Thursday, April 11, 2013

When Your Business Model Expires (The End of Broadcast TV Pt II)


I have written before that broadcast TV is not long for this world. They are not going to go away tomorrow, but they are going away. Now, these septagenerian networks are acting their age and asking the world around them to contmplate life without them. Aereo is a service offered in NYC that provides both live and recorded broadcast TV over the internet. Each customer is assigned two antenaes that both capture live TV and and record selected shows. Three copies are made of each for streaming to mobile, wifi, and standard broadcast recievers. Effectively it is like the consumer purchasing their own TV antenae and exercising their public access rights. With such a business model, per two previous court challenges, Aereo can capture broadcast content for their consumers without paying any royalties to the broadcasters.

Per ZDNet, "While advertising was once the life's blood for broadcast TV, over the last few years, cable and satellite operator retransmission fees has become vital to their business... So it is that CBS and Fox are threatening to turn off OTA broadcasts in NYC if Aereo continues to stream broadcast TV without paying retransmission fees. " Of course, they won't do that. Per my earlier blog post, the spectrum that the networks occupy in large metropolitan areas is worth more than those local stations. As the internet continues to grow and the diversity of content sources grows as well, the value of their content will only decline while the value of their spectrum continues to grow. The value of the broadcast spectrum is as the real estate value of a apple orchard nestled in the heart of Manhattan. Someone walks by and picks an apple or two off of a limg that happens to extend over the edge of the property and the land owner react by threatening to cut down the trees and abandon the property.... We can only dream that this would actually happen.

1 comment:

  1. From http://venturebeat.com/2013/04/15/crazy-for-spectrum-verizon-offers-1-5-billion-to-lease-clearwires-airwaves/


    o Verizon wants to lease spectrum from Clearwire, but both Dish and Sprint want to acquire Clearwire.


    o Caught in the middle of acquiring and being acquired, Sprint is being courted by both Softbank and Dish, which is doing all it can to buy a wireless network rather than build one.

    o Everyone has gone just about crazy for wireless spectrum.


    In this environment, will any broadcaster in a major market like NYC abandon spectrum because they can't get royalties from some tiny startup?

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