a margin that grows slimmer every day nonetheless. As of 2006, 59 percent of U.S. households subscribed to cable service and another 25 percent to satellite. If DTV conversion pushes more consumers to either services (both are digital-ready), as many think it will, network viewership will be further diluted.

What happens when networks decide that supporting local ownership and affiliations is just not worth it? The only question remaining is whether the government would allow them to do it. Given its track record, anything that that the telecom, Internet and media industry might do to respond to market changes gets immediate resistance if it forces departure from a long-time status quo. I recall a few Congressmen grumbled about stopping ABC from shifting Monday Night Football to ESPN. The FCC may get especially agitated because such a move might take it completely out of TV regulation. Hence, the attempts its made over the last few years to extend its regulatory mandate to cable TV may become even more intense. Look for the commission and its Congressional sympathizers to play the same "nostalgia card" is does with copper-based dial tone phone service, expressing sentiments to the effect of how tragic and unthinkable it would be if an institution such as broadcast TV were to disappear. Come to think of it, the whole DTV onslaught, in fact, is a similar example of nostalgia-based regulation. The government is giving up to $80 per household so they can preserve obsolete TV sets. Meanwhile, FCC Chairman Kevin Martin has asked Congress for $20 million more to promote awareness of the DTV change–for programs like a $350,000 sponsorship of a NASCAR race car.


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