TGTSTG Bonus Content: Inside the Future of Video

Netflix’s push into original content was largely touched off by a desire to insulate itself from incumbents withholding content from their own potential competitor; by enhancing the value of their service beyond simply redistributing movies and TV shows from other services, they could ensure people would continue subscribing even if the legacy players completely cut them off, and perhaps provide an inducement for new subscribers. It ended up greatly accelerating the transformation of the video landscape – and Netflix had some tricks in its arsenal completely unavailable to the legacy players.

Without being tied to a linear television schedule, Netflix touched off heated debate with its strategy of releasing every episode in each “season” of its shows at once, capitalizing on the “binging” strategy that many of its customers used to catch up on old cable series. That also paid off in benefits for creative freedom, as producers were able to avoid the cheap tricks such as cliffhangers used to keep people coming back to traditional television series. Netflix has also capitalized on its ability to collect data from subscribers to aid in development; it signed off on House of Cards after determining their subscribers included enough fans of Spacey, director David Fincher and political thrillers, including those that ordered the original UK series on which the show was based through its original DVD-by-mail service, as well as enough overlap between those groups, to make it worthwhile, and even targeted its advertising of the series differently to different audiences.

Amazon’s own video service, which it originally treated almost as an afterthought and an add-on to its Prime fast-shipping service but which has begun to emerge as Netflix’s biggest rival, soon followed suit, engaging on its own twist on television’s traditional “pilot season” by posting pilots on its web site for a month or so and using user data and votes to determine what to turn into series. Its focus has largely been on comedies, with its first two original series fitting the mold with Betas and Alpha House, the latter starring John Goodman and Bill Murray. At the 2015 Emmys, its Transparent picked up five nominations on the main show and two wins, including Outstanding Lead Actor in a Comedy Series, joining The Daily Show as the only non-HBO shows to win multiple awards on the main show, while Netflix won only its second main-show award, Outstanding Supporting Actress in a Drama Series for Orange is the New Black. Even Hulu, a joint venture of ABC, NBC, and Fox designed as a legal avenue for people to view their content and that of other traditional television networks online, has made strides into original content not originating on a traditional television network at all.

Since Vince McMahon took over the World Wrestling Federation from his father in the 1980s, the WWE has referred to itself as “sports entertainment”, a term that (among other things) reflects its status as a form of entertainment that looks superficially like sport, but isn’t. By the dawn of the 2010s the WWE wanted to get in on the sports cable boom by launching its own network, going so far as to announce a launch in 2012, but as mentioned in Chapter 7 of the book, cable operators are leery of launching new networks when not forced to by media conglomerates. Cable operators were only willing to pay the WWE 20 cents a subscriber for a standard sports network, and even after making it a premium outlet airing most of the company’s monthly pay-per-views that are the bread and butter of its business, the company still found cable operators wouldn’t do business on terms acceptable to them. Stymied by the cable operators at every turn, the WWE took a new route to the launch of its own network, one befitting its pseudosport status but which if anything placed it ahead of the curve compared to what real sports were doing, riding the wave that was changing the landscape of video distribution, and standing poised to change the nature of the business in a way not seen since McMahon took over the company and proceeded to use cable television and pay-per-view to systematically dismantle the network of regional promotions that had dominated professional wrestling to that point.

At the 2014 Consumer Electronics Show, WWE finally unveiled its plans for its network, which gave its subscribers access to the vast array of content in its back library, which pretty much included every wrestling show that mattered from the 80s and 90s thanks to the numerous promotions whose footage WWE had purchased over the years, plus documentaries on wrestling history and replays of WWE’s main shows Monday Night Raw and Friday Night SmackDown, both on demand and on a linear network that also contained live pre- and post-shows for Raw and SmackDown, first-run airings for secondary shows Superstars and NXT, and the crown jewel of the network, all the company’s monthly pay-per-views, including its biggest event of the year, WrestleMania. All this would be available for $9.99 a month; to put that in perspective, WrestleMania cost $55 in HD while other PPVs cost $45, meaning the network would pay for itself if you otherwise ordered just three PPVs. Oh, and it would be available entirely through the Internet, either through or on streaming devices such as Roku or Apple TV. WWE felt they were uniquely positioned to blaze a trail in this space; its data suggest WWE fans consume five times more content online than average and are twice as likely to own a streaming device, with 60% voicing their willingness to watch a WWE Network on there.

The project got off to a rocky start. Although cable operators would seemingly still make more money by airing WWE’s pay-per-views than not (McMahon called it “found money for them”), DirecTV announced it was dropping all PPVs while Dish Network decided it would decide whether or not to carry each PPV on a case-by-case basis. Needing a million subscriptions to break even, the company seemed to plateau at about two-thirds of that number, which, combined with a new television deal with USA and SyFy for Raw and SmackDown that fell far short of expectations given the media landscape, sent share prices tumbling. In October, the company dropped a requirement for a six-month commitment. But by the dawn of 2015, the network crossed the million-subscriber threshold and seemed poised to stay there even after a controversial finish to the Royal Rumble event caused #CancelWWENetwork to trend on Twitter and after WrestleMania had come and gone.

For outlets that might otherwise attempt to collect subscription money from cable operators, “over-the-top” platforms such as WWE Network are looking like increasingly viable approaches. Upon leaving Fox News in 2011, conservative political commentator Glenn Beck elected to start his own streaming news network anchored by a continuation of his TV show and a simulcast of his radio show, initially called “GBTV” but later renamed TheBlaze. It proved popular enough to earn a slot on Dish Network and other pay-TV providers the following year, while still maintaining 300,000 customers paying $9.99 a month to stream it directly. YouTube introduced a series of sports-oriented channels carrying niche content in 2011. The UFC launched the “Fight Pass” network carrying not only cards not shown on pay-per-view or as part of its contract with Fox, but even cards from other MMA promotions. The NFL launched its own streaming service, NFL Now, in 2014, boasting a high degree of customization based on customers’ favorite teams, delivering relevant news, highlights, archival footage, and other content. Several other entities, including Sports Illustrated and the NHL, came together to launch 120 Sports, delivering fast-paced news, highlights, and commentary in 120 seconds or less. Even major media companies have taken the plunge. In November 2014 CBS launched CBSN, a 24-hour news network with 15 hours of live anchored coverage per weekday, with the ability to start watching at any point in each hour, and additional content from other CBS properties.

Nor does turning to these streaming services have to mean watching on the tiny screen of a smartphone, tablet, or even laptop. A booming industry of devices makes it possible to stream content from all over the Web to the same television set you might otherwise hook up to a cable box, including “smart TVs” that can connect to online sources without going through any sort of intermediary at all, and indeed most streaming services catering to cord-cutters tend to focus more on these devices than on more general-purpose computing devices. Roku has been the longtime leader in this field, making devices since 2008, with Apple and Google joining them with their own platforms and Amazon jumping into the field with Fire TV in 2014. But the most popular such devices might be game consoles from Microsoft, Sony, and Nintendo; as they have added online capabilities while streaming boxes incorporate the ability to play games, the line between the two has become decidedly blurred and might be in the process of vanishing entirely. Also in 2014, Google shook up the field with the Chromecast, a small device resembling a USB stick with most of the same functionality of existing streaming boxes plus “casting” technology that allows one to access a video on their phone and “cast” it to the device. Roku and Amazon have already since introduced their own similar streaming sticks.

More than any streaming service, it’s this that most exemplifies the change coming over the living room and the existential threat it poses to cable TV as we know it today. Soon your entire entertainment experience will be controlled by a single device that unites video player, game console, and potentially, even desktop computer, and if the FCC gets its way, it’ll serve as your cable box too – one device that serves as the gateway to the entire universe of visual entertainment, with traditional cable TV at best one source of it, potentially presented to the consumer as many sources. Content providers are already maneuvering to take full advantage of this revolution, but it’s an open question how or whether legacy cable and broadcast programmers will adjust to it, or whether they’ll find themselves swept up in its wake.

Breaking down the new Thursday Night Football deal

Earlier this month the NFL announced a two-year deal with CBS and NBC to split the Thursday Night Football package, pocketing a cool $900 million in the process. CBS will have some games in the early part of the season, with NBC having the later part and NFL Network having some exclusives sprinkled between both parts. The NFL also still wants to sell the TNF package to an over-the-top outlet.

That’s a huge chunk of change, and it’s easy to look at that price and go “what sports rights bubble?” Certainly it looks like CBS and NBC don’t agree with Rich Greenfield that the massive amounts ESPN has paid for sports rights are rooted in assumptions that no longer hold and will end up undermining it, at least within the next two years. As I explain in the book, cord-cutting should actually make sports rights even more valuable, and in fact the forces driving it have arguably been underlying the sports rights boom all along, as one of the few pieces of content guaranteed to keep people watching linear television and keep them signed up for cable. If you look at this deal, you’re thinking it’s a good sign for the Big Ten’s ability to collect a hefty chunk of change from ESPN and Fox (not coincidentally two of the three outfits that didn’t get in on this deal).

That said, I do have to wonder if this is actually that great a deal for CBS and NBC. Analysts at Barclays looked at ad sales vs. rights fees and concluded that CBS lost money on Thursday Night Football last year, though they expect CBS to come out slightly ahead this year with the lower game load; throwing in production costs, Morgan Stanley thinks CBS lost $200 million on the deal and both networks could lose over $100 million a year under the new deal. Of course, ad sales aren’t the only benefit CBS gets from TNF; more NFL games increases the retransmission-consent value of CBS stations, high-rated NFL games increase the lead-in for local news, and CBS gets to use TNF as a platform to promote its other shows. On top of that, under normal circumstances networks do, in fact, make money off ads alone from NFL games. But CBS had to share its Thursday night package with NFL Network, meaning it likely had to share ad revenue with NFLN as well, and might have to share it with whatever OTT partner the NFL gets on board. That also means that, in theory, any retrans benefit from TNF games would be limited if cable operators could still pick them up off NFL Network, though I wouldn’t be surprised if the NFL would require cable operators to pick up CBS to get TNF games on NFL Network.

But selling games to an OTT partner could cripple the amount of money all three networks can get off TNF games from cable operators, even the NFLN-“exclusive” games their deals with cable operators require them to keep. The best-case scenario is that games are sold to Verizon or AT&T under similar terms as Verizon’s existing smartphone deal, where you have to sign up to their existing services to watch the games, meaning subscribers to rival carriers would have to watch on one of the linear networks. The next-best case is if the games are sold to a subscription service, meaning if you aren’t signed up for that service already there’s value in finding a service that carries one of the linear networks or getting an antenna, but by all accounts that’s unlikely. Where there could be a real problem is if the games are sold to an outfit like Yahoo under similar terms as their London game last year, where the stream is free to everyone. Besides making it more likely that Yahoo would want a cut of ad revenue, that means TNF games provide little to no incentive for cable operators to pay more for CBS, NBC, or NFL Network than they otherwise would, with the main incentive to want any of the networks being to avoid seeing Tweets that are as much as a minute ahead of the online stream. It also means some of the suggestions I’ve seen, where the cockamamie scheme where some games air on CBS, some NBC, and some NFL Network leads people to just watch all the games on NFLN, might instead lead people to watch it on the OTT outlet, limiting the amount that any of the networks benefit from the games.

If I’m CBS I’m not sure I agree to this deal without at least securing rights to the games for CBS All Access (and with NBC getting the second half of the season I’d want to find out how much to pay them to get the rights to the season-opening kickoff game, reducing the perception that the balance of Thursday games is tilted towards NBC with that and the Thanksgiving game); if I’m NBC I think long and hard about becoming a party to a scheme that could accelerate the growth of streaming video, potentially at the expense of my parent Comcast’s cable business. I certainly don’t think five games apiece, plus producing four more for NFL Network, with all the games airing on NFLN and an OTT outlet, is worth anything near what CBS and NBC are paying for them.

The NFL is talking about still having an opportunity to “grow the profile” of the Thursday night package, but if the NFL has to come up with this confusing scheme to split the games between two different broadcast networks and sell them to an over-the-top outlet, I think they’re bumping up against the limit of how much value the Thursday night games actually have, and I think this probably puts the nail in the coffin for the notion that the NFL will eventually sell part of the Thursday night package to a cable network like FS1 or NBCSN. The NFL is running up against the inherent limits of the Thursday night timeslot, the questionable quality of the games played on short rest and the need to give every team exactly one game played on short rest, meaning you inevitably have to put the Titans and Jaguars on at some point and you’re limited in how much you can showcase the marquee teams. NBC is salivating over the late-season games they get to show, but the lack of flexible scheduling means they could easily get shafted with dog games involving dog teams; at least early in the season you can put on name teams and people will watch before they know just how good or bad they actually are. (Of course, expect NBC to get the Cowboys the week after Thanksgiving every year, which is guaranteed to pop a rating no matter how much they or their opponents suck.)

Honestly, I wouldn’t be surprised if Thursday Night Football doesn’t last beyond the end of the current long-term deals in 2022. If selling it to a cable sports network is a dead letter – and Fox, NBC, and ESPN are all likely going to be badly hurting from their hefty investments in their cable sports networks by then – and there isn’t the oversupply of linear TV space there is now, then given the constraints on the product TNF really only makes sense as long as the NFL still has its own cable network, and while you’d think if any outfit could justify its own network, even in a future age of linear television contraction and a la carte, it would be the NFL, the limited live game inventory it would have would make it a tough proposition (something that’s not necessarily the case with college conferences like the Big Ten or SEC), especially given the pros and cons of continuing to sell some of it to another outlet. Depending on how viable an option ESPN is looking, I could see the NFL trying to monetize Monday Night Football in much the way they’ve been doing with Thursday nights, where they can offer more consistent, better matchups and better quality of play than what they can offer the networks and over-the-top outlets that have been bidding on TNF. It’s doubtful they can get the kind of money ESPN pays them for MNF, but then it’s doubtful ESPN itself will be able to pay that much by then.

The realities of trying to turn Thursday Night Football into an institution on par with MNF and SNF are coming home to roost, and while CBS, NBC, and an over-the-top outlet to be named later may be allowing the NFL to keep deluding itself otherwise for now, it may be about to bite all of them in the ass.

THE GAME TO SHOW THE GAMES now available in paperback!

After two months being available only for Kindle, my book, The Game to Show the Games, is now available in paperback from Amazon, for those who still prefer having their books on paper. A link to the Amazon page has been added to the book page on this site, and once Barnes and Noble begins offering it on their site I’ll add a link there too; it should also start to become available on various other online book retailers over the next few days. (Don’t bother looking for it in physical bookstores unless it really takes off, though.)

I’ve also added a cover image to the sidebar that will link to the book page, and as soon as I have suitable images I’m going to add links to buy the book to the ad spaces so the bottom one isn’t plugging a webcomic that’s been defunct and inaccessible for years. I also took the opportunity to finally get rid of that outdated Twitter widget hat hasn’t been supported for years, but the replacement had to go onto the right sidebar underneath the blog archive elements because Twitter currently supports only one style of widget and it can’t be narrower than 180 pixels.

2016 Pro Football Hall of Fame Watch – The Top 50 Active Resumes

Surefire first-ballot players:

  1. QB Peyton Manning
  2. QB Tom Brady

These two stand far and away on top of the pack, and their lead has become a yawning chasm. If this is the end of the line for Manning, it will leave Brady standing alone in this category, and it may take at least a few years for anyone else to join him…

Borderline first-ballot players:

  1. RB Adrian Peterson
  2. QB Drew Brees
  3. QB Aaron Rodgers
  4. DT Kevin Williams

…by which I mean, maybe one or two more years of Adrian Peterson performing as he has. His career is all the more remarkable for how short most running back careers have been recently. In general, this year marks the point at which the current generation of players officially grabbed the brass ring and started positioning themselves for potential first-ballot induction. As such, the list is going to get a bit awkward the next few years until the All-Decade Team of the 2010s is named, which’ll be before any of the names on this year’s list are up for consideration; there’s considerable evidence the Hall of Fame voters weight All-Decade teams fairly heavily when deciding who to induct, with All-Decade players ending up inducted more often than not. As such, there’s increasingly going to be a divide between players who’ve played long enough to make the 2000s All-Decade Team and those who haven’t and are waiting for the 2010s Team to be named. I’m assuming Peterson and Rodgers are making that team, but the divide really makes itself felt in the next category; starting next year I may attempt to start predicting who makes the All-Decade Team and re-sort the list accordingly.

Surefire Hall of Famers:

  1. TE Antonio Gates
  2. CB Charles Woodson
  3. WR Calvin Johnson
  4. DE Julius Peppers
  5. CB Darrelle Revis
  6. TE Jason Witten
  7. LB DeMarcus Ware
  8. DE Dwight Freeney
  9. WR Andre Johnson

I’ve seen talk that Charles Woodson not only might go in first ballot, but might be in the running for best cornerback ever. Yeah, no. Even with Champ Bailey retiring a couple years ago, it’s only this year he even became the best active defensive back by resume, as his resume remains comparable to Troy Polamalu (Woodson has one more Pro Bowl selection with his swan song this year, but the AP at least named Polamalu a first-team All-Pro an additional time). Polamalu should get in the Hall of Fame in his first few years on the ballot and the same is true for Woodson, but best-ever they are not. As for Calvin Johnson and his own retirement talk, he should get into the Hall without too much delay (realistically I think his resume is on par with Gates), but the shortness of his career is likely to cost him a first-ballot spot.

Borderline Hall of Famers:

  1. WR Larry Fitzgerald
  2. WR Steve Smith
  3. WR Wes Welker
  4. DE Jared Allen
  5. RB Jamaal Charles
  6. RB LeSean McCoy
  7. RB Arian Foster
  8. OT Joe Thomas
  9. DE J.J. Watt
  10. TE Rob Gronkowski
  11. S Earl Thomas
  12. QB Ben Roethlisberger
  13. CB Patrick Peterson
  14. RB Marshawn Lynch
  15. DE Haloti Ngata
  16. WR Antonio Brown
  17. QB Eli Manning
  18. WR Brandon Marshall
  19. QB Michael Vick
  20. P Shane Lechler
  21. OT Jahri Evans
  22. DT Ndamukong Suh
  23. QB Philip Rivers
  24. KR Devin Hester
  25. K Adam Vinatieri

Because this list assesses players’ resumes if they retired today, it’s only this year that J.J. Watt, who may well prove to be one of the greatest defensive players ever, and Rob Gronkowski amass resumes good enough to even have a chance at the Hall. See the Class of 2020 list to see what can easily happen to players with Hall of Fame-caliber talent that cut their careers too short. Vinatieri remains an interesting situation: very few non-quarterbacks have been propelled into the Hall of Fame on the strength of their Super Bowls… but Vinatieri could be one of them, despite being a kicker, a position with only one other representative in the Hall at all.

Need work:

  • RB Chris Johnson
  • LB Navorro Bowman
  • T Jason Peters
  • S Eric Weddle
  • S Eric Berry
  • DT Gerald McCoy

A couple other players have similar resumes to McCoy and Doug Martin, but those two actually improved their resumes this year, so I can avoid having anyone “back” onto the list just because of players retiring. Probably I should have just thrown on one or two special-teams players, maybe a fullback like Mike Tolbert.

Young stars (exclamation marks indicate players with resumes already strong enough to be among the top 50):

  • LB Von Miller (5th year)
  • WR A.J. Green (5th year)
  • CB Richard Sherman (5th year)!
  • RB DeMarco Murray (5th year)
  • LB Justin Houston (5th year)
  • QB Cam Newton (5th year)!
  • WR Julio Jones (5th year)!
  • QB Russell Wilson (4th year)
  • WR Josh Gordon (4th year)
  • LB Luke Kuechly (4th year)
  • RB Doug Martin (4th year)!
  • LB Bobby Wagner (4th year)
  • RB Le’Veon Bell (3rd year)
  • C Travis Frederick (3rd year)
  • WR Odell Beckham Jr. (2nd year)
  • G Zack Martin (2nd year)
  • DT Aaron Donald (2nd year)
  • DE Khalil Mack (2nd year)
  • RB Todd Gurley (Rookie)
  • CB Marcus Peters (Rookie)

Exactly two rookies made the Pro Bowl in their own right this year, and they also just so happened to be Offensive and Defensive Rookies of the Year.

Players to watch for the Class of 2020:

  • S Troy Polamalu
  • WR Reggie Wayne
  • LB Patrick Willis
  • DE John Abraham
  • RB Maurice Jones-Drew

After last year’s potentially three-first-ballot class, this year should provide some breathing room for players that have been waiting to get in. I’m not sure Polamalu has a good enough resume (or a long enough career) to get in first ballot, but he should get in within a couple of years, so any reprieve is short-lived. No one else is assured of getting in, although Willis’ own short career will make a very interesting case study, as he was shaping up to be a surefire Hall of Famer before his abrupt retirement but now looks decidedly on the bubble. Perhaps more than anyone else, he epitomizes why Rob Gronkowski and J.J. Watt only this year became even borderline Hall of Famers. (I’m not actually sure Wayne will be eligible this year, as he remained on the Patriots’ roster into September before being cut. It’s always fun to see where the Hall of Fame considers a player’s career to have “actually” ended in these borderline situations where a player never played, and wasn’t on a roster during the actual season, but was on the roster for just long enough for you to make an argument either way.)

Does ESPN Have a Fixed Cost Problem?

Recently ESPN President John Skipper was interviewed by the Wall Street Journal about the numerous challenges facing the company in the age of cord-cutting, as became apparent over the past year. Here’s a telling excerpt from the interview:

WSJ: A lot of your sports rights deals are locked in for years. Given how pay TV is changing, how will that affect your negotiations with the leagues?

Mr. Skipper: It’s too soon to predict. Sports is a growth business. I think it would be foolish to predict that sports rights (prices) will decline. We hold more sports rights than the rest of the sports media combined. All we have to do is use all those rights to create continuing growth in revenue to cover them. To date, we’ve demonstrated that we’ve been able to do so, and I’m highly confident we will continue.

WSJ: Do you have any wiggle room with your league partners to adjust payments if things change and cord-cutting really picks up? Would you want that flexibility?

Mr. Skipper: We don’t have any contingent payment plans. We have rights agreements with defined payments. It’s probably not practical. I wouldn’t particularly entertain it if people came to me and said, “Gee, I’d like to do a deal with you, but if the economy’s worse I’d like to pay you less.”

Of course, there’s a big difference between a sluggish economy and cord-cutting: a sluggish economy is, in theory, a temporary phenomenon. Cord-cutting is a permanent shift in the way we consume our entertainment, and while declaring it a fad that’ll end once my generation has kids might be a good way to try and delude Wall Street into keeping investing into the business, deluding yourself into thinking that to the point of making long-term decisions based on that assumption would seem to be suicide. Indeed, BTIG analyst Rich Greenfield, perhaps the loudest voice on Wall Street casting doubt on ESPN’s long-term viability in the age of cord-cutting, identifies this as the single biggest fatal flaw that could come back to bite ESPN later:

Most of these sports, of course, ESPN “overpaid” for under a very different set of assumptions, that of the sports TV wars and the need and desire to keep valuable sports out of the hands of Fox and Comcast (the latter of which Greenfield has acknowledged elsewhere). In retrospect of course, the best approach for ESPN might have been to let Fox and Comcast have valuable sports to shore up the cable bundle, but to some extent they did that, particularly by tag-teaming with Fox on a number of rights. In the case of the NBA deal, Adam Silver quoted ESPN a price that Fox and Comcast were willing to pay, and ESPN could either pay that price, or wait for the exclusive negotiation window to end, at which point either the price would go up, Fox or Comcast would steal the rights away from ESPN, or both. Perhaps in retrospect ESPN should have let Fox or Comcast steal the rights and have them take the financial hit, but that would mean ESPN wouldn’t be able to sell NBA games (its most valuable non-football content) as part of any hypothetical future direct-to-consumer offering, and more to the point, Fox or Comcast would. As much as ESPN might suffer from accelerated cord-cutting, as it stands they’re much more able to monetize the rights they do have than Fox or Comcast, and those two companies might be poised to suffer much more (especially Fox), though their regional sports network interests might help offset that. It’s worth noting that ESPN consciously left a number of potential rights deals on the table, most notably NASCAR, in order to save up for an NBA deal, so it’s not like ESPN had the right to spend like Midas before; after all, even before cord-cutting became a household word, Disney was vigorously fighting a la carte bills in Congress. (And while ESPN and the NBA haven’t launched the OTT service that was part of the deal yet, its very inclusion as part of the deal suggests ESPN has taken at least some steps to shore up its empire against cord-cutting.)

Skipper argues that his company’s deals allow them to increase revenue, both by selling ads against the content and by using it as justification to raise subscriber fees further. So long as the cable bundle continues to exist, that’s true, even in the face of cord-cutting: the more audiences that find indispensable content locked up with ESPN, and thus find ESPN itself indispensable, the more indispensable ESPN is to cable operators, the more indispensable the cable bundle as a whole is to people that might otherwise consider cord-cutting, and the more audiences find value in any offering that has ESPN in it. Of course, I would argue that because of how much non-sports fans have been subsidizing sports networks, sports networks are probably overvalued compared to if they had to stand and fall on their own merits, so if the cable bundle completely broke up ESPN’s revenues would have no choice but to decline – the commonly-quoted $30 a month ESPN would supposedly have to charge to break even on an over-the-top offering is based on how many people would subscribe to ESPN in an a la carte world in the abstract, divorced from price, or at best at the $8 a month price ESPN and ESPN2 charge cable operators now, without regard for how many people wouldn’t be able to afford it at $30 a month. But realistically, the cable bundle isn’t going to break up tomorrow; Dave Warner estimates that, given ESPN’s continued carriage fee hikes, it wouldn’t even start making less money than the prior year until at least another year from now, and those losses wouldn’t become catastrophic until 2019 or 2020 at the earliest. By that point it’ll be time to renegotiate the Major League Baseball and Monday Night Football deals, allowing those deals, at least, to be brought up to date with the new reality, if ESPN’s able and willing to keep them at all, though it’ll be stuck with the NBA and college sports deals worth hundreds of millions of dollars a year until mid-decade and running the SEC Network into the 2030s.

But even if cord-cutting reaches the point that ESPN finds itself caught between deals signed under a very different environment and a present-day environment that doesn’t allow them to monetize it, there’s one more factor that could allow them to renegotiate many of those deals or may have justified the negotiation of contingency plans that go beyond a “sluggish economy”: sports entities would be just as upset about a contracting ESPN as ESPN is, even if they’d still be collecting the same money.

The College Football Playoff is the example I always bring up on this front. When the BCS first signed its blockbuster deal moving the Rose Bowl and college football’s national championship to cable in 2008, they made a lot of noise about how people wouldn’t be deprived of the games because ESPN was in the vast majority of homes and those homes it wasn’t in tended to fall outside of valuable advertising demographics, were disproportionately less likely to watch the games to begin with, or otherwise wouldn’t represent any big loss for ESPN and the BCS. That’s not a given anymore; my generation lies right at the heart of the cord-cutting movement, and as I alluded to earlier, not every sports fan, even those that find ESPN indispensable, will be able to pay $30 a month for it. I have always said that no major sports competition wants to go the way of boxing, with all the fights anyone would care about on premium cable and pay-per-view, and $30-a-month a la carte ESPN would be even more of a luxury than HBO, indeed would cost twice as much. There’s no way college football would want its national championship hitched to that wagon (assuming they actually want the playoff to succeed); the entire sport’s mindshare would plummet.

So if cord-cutting started accelerating to the point where ESPN is in only a third of households, I would imagine the CFP would want the playoff moved to ABC, and in return ESPN would be able to win lower rights-fee payments. Similarly, the NBA could win more regular-season and playoff games on ABC in exchange for lower rights fees, and the same might go for college conferences although there would be more restrictions there (in football, most of them are probably already on ABC as much as they realistically can be, except for the SEC which has exclusivity with CBS). This process is already starting: witness the move to simulcast this year’s NFL Wild Card playoff game on ABC, as well as the much-hyped move of regular-season NBA games to ABC Saturday Primetime, even if they’re coming out of ABC’s Sunday slate at the moment.

Of course, this depends heavily on broadcasting itself continuing to remain viable, and I’m not sure it should continue to be necessarily free if it does. Still, the fact remains that the cord-cutting revolution is going to put a big hurt on all media companies, and ESPN might be able to weather it better than most, and have a better chance of getting out from under the rights-fee payments Greenfield worries about than the text of the contracts might suggest. A big bellwether is going to be the Big Ten negotiations that should wrap up sometime this year; the most likely outcome seems to be ESPN and Fox sharing the rights, and for ESPN to leave them on the table entirely would effectively be admitting that Greenfield is right and ESPN has paid too much for sports rights overall and is now trying to ratchet them down quickly in the age of cord-cutting, to the point of letting competitors have a property as valuable as the Big Ten, which may be second only to the SEC among college conferences. At the same time, it would be foolish to simply ignore cord-cutting and the prospects for its continuation when valuing the Big Ten rights, so if ESPN and Fox pay in the same vicinity of what they would have paid in the pre-cord cutting era, it might be less a mistake in and of itself, as Greenfield might see it, as a sign that ESPN still believes its rights portfolio will prove to be worth what they’ve paid for it even if cord-cutting accelerates. On the other hand, if they pay substantially less but still leave the Big Ten walking away with a decent chunk of change we’ll get a better sense of the real value of sports rights when they aren’t inflated quite so much by the cable bundle. But if they pay a fraction of what might otherwise have been expected, maybe even behind inflation compared to ESPN’s existing deal and what Fox is paying for the conference’s football championship game? That’s when it’ll be time to panic, both regarding the struggles ahead for ESPN and the house of cards (no pun intended) all of sports has come to be built on.

How Poor Ownership Rules Will Help the Incentive Auction Cripple Broadcasting

I have argued in my comments with the FCC (especially here) that the commission should, at the very least, hold off on the broadcast incentive auctions until it completes its ownership review and determines what the rules will be for the post-auction landscape; the fact that the auction process is currently slated to begin at the end of March, but the FCC doesn’t plan to wrap up its ownership review until June, is to me just one more piece of evidence that the FCC is trying to shove the auction down broadcasting’s throat before people catch on to just how valuable it can still be. Recently I saw something that puts in stark relief just why this is so, and makes me realize just how much the incentive auction could terminally cripple broadcasting.

A week ago the RabbitEars site I’ve written guest posts for in the past posted a rundown of what companies and stations have signaled their participation in the auction. Most of it was information available elsewhere and much of it I had seen earlier piecemeal, but it was still stunning to see it all in one place. Three of the four major broadcast networks have plans to participate in the auction to some degree, and most of the other largest station owners are at least considering either a channel-share or full-fledged participation. I might have been willing to accept the incentive auction if the only stations surrendering spectrum turned out to be a small handful of operations that weren’t doing much of worth anyway, causing the whole thing to come crashing down and forcing the FCC to reassess, but that possibility now looks decidedly remote.

One thing many of the big station group owners considering participating have in common are their heavy interests in duopolies. In many large markets, CBS owns both its own station and a CW or independent station; Fox owns its own station and a MyNetworkTV station; and NBC owns its own station and a Telemundo station. Any of these companies could easily surrender one station and effectively keep running it on the signal of the other station, as could Univision in markets where it owns both its own station and a UniMas station, or companies like Sinclair that could effectively make its “virtual duopolies” legal by merging them into a single signal, something that’s already started. Indeed, a company like Sinclair could, completely legally, control four times the amount of spectrum as a smaller outfit that elected to channel-share; the only downside would be that they would have must-carry rights for only two of them, but if they had valuable enough content on the channels that would mean little as they could pressure cable operators to carry them anyway. Big station group owners, in other words, could come away from the auction with that much more of an advantage than they have now.

Since a single station could either take up an entire channel’s width or share with another station, and because wireless providers are going to be voraciously gobbling up as much spectrum as they can to the point of potentially taking different amounts of spectrum in different markets, the effect would be to “lock in” the competitive landscape that’s in place now, regardless of how priorities might change, if for example the FCC decides the post-auction landscape should be governed by ownership rules based on the amount of spectrum controlled instead of the number of “stations”, or if Congress passes legislation that has the effect of weaning broadcasting off its dependence on retransmission consent and thus makes it more viable for a small station owner to exist and compete with larger owners. But by that point, the structure of how spectrum is divvied up will effectively favor whoever owns multiple stations, for whatever reason, right now, effectively making it impossible to break up today’s oligopolies; if someone decides they have a better programming concept than what’s on the air right now (and our vision for broadcasting allows it), it’s not clear there will be any room to launch a new station, and I doubt a station that’s taking up a full channel’s width can be subdivided and turned into a channel-share operation even if the incumbent owner is willing to do so and even if the programming in the leftover space used to be a separate station to begin with – at best, the new owner might find themselves having to rent the space from the old. Even if the current consolidation trend continues, it’s going to be much harder to make it work after the auction, when existing station combinations are neatly combined onto a single signal, but potential new duopolies could be on very different parts of spectrum or even sharing with different stations, and it may be impossible to turn one signal in and reap the benefits from owning one licence.

That’s just one way the incentive auction could make it much harder for broadcasting to compete and claim its full value should it realize just what that value is; it’s not clear broadcasting ends up being viable at all given the interference potential of the variable band plan and the effect the lack of flexibility will have on broadcasting’s ability to improve its reach that’s currently based on unrealistic expectations of what equipment people would be willing to acquire and what the future use of broadcasting actually is. It is one of the bigger ways, however. Perhaps more than anything else, it contributes to the sense that as far as the FCC and most parties that aren’t broadcasters themselves are concerned, the incentive auction is about carving out a little niche for those legacy fossils that aren’t willing to take our gracious check to cease their wasteful, spectrum-hogging, outdated activities, allowing them to keep going as long as they want to and as long as it remains viable, but with the expectation that it’s only a matter of time before they end up bailing out too. If this assumption turns out to be wrong, if those legacy fossils turn out to be performing a critical service that the auction has left underprepared and inefficiently organized and that people that might not have given it a second look or even gotten out of the business now want a part of, it’s going to be very difficult if not impossible to correct for it. The FCC has promoted the auction by proclaiming it a once-in-a-lifetime opportunity, that there will not be another auction once this one is over. But that also makes it the FCC’s one and only chance to set the post-auction landscape, and right now they look set to make a number of huge mistakes on that front it’ll be impossible to correct later – and I fear it may already be too late to convince them of such.

The Sling TV-style service ESPN really fears (and why Sling TV has what it has)

According to SNL Kagan estimates from last spring (listed here), here are the most expensive channels on cable (not counting broadcast retransmission fees or regional sports networks):

  1. ESPN ($6.61)
  2. TNT ($1.65)
  3. Disney Channel ($1.34)
  4. NFL Network ($1.31)
  5. Fox News ($1.12)
  6. USA Network ($1.00)
  7. FS1 ($.99)
  8. TBS ($.85)
  9. ESPN2 ($.83)
  10. Nickelodeon ($.73)

The heavy presence of sports channels on the list, topped by ESPN having several times the figure of the next most expensive network, may be the most obvious thing that jumps out at you, but there’s something else remarkable about this list. I mention in the book that the vast majority of channels on your cable lineup are controlled by nine companies, but seven of the ten most expensive networks are controlled by just three companies: Disney, Fox, and Time Warner, who also represent two of the four major broadcast networks and the largest owner of regional sports networks. An eighth, NFL Network, isn’t controlled by any of the Big Nine. The remaining six members of the Big Nine account for just two of the ten most expensive networks, USA and Nickelodeon. Add Comcast to that group of three and you have three major broadcast networks, most of the country’s regional sports networks, and eight of the top nine most expensive national cable networks, not to mention HBO, with Showtime owned by the remaining broadcast network.

Last month I suggested that ESPN actually benefits from having as many companies as possible invested in sports, keeping them tied to the cable bundle and preventing any attempt to defect from it from being much use for sports fans. But only those four companies – Disney, Comcast, Fox, and Time Warner – have any serious investment in sports on cable, with CBS the only other Big Nine member with any stateside presence in sports at all. I talk about the Big Nine, but the reality is there’s a divide within the Big Nine between the Sports Four-and-a-Half – which as it happens, make up the most valuable members of the Big Nine according to the Fortune 500, in rough order of the level of their investment in sports aside from Comcast being propelled by its cable-operator business ahead of the rest – and the remaining members with no presence in sports. What would happen if those four companies – Viacom, Discovery, AMC, and Scripps – decided to defect from the cable bundle themselves, on their own or individually?

Let’s do some back-of-the-napkin math. Let’s start by assuming that the average American sees $50 of their cable bill go towards programming costs. Just getting rid of every network that’s not Nickelodeon on the list above takes out $15.70 of that total. Take out another 87 cents for ESPNU, NBCSN, and Golf Channel (based on numbers here). Take out another $5 for retransmission fees for broadcast stations, and another $3 for regional sports networks. Take out another $2.28 for another seven networks listed here, and around 10-20 cents for each additional network owned by one of these five companies in over 75 million households, so about 14-ish – let’s say that comes out to $2.15 so we get a nice, round number of dollars. That comes out to $29 in savings, over half of that $50 figure. That would mean a service from those four companies could cost as little as $21, about the same as Sling TV, though realistically in order to make up for the consequences it would charge at least $25. On the other hand, that figure also includes networks not owned by any of the Big Nine, as well as networks in under 75 million homes (which is still a substantial majority of homes), and it also undercounts the total for markets with multiple RSNs not counting college conference networks and might undercount the retransmission haul as well (not to mention the price for the remaining networks being taken out), so it’s possible the true figure might come down below $20. Viacom is the only company not already present in Sling TV, so if you take that as a baseline our service might cost as little as $10 just from taking Sling and removing the Disney networks, and if necessary Viacom has both the most expensive single network and a suite performing weak enough small cable operators are increasingly comfortable going without it and shareholders are questioning Sumner Redstone’s mental fitness to run the company, so jettisoning them would probably shave at least $2.40.

Whether $10, $20, or $25, what would that give the consumer? Well, there’d be an eclectic mix of documentary and lifestyle programming from the Discovery and Scripps networks. If you kept Viacom in the mix you’d have kids and family programming from Nickelodeon and Discovery Family, plus popular reality and other shows from MTV, VH1, and Spike, some of which might complement the Discovery/Scripps selection. Viacom would also have a back library of TV shows and it and AMC would have a decent movie selection, though maybe not on-demand, while AMC might also contribute some popular British shows from BBC America. And of course you’d have The Walking Dead and other popular and critically-acclaimed original shows from AMC, plus other original shows from OWN and the Viacom networks including South Park. Other than sports, the main thing you’d be lacking would be news or anything from the last decade that wasn’t originally produced for one of these networks (the main exceptions probably being on Comedy Central), and if you’re looking for anything specific associated with a network owned by one of the Sports Five you’d be out of luck, but as a complement to other services that exist such as Netflix and Hulu it could be a decently valuable collection, especially if you can price it substantially lower than Sling TV’s $20, and/or if Viacom brings enough value to the table to make up for the loss of the Disney and Turner networks.

Perhaps more important than the raw price, however, would be the fact anyone signed up for such a service would not be paying any form of sports tax. Unlike Sling TV, our service would allow anyone without a lick of interest in sports to get valuable cable content previously unavailable outside of a cable bundle without subsidizing a single sports network of any kind. That means even if it’s less popular than a Sling TV, if it gained any kind of traction whatsoever it would be a much bigger existential threat to the cable bundle and ESPN’s business model than anything else that exists so far. For the record, in the piece I linked to in my post a month ago about how a standalone ESPN would break up the cable bundle, the analyst in that piece specifically talks about a service consisting of precisely these four companies plus Turner, priced at $15 a month, suggesting $10 for these four companies alone is quite reasonable.

When talking about the cable-bundle business model, sports writers often note that just as non-sports fans subsidize sports networks, so do sports fans subsidize networks like AMC.  Of course, this attempt at equivocation, even if it comes down to a single sentence in an article, seems way overblown; if you believe the total amount being spent on the cable bundle reflects fair market value for whatever each consumer gets out of it, then if some networks are getting more than their open-market value others are getting less, and it seems likely that by and large, sports networks fall into the former category and most non-sports networks the latter. But in this area, the notion that non-sports networks are receiving some value from remaining attached to the cable bundle, and being subsidized by its sports fans, seems to be an important one. It is quite telling that while only two of the Sports Five are associated with Sling TV, three of the non-sports four are part of it. How much do Discovery, AMC, and Scripps continue to value remaining tied at the hip with ESPN, or at least keeping the cable bundle stable? Were they already aligned with Sling TV and either ESPN felt obligated to join them or Dish felt obligated to recruit them? Conversely, if ESPN came first, did they have any say in what other companies would be part of Sling TV? And how long until the calculus changes and these companies decide they have enough to gain to be worth defecting from, and thus potentially destroying, the cable bundle? Right now ESPN and the non-sports four need each other enough to be tied at the hip even into their ventures into OTT, even more than the companies with sports investments, but one day the time will come where ESPN needs them more than they need ESPN – or worse, they come to see their association with ESPN as a liability – and that may well be the day the cable bundle dies, or is at least terminally injured.

Cable Television Regulation for the Twenty-First Century

In its highfalutin’ ideals, the Internet is dedicated to the notion of delivering a world of information to all for free, accessible for all to contribute to, available whenever and wherever you want it. Cable television, by contrast, delivers only the content the cable company sees fit to provide you, the vast majority of it from nine companies and laid out on a rigid linear-television schedule, and forcing you to pay for all of it to get just the few programs you want. It is, in short, the antithesis of net neutrality, and as I laid out earlier, the cord-cutting debate is effectively a clash between the outdated vision for the provision of content and the new vision sweeping it aside.

It is therefore tempting to conclude that traditional, wired linear television has not only outlived its usefulness but needs to be actively destroyed to preserve the ideal of net neutrality, that any future it might have is only in schemes such as Comcast’s “Stream TV” that use the existence of linear television over traditional wires to circumvent net neutrality by providing preferential treatment to certain types of video content. But as I’ve chronicled, at least in the wireless context, linear television can not only play a key role in network management, traditional broadcast linear television can actually benefit net neutrality by allowing those tools to be accessible to as many potential programmers as possible and delivering it to everyone regardless of carrier.

Not all of these benefits can be directly transferred to the wired context. Most obviously, wired connections are inherently dominated by whatever company owns the wires and processes the connection; they are inherently going to have some control over what content can use the linear television wires. And if you believe that at some point, everyone is going to be fed by a direct fiber-optic connection, fiber-optics sees no benefits to linear television at all; each customer has its own fiber leading directly to the node and the rest of the system without being impacted by anyone else’s activity. Unless, that is, it’s set up in something like a passive optical network, which reduces the cost and amount of fiber needed to go into business by splitting one fiber to serve multiple endpoints, effectively delivering each customer’s content to every customer on the same splitter. It requires end-terminals to sort out what content belongs to which customer and encrypting content to prevent eavesdropping, but if I were running such a network I would look into a way to actually foster eavesdropping for live streaming video, so if someone is watching a game on ESPN3, anyone else on the same splitter that wants to watch the same game can ride on the first person’s stream, freeing up network capacity for everyone else.

This hints at what the future of wired linear television might look like on both coaxial cable and fiber-optic networks, blurring the lines between online and linear content so thoroughly it may be impossible for the end user to tell which is which; some WWE Network content might be delivered linearly, while in some areas a network like Logo might be delivered via IP. It doesn’t have to look like Stream TV, but it might have to adopt some of the less savory elements of T-Mobile’s Binge On, finding some way to identify live streams so they can be isolated and delivered once. It may also be beyond the capability of some providers to pull this off dynamically, certainly while minimizing lag; linear delivery may be something that has to be arranged ahead of time in some way. The key, then, is to figure out how to foster such a system while preserving the principle of net neutrality.

Last year I sent a Congressional committee 13 pages of comments explaining what principles I felt should underlie any revisions to the Communications Act to update its treatment of video for the Internet age. More recently my thoughts have coalesced with regards to how to regulate wired television to bring it into alignment and consistency with the principle of net neutrality and existing rules governing the Internet. To that end, here’s what it might look like:

  • No content delivered via linear television, particularly that not delivered over-the-air, can be withheld from delivery over the Internet, whether by the ISP or the content provider. This is a basic way to avoid using linear television as an end-around around net neutrality rules, and it also demonstrates an important difference between linear television now and going forward: it is no longer a prerequisite for the delivery of content. ISPs may no longer find it necessary to carry a linear television service at all. Really, the notion that cable operators are just a backdrop and infrastructure system through which programming is carried, which has little to no role in what programming it is, is one that probably should have taken hold several years ago as digital cable obviated the condition of scarcity that had governed the pay-TV industry, and certainly once Internet streaming became competitive; it’s still impossible for a cable operator to carry every would-be linear network, but the notion that your ability to watch a channel anyone would actually watch would be determined by what pay-TV operator you subscribe to seems not only quaint and outdated, but antithetical to net neutrality. In this vein:
  • If linear television is carried over any wired network, it should be controlled at the infrastructural level. I’ve seen suggestions to increase competition for Internet service by decoupling control of the infrastructure from the service delivered over the pipes, recognizing the natural monopoly the pipes themselves represent while still allowing ISPs to compete freely (i.e., without utility regulation) for the service delivered over them. If so, the same principle underlying broadcast television applies: the content allowed to benefit from linear television should be the same for everyone regardless of carrier. Any distinctions between the content available in different areas should be a natural result of the existence of different networks, without individual ISPs controlling what content you can and can’t watch and how easily you can do so.
  • Keep the existing must-carry rules. Ideally, broadcast television serves as a means to deliver the most popular content quickly and efficiently to a variety of devices. It’s reasonable to think that the same content would also be most popular over a wired connection. This rule would establish some degree of parity between wired and wireless video, ensuring the same content that benefits from linear television for the one gets the same benefit on the network with more capacity, and recognizes the original purpose of cable TV to deliver broadcast stations to areas their signals couldn’t reach. The increase in capacity may mean it’s actually not necessary to add any further linear channels beyond those provided by broadcast stations, but it’s reasonable to think video consumption would be higher, and be at higher quality, over a wired connection. If there is a need for further linear channels:
  • Forbid any monetary transactions as a condition of linear carriage between an ISP (or infrastructure authority) and a content provider, especially per-subscriber or per-viewer fees. Content providers may only charge consumers directly, though they may use any scheme they wish to do so as long as the ISP (or infrastructure authority) is not directly involved. This rule ensures that potential network strain is the only factor going into what channels are carried linearly, and should render retransmission consent unnecessary and contradictory. Net-neutrality foes and general free-market advocates may look at this rule and think it’s cutting off “innovative” business models, but because in this model linear television is a means for smoothing over the transmission of content that is being made available through the Internet anyway, one that should reduce the costs to both parties relative to the alternative as the number of viewers goes up, there should be no relationship between the costs of maintaining a linear feed and the number of subscribers an ISP has that would have access to the feed or the number of people using it; the costs of providing the feed should be the same regardless of how many people are on the network or can view the feed, indeed that’s entirely the point of linear television in the 21st century. The cost of providing and acquiring the content (an issue concerning the consumer) should be a separate issue from the cost of delivering it (an issue concerning the content provider and ISP). There is therefore no good reason to charge ISPs anything other than a flat fee (and even that’s questionable; small ISPs wouldn’t be too hurt by being unable to amortize the cost across more customers because they’d have less need for linear TV to begin with, but any sort of payment scheme might create the same imbalance that made retransmission consent necessary), and for an ISP to charge a content provider would amount to exactly the sort of “paid prioritization” net neutrality advocates fear so much.
  • Impose effective protections against discrimination and an effective dispute resolution process. Again, the only factor that should go into whether any programming is or is not offered linearly is its raw popularity, and any content popular enough to warrant it should have the opportunity to use it regardless of their level of resources or connections. This does not mean disadvantaged groups or public entities should have a blanket right to a linear stream; again, a linear channel is not a prerequisite for the delivery of content, and in some cases what they’re looking for no longer even needs to be video. In many cases these entities seek to take advantage of the modern cable-bundle model to acquire production and distribution resources on par with more well-heeled groups they might not be able to attain if they were forced to stand and fall on their own merits. It may be desirable to introduce new programs to benefit minorities and open up the possibility of using franchise fees on ISPs to fund the production of video and other content by public entities (similar to today’s “public, educational, and governmental channel” system), but linear television is irrelevant to that discussion and shouldn’t be hijacked to attain those goals.
  • The quality of a linear stream must be the same across all platforms and an ISP (or infrastructure authority) must not degrade it. Because an ISP does not have to carry a channel (except for a broadcast station) for its customers to have access to the programming on it, there is no reason for an ISP to reduce the quality of a stream in order to fit in more streams. If a content provider offers its stream at too high a quality and causes all ISPs to balk at carrying it, that’s a market signal to reduce the quality of the linear stream. There is one exception to this rule: because the main purpose of over-the-air broadcasting is to reach mobile devices, it may be beneficial for broadcasters to offer wired services their content at a higher quality than they broadcast it over the air.
  • Consider imposing restrictions on how many streams one entity can control 24/7 (or otherwise beyond particular events) on one set of wires. Ideally, impose some degree of parity in ownership restrictions between broadcast and wired linear networks. In particular, ISPs should be severely restricted in how many linear streams over their own wires they directly control the content of. In general, consider moving to the Canadian system where the FCC has as much latitude to regulate cable networks as they do broadcast networks.

These rules provide a baseline to move wired linear television away from being a marketplace defined by 1990s rules and market realities and towards becoming a tool that enables the benefits of both linear television and the Internet to be available to all, consistent with the ideals of net neutrality. They hold the potential to usher in the dawn of a new era of consumer choice that frees Americans from the paradigm of having one’s entertainment options dictated by the cable company and enables them to choose from a menu of options that provide value to them. It’s my hope that this provides a framework for policymakers to rethink the wired television landscape and for the American public to imagine what it might look like.