TV Business

Report: WGN America to Drop Chicago Sports

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For at least two decades now, and certainly for the past decade-plus, Tribune Broadcasting has been an anachronism: the last relic of an age of truly local, independent broadcasters, from a time when broadcasting was so dominant that broadcast stations’ fear of cable had to do with the prospect of importing other stations from outlying markets, a time when independent broadcasting was so strong that Tribune, the owner of the dominant independent stations in its markets, didn’t affiliate them with the fledgling Fox network, leaving Fox to leave Tribune’s VHF stations behind in favor of UHF stations in markets like Chicago and Denver in a time when that still mattered. Even as its stations have affiliated with the WB and later the CW, Tribune has steadfastly avoided being identified with those networks and, especially with the CW (which, unlike the WB, it doesn’t hold an ownership stake in), has downplayed its affiliation as much as possible. In the very biggest markets, the biggest general-entertainment stations outside the Big Four networks tend to be owned by CBS, Fox… or Tribune, the one company of the group not to be a massive conglomerate, even as it has increasingly become a more standard owner of affiliates of the Big Four networks in smaller markets, especially ABC and Fox.

A big reason Tribune has managed to maintain this strange, hybrid status has been its flagship station in Chicago, WGN, and its own status as the last relic of the early days of cable, when imported “superstations” were the main distinguishing feature from standard broadcast. While Ted Turner was exporting WTBS throughout the South, Tribune was doing the same with WGN throughout the Midwest, showcasing Cubs games in much the same way TBS did Braves games. Broadcast stations were able to get “syndication exclusivity” rules passed that required any syndicated programming on imported broadcast stations that also aired on a local station to be wiped from the feed, requiring the likes of TBS and WGN to set up separate feeds to export to outlying markets, but because such rules didn’t apply to cable networks that didn’t originate as local stations it left the superstations at a substantial competitive disadvantage and helped hasten their demise.

In the case of WGN, the advent of the WB further sealed its fate; WGN was able to carry the WB on its national feed in its early years, helping that network gain traction throughout the country in areas that didn’t have a WB affiliate, but as that problem slowly waned WGN eventually dropped the WB from its national feed, meaning the national feed increasingly became very different from the local Chicago one – which ironically may have helped it keep going longer. Tribune’s relatively smaller status also may have helped; TBS divorced its national feed from its local Atlanta station once and for all once it won a national baseball contract. Eventually, the WGN national feed was renamed “WGN America” with a different logo, and the only things it had in common with the Chicago feed were the 9 PM CT news and local Chicago sports.

Now, however, Tribune has signaled its intention to turn WGN America into a more traditional cable network and is wiping the last vestiges of WGN America’s superstation status from its lineup. WGN America dropped local Chicago news earlier this year, and now Tribune CEO Peter Ligouri has told Crain’s Chicago Business that WGN America intends to drop Cubs games and other Chicago sports at the end of 2014. (The article is behind a paywall, but if you want to read a possibly-illegally-copy-pasted version that reads like it was sent through a machine translator and back again, click here.)

The continued presence of Cubs games on WGN America was yet another vestige of a bygone age. In the early days of cable, there was no MLB Extra Innings, no more than one game a week on TV nationally, and MLB had a lot fewer teams than it does now. The Braves and Cubs were able to build large regional fanbases through the exporting of WTBS and WGN. With games with national interest on TV every day of the week on ESPN, FS1, and MLB Network, Cubs games on WGN America are less special, and the continued presence on broadcast those games require means missing out on the dual revenue stream from a regional sports network.

Despite all that, this is a bit of a head-scratcher to me. Tribune seems to be trying to catch the general cable network market on a downswing, right as it reaches a tipping point and starts to decline as online services like Netflix step on its turf. The value of linear television going forward is sports, so WGN America seems to be going in the exact wrong direction; I’d be very surprised if Cubs games, even with the team sucking in recent years, would be less popular than whatever original programming WGN America tried to put on its air (how much money it makes for WGN given production costs is another matter). This is especially the case since, owing to the SyndEx rules, WGNA has rather limited distribution compared to other networks of similar vintage, and may have to renegotiate its contracts from scratch if it divorces itself from WGN in Chicago completely. I would mention that the national carriage WGNA gives the Cubs is the one big value WGN would bring to an impending renegotiation of its contract, except that this move may itself be an admission that WGN is likely to lose the contract.

Tribune is in the process of spinning off its newspapers into a separate company, leaving its broadcast stations and WGN America as the heart of the company, along with digital investments. But those stations are themselves prone to potentially suffer the same fate the newspaper industry did as the Internet stepped onto its turf, and without affiliation with a Big Four network or (with the only exceptions being WGN and WPIX in New York) a sports presence, Tribune’s legacy stations seem particularly exposed. Tribune has been run by private equity firms since its emergence from bankruptcy in 2012, and besides turning WGN America into a conventional cable network, those firms have shown every sign of running Tribune as a traditional owner of broadcast affiliates (purchasing the Local TV group, another group of stations run by private equity firms, last year), yet no company is in better position to affect the future course of the broadcast industry. I hope the people in charge of Tribune have, or at least can acquire, a mindset of the television industry of the future, not the past.

The Nexus of Television and Sports in Transition, Part IV: Pricking the Bubble

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The cable business model might be the greatest scam in history, and the best part is that it’s entirely legal. It’s not merely that cable networks get to collect money from the dual revenue streams of advertising and subscriber fees. It’s that they collect subscriber fees from every single person who subscribes to cable. ESPN and ESPN2 were in about 96.2 million homes each in March. ESPN2 collects about 70 cents a subscriber, so the two of them combined take $6.24 out of your cable bill. Do the math: 96.2 million homes times $6.24 means ESPN is raking in $600 million dollars every month before it sells a single advertisement. That adds up to $7.2 billion every year from subscriber fees alone, the vast majority of ESPN’s yearly revenue – and it’s going up so fast it crossed the $7 billion threshold just last year. Not a bad chunk of change if you can get it. By contrast, TNT – which is actually in more homes at 96.9 million – is only collecting $129 million a month or $1.5 billion a year, and it wouldn’t be collecting nearly that much if it didn’t have valuable NBA inventory. The amount ESPN pays each year for Monday Night Football or even the SEC would chew up most of that amount.

These subscriber fees aren’t determined strictly by popularity; in terms of total viewership, the USA Network is actually more popular than ESPN, thanks to a combination of WWE Monday Night Raw and a collection of critically-acclaimed and popular original series. But USA collects only 71 cents a subscriber, about sixth-most in cable and roughly neck-and-neck with ESPN2, because if you drop USA you’re only pissing off a few wrestling fans and fans of a few original series, but if you drop ESPN you’re pissing off fans of just about every popular sport under the sun, including the almighty NFL – and those fans can’t live without their sports. Even so, even by the most optimistic estimates, only about 80 million of that 96.2 million watch any ESPN at all that’s taking so much of their cable bill. Far fewer, probably less than a third, would decide ESPN is so indispensable they would pay six dollars a month for it. Yet ESPN is raking in the dough from every one of those 96 million. ESPN’s certainly happy with this state of affairs, and so are its rights partners, who get to count the money from the lavish rights fees ESPN pays them. No wonder everyone else wants in on the action. But if you’re an ordinary cable subscriber, especially if you’re not a sports fan, you’re not so happy.

For several years now, many have called for the government to step in and do something about the subsidization of sports networks, and media companies have resisted those efforts mightily. The most popular idea is to force cable companies to offer their wares a la carte, allowing you to only pay for the networks you want; Senator John McCain introduced an a la carte bill last year, and the effort has attracted the support of none other than Senator Richard Blumenthal, who represents ESPN’s own home state. Media companies claim that most channels are underpriced compared to what they would receive in an a la carte world, that cable is still a good value for the vast majority of customers who would gladly pay as much as what they do now for what they do watch, and that a la carte would actually end up hurting consumers in the long term: because each network would have far fewer customers, it would need to jack up rates considerably. On average, people would end up paying the same or more for their cable than they do now and getting less for it, although sports fans would likely pay more and non-sports fans would pay less. Media companies claim the effects would be so catastrophic that the vast majority of cable networks would go out of business, especially those targeted towards minorities and underserved communities; the number of networks that would be left might be in the single digits.

You could poke several holes in that logic and point to evidence that the eventual outcome might not be quite so dire. But even if things happened exactly as the media companies say, someone with a good grasp of the overall video landscape might find reason to say: “So?”

It’d be one thing if sports fans were merely passionate enough about their sports that if a cable operator were to drop a sports network they’d leave en masse. But it turns out sports fans are incredibly important to the other half of cable’s dual revenue stream, advertising, as well: as said before, they are disproportionately likely to be in the male 18-49 demo, which just so happens to be the most valuable demographic to advertisers, and they’re the one type of programming that’s DVR-proof, meaning sports fans are a captive audience to actually watch the advertisements. But these two things are connected in a way that casts a long shadow over the future of the entire television industry.

Concerns over time-shifting are nothing new; the television and movie industries attempted to kill the VCR when it came out, and once VCRs caught on, sports rights already became incredibly valuable for their immunity to time-shifting, to the point that many of the same points being made over the sports rights bubble, as Deadspin pointed out, were being made in 1989 in response to CBS’ multi-million dollar baseball deal. But these days, DVRs are, or at least should be, the least of television programmers’ worries, if not so much advertisers’. The biggest reason why those age 18-49 are so valuable these days is simply because they watch less television than older people, and while that has a number of reasons, the biggest is because of the rise of the Internet as a source of entertainment.

Well aware of the futility of attempting to fight piracy and the rise of YouTube, content providers have increasingly embraced the Internet as an alternative venue for their content, through sites such as Hulu and Netflix. But the Internet challenges some of the deepest assumptions of the television industry in a way few within it have recognized and, to the extent they have recognized it, they have resisted at all costs: if non-live programming can be watched any time you want it, why does it need a spot on a linear television schedule at all?

Before the Internet, the only way to consume content was to watch it when someone else told you it was on, unless you rented a video from the video store. You visited the movie theater when they decided the movie was going to start; you watched a program at the time the broadcast station or cable network scheduled it for. Each television station or network, even with the increased capacity of cable, had to be assigned a certain portion of spectrum, a channel, that could be used to show one piece of video and one stream of audio at a time, so any program that wanted an audience on television had to find a channel that would show it at a particular time. But once a video is on the Internet, you can pull it up any time you want. You don’t need someone else to schedule it for you. The traditional linear television schedule is an artifact of these pre-Internet days.

It’s entirely possible the prospect of hundreds of channels falling by the wayside may end up falling on deaf ears, because we may not need hundreds of channels anymore. It’s very possible that the vast majority of programming that would find itself without a home because of the collapse of so many cable channels would be able to find a home on the Internet without a problem, though admittedly the financial infrastructure that would support that may not be in place yet. It’s even tempting to wonder if the Internet could pick up the slack even of live programming, which would render television completely obsolete.

More is at stake here than just sports. As much as the likes of CBS, Fox, and NBC may want a powerful sports network for their own sake, they also want a popular network cable companies can’t afford to drop. That way, they can force those companies to carry a bunch of other, far less popular, channels.

Just six companies own the vast majority of channels on your cable lineup. Go down the list of cable networks with the most penetration. Once it’s properly ordered, at the top of the list is the Weather Channel, which is owned by Comcast, which also owns NBC, USA, Bravo, E!, Syfy, Oxygen, the Esquire Network (formerly Style), and G4, besides NBCSN and the Golf Channel. Next is the Food Network, a relative independent owned by the E.W. Scripps Company, which still owns thirteen ABC and NBC affiliates as well as HGTV, the Travel Channel, the Cooking Channel, and DIY Network. TBS is owned by Time Warner, which also owns TNT, Cartoon Network, CNN, HLN, HBO, Cinemax, truTV, and TCM. Discovery Channel is another relative independent owned by Discovery Communications, which also owns TLC, Animal Planet, and a host of smaller networks. Nickelodeon is owned by Viacom, which also owns Comedy Central, MTV, Spike, VH1, TV Land, BET, CMT, and numerous MTV and Nick spinoffs. A&E is owned by A+E Networks, a joint venture of Disney and Hearst (split 50-50 this time) that also owns Lifetime, History, and smaller networks like Bio and H2. The Disney Channel is, of course, also owned by Disney, which besides ESPN and ESPN2 also owns ABC Family, Disney XD, and others. AMC is another relative independent owned by AMC Networks, which also owns IFC, We, and Sundance. Fox News Channel is owned by Fox, which also owns FX, the National Geographic Channel, and spinoff networks Fox Business, Nat Geo Wild, FXX, and FXM, to say nothing of Fox Sports 1 and 2.

CBS is the last of the big conglomerates, owning Showtime, TVGN, and the CBS Sports Network. The broadly-distributed commercial networks not owned by one of these companies can be counted on one hand, and most are owned by formidable corporations themselves. A cable company that wants the popular channels – ESPN, TNT, USA, Fox News, MTV, Showtime, arguably even AMC, Discovery, and Food Network – has to carry the lesser ones. The result is a situation where a cable company’s hands are tied as much as the consumer’s are.

In the same breath that they stand side by side with media companies in opposition to a la carte, cable companies also push back against the increased price of sports networks that they’re stiffed with and left to pass on to consumers, thus either losing customers or taking less profits. They’ve been working to roll back the sports subsidy as much as they can. As far back in 2011 the president of Dish Network raised the prospect of some company deciding to go without sports programming entirely and market itself as a low-price service for non-sports fans. These days, DirecTV has started imposing a $3 fee to customers in markets with multiple regional sports networks, and multiple companies have experimented with offering sports-free packages to customers.

Those sports-free packages haven’t achieved much penetration, though, in large part because the contracts sports networks have with cable companies guarantee them a certain level of penetration, and cable companies can’t risk accidentally breaking those contracts. Moreover, the bundle works both ways: cable operators may be stuck taking lesser networks if they want ESPN, but they also can’t just drop ESPN without dropping other channels like the Disney Channel, and that means people who might not otherwise have an interest in sports suddenly have their kids pestering them to get the Disney Channel back. In turn, the contracts cable networks have with leagues and especially conferences require them to have a certain level of penetration.

And because of this, even the relatively modest advent of the sports-free package has the potential to completely pop the sports cable bubble. ESPN only has the rights to the new college football playoff because it happens to be in the vast majority of households. How many leagues and conferences would bail on ESPN once people start electing not to pay for it en masse, leaving only sports fans still getting it? How many sports would be willing to risk completely shutting out the casual fan? Considering how few sports went the way of boxing, with all the top-caliber fights on pay-per-view and the remaining fights of any consequence on premium networks like HBO, the answer may not be something any of the programmers of sports networks would like.

There is one way to collect ESPN-type money, at least on a per capita basis, in cable. That’s to run a regional sports network airing the games of local MLB, NBA, and NHL teams. $2.50 is the baseline subscriber fee in the regional sports business, and more than a few charge north of $3; some even dare to demand more than what the mighty ESPN charges. As a result, teams have benefitted from the sports rights bubble as much as larger leagues and conferences – especially in baseball.

When the New York Yankees founded the YES Network in 2002, it was a milestone in the history of baseball. Under Bud Selig’s tenure as commissioner, baseball has attempted to even out the imbalance between the “haves” and the “have-nots” without instituting a salary cap by means of various revenue sharing schemes. The Yankees are indisputably one of the “haves”; in fact, after one luxury tax went into effect, the Yankees were the only team in all of baseball to be affected by it. The Yankees collected a rights fee from YES like from any other RSN, but it also owned a sizable chunk of the network itself – and the money it raked in from the network’s profits, unlike the rights fee, wasn’t subject to baseball’s revenue sharing. In a sport without a salary cap, that loophole was huge for the Yankees to maintain its spot atop the heap.

The rest of baseball took notice, and these days, it seems like if you pick a baseball team at random they probably own an RSN – even some of the more unlikely ones, like the Cleveland Indians who sold their SportsTime Ohio network to Fox last year. After purchasing the SportsChannel and Prime networks in the 1990s, Fox had attained a near-monopoly in the RSN business and attempted to mount a challenge to ESPN with them using the overall branding of “Fox Sports Net”; it failed, but Fox still had a lucrative revenue stream and a lofty position it would be hard to knock them off from. That is, until Comcast began offering teams equity stakes in its networks – the Cubs, White Sox, and other Chicago teams, the Mets in New York, various other MLB and NBA teams elsewhere. Fox had long resisted offering teams equity stakes in its networks, but eventually decided it had to offer such stakes to the Angels and Rangers to keep them in the family. Meanwhile, Time Warner Cable, after years of messy disputes with regional sports networks, decided to get in on the lucrative business themselves and launched new networks with the Lakers and Dodgers.

Yet it may also be here that the sports rights bubble is already starting to burst, specifically in the heart of Texas. Comcast recently convinced the Astros and Rockets to leave Fox and start a new regional sports network they would own a stake in, giving Comcast an effective monopoly over the Houston sports market. A year later, the network is largely considered a disaster and a laughingstock, failing to pick up carriage agreements with any cable companies other than Comcast, putting it in less than half of Houston-area households, not helped by the Astros being a laughingstock themselves as the worst team in baseball. The network has declared bankruptcy, and the Astros have accused the bankruptcy proceeding as a way for Comcast to keep the Astros from pulling out of the arrangement. If the Astros or Rockets can put good, attractive teams on the field things might start looking up for CSN Houston, as New York’s MSG learned in 2012 when Jeremy Lin caught fire for the Knicks as MSG was in the middle of a heated carriage dispute with Time Warner Cable, forcing TWC to abruptly end the dispute. That may help explain why the Rockets signed Lin that offseason. But a playoff Rockets team with multiple stars hasn’t been enough to boost its RSN, at least not yet.

Across the state, the University of Texas’ attempt to bring the RSN to college sports, the Longhorn Network, has similarly struggled to pick up carriage agreements and has also been considered a laughingstock. Pushback may be spreading outside of the Lone Star State: Time Warner Cable’s LA-area networks have struggled to pick up distribution, with the Dodgers network basically unavailable to any providers that aren’t Time Warner, to the point that the Dodgers’ own legendary announcer, DirecTV customer Vin Scully, can’t get the network in his own home. For teams across the country, the money train may be running out, and cases like these may increasingly become a cautionary tale.

There is an unassuming warehouse in Brooklyn housing something that media companies are completely panicked over: thousands of teeny-tiny little television antennas. These antennas belong to a startup called Aereo, founded by mogul Barry Diller, who once helped the Fox network get off the ground and who is now – so the broadcasters, including the network he helped launch, claim – completely destroying the foundation of their business. Aereo charges customers in the New York area, and a growing list of other places, $8 a month to rent one of its tiny antennas. With those antennas, you can watch any broadcast channel you like over the Internet and even record up to 20 hours of programming using Aereo’s DVRs. And broadcasters are apoplectic about it.

They’re apoplectic because the once-fledgling retransmission consent program, created to level the playing field and allow broadcasters their own piece of cable networks’ dual revenue stream so that broadcasting could survive the rise of cable, has now completely warped their incentives and made it so that broadcasters would be first to destroy it themselves in order to save it, so they could place all their programming on cable and collect retransmission consent fees from all their customers. Literally: multiple national networks, including CBS, Fox, and Univision, have floated the possibility of pulling their programming off the free airwaves if they don’t win their court challenges against Aereo. The courts have so far yet to make any actual ruling on the matter, but for the most part have refused to grant the broadcasters’ requests for injunctions against the service. That in itself is too much for broadcasters to bear: they’ve gone so far as to ask the Supreme Court to weigh in on the matter, again before any lower court has actually come down with an actual answer.

To be perfectly honest, I wouldn’t be surprised if Aereo ultimately loses the court challenges against it, and I’m not even sure it should prevail even if it might be on the right side legally; Aereo’s claim that they’re simply making it easier for consumers to use an antenna to pick up the free over-the-air broadcast signals they’re entitled to anyway seems somewhat chintzy and getting off on a technicality, and even if they do ultimately prevail in the courts I wouldn’t be surprised if Congress closed the loophole shortly thereafter. In fact, Diller may not actually be interested in Aereo’s success in and of itself so much as pushing broadcasters to change their business model to one more based around the Internet, if his comments to the Wall Street Journal are anything to go on. But even if we took Aereo’s claims at face value, there seems to be a question that has been insufficiently explored: why is Aereo necessary to begin with? Why would someone sign up for Aereo instead of simply putting up an antenna themselves and watching TV that way?

There are several answers to that question, starting with the fairly basic one regarding the hassle of putting up an antenna at one’s house – especially when they often need to be oriented towards wherever the signals are coming from, which ordinary people can’t be expected to know, and beyond a fairly short distance away retrieving said signal requires more than just rabbit ears, but a huge rooftop antenna, which unlike satellite dishes with a similar footprint and restriction you probably won’t find anyone who’ll install it for you. Then there’s the DVR access you get with the Aereo fee, which can be especially important when most cable and satellite subscribers get their DVR service from their cable or satellite provider. But perhaps the one that is, if not most important, certainly the most telling, is mobility: the ability to connect to your Aereo antenna from any device, including your computer, tablet, or smartphone.

The DVR question is not prohibitive – it certainly is possible to get a DVR that will record straight from an antenna, though the options are limited – but the other two raise questions about the nature of the digital transition that America’s broadcasters went through in 2009. Digital signals are all-or-nothing – no ghostly, static-filled images anymore – and many areas that could have once gotten at least the latter from a set of rabbit-ears now appear to be out of luck. But the more serious issue is the lack of mobility – and it goes beyond the new digital standard failing to anticipate technologies that didn’t exist yet at the time it was adopted.

The digital transition may have actually killed off the existing market for battery-powered portable TVs – interference makes it impossible to watch an unmodified digital signal while on the move. The digital standard is thus ill-suited to be watched on anything other than a typical, stationary TV – thus not merely failing to anticipate, but actually becoming less well-prepared for, mobility becoming the new watchword among consumers. It is actually harder to watch digital television “anytime, anywhere” than it was to watch an analog signal.

To some extent, the broadcasting industry has recognized this, adopting an addendum to the digital standard that allows them to send a second signal that achieves an interference-free mobile picture by sacrificing picture quality, resulting in an image suited for smaller smartphone screens. (The portable TV market is still thriving in Europe in part because their DVB standard included a similar addendum from the start.) But even this shows the relative neglect America’s broadcast television infrastructure has fallen into without the general public making use of it and without anyone having much of a financial interest in promoting and maintaining it; not only have you not heard of it, the vast majority of devices don’t support it natively, requiring you to plug in an antenna dongle, and of the largest network stations in the New York area – the epicenter of the Aereo controversy – only three transmit mobile feeds: the NBC, Telemundo, and surprisingly, Fox stations.

If a la carte isn’t coming down the pike and a sports-free package isn’t coming to a cable system near you, there is still another way for consumers to take control of all the money being siphoned off their cable bill to pay for ESPN: cut the cord entirely. Services like Netflix and Hulu make it increasingly easy to watch the shows you want whenever you want, regardless of whether you have a cable subscription. Long feared by media and cable companies, it’s becoming a growing reality: nearly 900,000 people cut the cord in the past year, more than doubling the number the previous year, according to one analysis – and for all their problems, deals like the recent one between Comcast and Netflix could help build a network robust enough to make buffering a thing of the past and make the online streaming experience closer to on par with cable TV, which could accelerate cord-cutting (or at least “cord-shaving”) even further. And media companies are putting as many roadblocks in its way as they can.

Media companies want the Internet to work for them, not against them, but the way they tend to do so is to keep people tethered to their cable company – and thus, to the cable bundle and their millions in subscriber fees – as much as possible. The future they see is termed “TV Everywhere”, and it allows you to watch the shows you want to watch not just on your TV, but on your computer, tablet, or smartphone – so long as you “authenticate” with a participating cable provider. In the case of services such as HBO GO, this includes the ability to watch popular shows like Game of Thrones and True Blood anytime you want to. HBO already operates on the a la carte business model, but so far has refused to offer HBO GO standalone to people who don’t want to subscribe to cable, although Comcast has begun offering it to customers who sign up just for its Internet service. A considerable amount of Internet-delivered video is being restricted to maintain a structure that by all rights should be becoming obsolete – and not even everyone has the future yet: until very recently only about 20 million subscribers could get ESPN’s TV Everywhere offering, WatchESPN, which ESPN president John Skipper admits is in large part “a significant measure to preserve the current system.”

Yet cord-cutting doesn’t seem to have had an associated increase in antenna viewership, at least outside of areas where Aereo has set up shop; most coverage of cord-cutting has limited its implications to Internet viewership, to the point that most cord-cutters may not even consider putting up an antenna – in fact, some might even be eagerly awaiting the demise of broadcasting, even as they benefit from it. Cord-cutting should be a boon for broadcasters who can find themselves a willfully captive audience limited to their wares and whatever is offered online, yet not only is broadcasting woefully unprepared for the demands of the modern consumer (whether cord-cutting or no), the companies with the biggest pockets in the industry are more worried about losing their retransmission consent revenue – not to mention the revenue from their lucrative cable networks – than in any way excited over what must seem like a hollow “opportunity” presented to them by cord-cutting. As a result, the general public doesn’t even understand the modern broadcast landscape very well, to the extent it’s even aware it still exists.

These are tough times for the broadcasting industry, under attack from multiple fronts to the point of seeming to be on life support, and it’s not even clear how many people would miss it if it went away. Wireless providers covet their spectrum, cable operators would love to eliminate the free competition provided by an antenna, even broadcasters themselves would love to ensure every one of their potential viewers is paying retransmission consent fees. Those that do watch broadcast television on an antenna tend to be older and poorer, pretty much the antithesis of the people those in the television industry care about.

With the traditional linear television channel seeming to be obsolete in the age of the Internet, it’s easy for even an idealist to assume broadcasters are a relic of a bygone age, hogging spectrum that could be put to more productive use. Already the federal government has set up a two-way auction, currently scheduled for 2015, allowing stations to voluntarily give up their spectrum, either going off the air entirely or sharing spectrum with another station, to auction off to the wireless carriers and take a cut of the proceeds – seemingly just a waypoint to the complete liquidation of over-the-air television spectrum. What purpose could it possibly serve that couldn’t be served by the Internet? The answer requires a good technical understanding of how the Internet works – and there is a supreme irony about the whole debate over sports and cable television waiting at the end.

When you call up a video on Netflix, or any other video service, the device you use to access it sends a message asking for the video and sends it to the ISP or wireless provider, which sends it on its way through the network to Netflix. Netflix receives the message and sends the video on its way back through the network to you. If someone else wants to watch the same video, they go through the same process, even if they’re on the same ISP. Streaming a live event works the same way: your device tells the streaming provider it wants to watch the stream, and the streaming provider sends the content of the stream back through the network to you. It does this for each and every person that wants to access the stream, again regardless of whether or not they’re on the same ISP, even though they’re watching the exact same thing at the same time, with each new person joining the stream joining at the exact same point, yet each of them watching, in effect, on their own individual “channels”.

You can imagine what the effect is when a huge number of people want to watch the same thing at the same time, and indeed NBC’s streaming coverage of the 2012 London Olympics was notorious for running into massive issues as as many as a million people tried to access it at the same time. No one has ever heard of a television channel, whether broadcast or cable, regularly freezing while it buffers or fluctuating in picture quality, or even being completely inaccessible, without thinking something was wrong with their signal or connection, yet such is often the norm when it comes to watching things online, at least in the case of a live stream. Broadcast stations send out one signal, and that signal can be received by anyone with an antenna; similarly most cable companies send out their offerings in one burst, and anyone can tune in to the sliver they want while leaving everything else for everyone else. It is infinitely scalable in a way the Internet, at least as described here, can never be.

Video puts a massive strain on the Internet; Netflix alone can make up 30 percent of an ISP’s traffic despite a very small minority of consumers actually using it, and video traffic as a whole make up a majority of all traffic on the Internet. A disproportionate amount of bandwidth is being used by visitors to a few video sites, many of which are now paying ISPs for faster transit through the network, as with the recent Comcast/Netflix deal. The amount of video people consume may well pose the single most serious threat to net neutrality, the backbone of the free and open Internet, and it will only get worse as more and more people discover the selection of video available online and as more and more video currently being consumed on linear television channels moves to the Internet. Deals like Comcast/Netflix may help capacity keep pace, but at the expense of allowing ISPs to be gatekeepers by forcing video providers to pay a tax, exactly the antithesis of what has built the Internet – including Netflix itself – into what it is today.

Considering all this, it should be apparent that anything that can take some of the video load off of the Internet as we know it today should not be dismissed out of hand, and there are some within the industry that have at least started to recognize as such. Of course this argument could apply equally to either broadcast or cable channels, but there are a couple reasons to expect broadcast to be the more important; for one, broadcasting is pretty much the only option for reaching mobile devices that can’t be connected to (or at least can’t be expected to be connected to) a cable connection (and mobile devices are no small matter; already, according to one study, people are now spending more time in front of their phones than in front of the television). Further, as was hinted at earlier when talking about how many teams and leagues would desert ESPN if it no longer reached the vast majority of homes, content providers will always seek to reach the widest possible audience, and that means reducing the amount they’ll have to pay to be part of that audience as much as possible. At the very least, there will always be demand for a YouTube of linear television as opposed to a Netflix.

Considering what advantages the Internet brings to the table to begin with, what sort of content would people be willing to watch at a particular time set by someone else? Certainly people may still want to simply turn on the TV (or whatever would fill that role) and have something on in the background while they do other things or watch a parade of thematically connected programming without having to think too much about actually picking out anything specific, but this question really boils down to, what sort of programming would benefit from the linear television model, in that it inspires a large number of people to tune in to the same thing at the exact same time? Certainly anything, including scripted programming that theoretically can be seen at any time, can inspire people to want to see it as soon as it’s available if they wish to avoid being spoiled about it on social media (or conversely if they want to take part in the conversation surrounding it), but what really inspires this sort of behavior is live programming.

And it is here that we come upon the supreme irony in all of this, because while live events can encompass a number of things such as awards shows or breaking news, the vast majority of this sort of live programming, the exact sort of programming that broadcast television is best suited for, is the same exact sports that it is increasingly being deprived of. Indeed maybe this isn’t so surprising; perhaps, for all the talk about captive audiences and DVRs and money demos, what ultimately underlies the entire rush to pour so much money into sports, all the skyrocketing contracts and subscriber fees, all the multimillion dollar contracts and abandonment of tradition and principles, all the rush to build new sports networks, is the simple, largely unacknowledged fact that sports is one of the last few things holding people to traditional linear television at all, and the fact that so much of it has benefitted cable networks is a simple reflection of the fact that cable has so far enjoyed a decided monetary advantage without much in the way of substantial audience loss.

The Nexus of Television and Sports in Transition, Part III: The Fight for the Sports Cable Dollar

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For gearheads, August 17, 2013, may well go down as Black Saturday. The first signs of it were the previous day, when many of the personalities heading up Speed Channel’s coverage of NASCAR practice and qualifying started talking about the end of an era, and the network’s Trackside talk show held its final edition ever. Then, when they woke up the following morning, Speed had been replaced with something called Fox Sports 1. For much of the day, Fox Sports 1 carried much of the same NASCAR coverage that had been on Speed, but that night it aired a bunch of fights from the glorified cagefighting promotion known as the UFC, followed by a couple of snarky Canadians yukking it up alongside a bunch of ex-jocks talking about just about every sport except their beloved cars. The succeeding days would see Speed’s lineup of car-oriented shows completely gone by the wayside, replaced by a bunch more shows talking about nothing but stick-and-ball sports. Just like that, the only network gearheads had that was totally dedicated to cars was gone.

Speed fans were not happy, and quickly took to the Internet to voice their displeasure, flooding the comments of just about any article having anything to do with the new network. Here are just some of the comments they posted, all reprinted with spelling, grammatical, and other errors intact:

what idiot decided we needed another stick and ball sport station? mma? boxing? you people are totally out of touch. speed was a car channel, the only car channel…hopefully this channel will fail miserably and maybe we`ll get a car channel back. we don`t need more retired jocks and announcer wannabes telling us the same retread crap that we get fed on 100 other channels.

did you really need anther stick and ball channel? I thought cutting wind tunnel to 30 min. was bad enough but then to cancel it!!…I have an idea, change the classic espn channels format. I can’t believe anyone whatches that channel…car guys spend a lot more money on motorsports than most stick and ball sports fans. I can only hope you will change your minds, but I will not know because I will not be watching any espn channels!

who in the world decided to take speed off the air my god another sports program channel really no speed channel come on this sucks now what I can watch chopped but nothing about cars which is a large industry you have gear heads every where that watched speed n all the shows including Barret -Jackson action . also gearz and all the other shows like pinks and motorcycle racing this sucks

we did not need another all live sports channel, not everyone watches sports, we want all the car shows back from speed and everything else it had on it, now what, where did all those shows go? this is crazy that corporations keep messing with everyones lives on what we have to watch and we still have to pay the price for it.

All of my car shows, car repair shows, collector car shows are gone. Not on the air anymore. No more Stacy doing donuts in a Year One Bandit Trans Am, or climbing mountain trails in some crazy 4X4 that he just welded together. NO, Just another ESPN Wannabee Channel sadly similar to how Comcast destroyed Versus with my fishing and hunting shows. Now both of those lame ass channels are playing European Soccer games instead. Seriously. Fox and Comcast can both go screw themselves.

the reason America is a great country is because of change. What makes it the best country on the planet is admitting our mistakes. FX1 is an obvious mistake. Im sure this channel was created to further better the lives of Fox share holders. SPEED was what built America, cars. trucks. racing. DIY! shows. buying selling/auctions. Ive been patiently awaiting some good from FX1, its just not there. a huge mistake! please, bring back SPEED, u can even keep your crappy FX1 channel, just put channel 607 back on my receiver so Americans can feel like Americans again. am i the only one that feels like moving to Canada? ha, i hear SPEED still aires there. Fix this mistake FX1, i refuse to watch your programming, at least ESPN is original. l.o.l.

While Discovery’s Velocity network remained and remains focused on cars, and several old Speed programs found their way to the fledgling MavTV network, neither is anywhere near as prominent or widely-distributed as Speed was. Speed fans had been swept up by a force far bigger than their own corner of the world, one no demographic could be rich enough to avoid. That the new Fox Sports 1 format was a carbon copy of ESPN, and so many other networks, was precisely the point: ESPN was making over $8 billion a year, over half a billion from subscriber fees alone, and a business model that’s making that kind of money is one any businessman would be falling over themselves to emulate.

Fox had spread out many of their sports contracts across several different networks – besides Speed, there was FX, Fox Soccer, and Fuel – but by consolidating them all onto a single network Fox hoped to charge cable companies higher subscriber fees and lure away some of the massive ESPN audience. Speed, in fact, was a victim of its own success: its presence in nearly 90 million households was far more than Fox Soccer, which had barely 50 million, and Fuel had even less, so it was, from the perspective of the Fox corporate bean-counters, a logical choice to convert to a prospective competitor to ESPN.

It didn’t work out the way Fox had hoped – several cable operators balked at paying the increased rights fees Fox demanded, insisting on paying the same rate they had been paying for Speed, and Fox only gave in a couple days before the launch – and the ratings would be so miniscule, especially in comparison to ESPN, that Fox ended up giving advertisers make-goods on its World Series coverage, but with rights to major college football and basketball and big-time European soccer on top of the UFC, and Major League Baseball, the NASCAR Sprint Cup Series, and the World Cup and US Open golf tournament coming down the pike, Fox likely felt that, in the long-term, they could take a bigger bite out of ESPN’s pie than anyone else. What were a few pissed-off gearheads to them when those were the stakes?

The challenges ESPN faces today are very different from the challenges it faced for the first twenty years of its history. Putting sports on FX made sense for Fox during the 1990s, when ESPN’s biggest challengers dating back to the 80s were the Turner networks and USA, general-entertainment networks all, with Turner arguably holding the upper hand with the NBA, half the NFL season, TBS’ long-standing Atlanta Braves coverage, and more. The continued presence of NBA games on TNT and baseball games on TBS today is very much an anachronism. With most cable providers not offering much more than 70-odd channels, a good chunk of which was chewed up by local broadcast stations, ESPN was the “sports channel”, just as other channels, following ESPN’s “narrowcast” lead, staked their ground to their own fields or, as Turner and other such networks did, threw up a potpourri of programming.

The growth of digital cable and direct-broadcast satellite services (such as DirecTV, which boomed in popularity on the back of its exclusive carriage of the NFL’s out-of-market games) in the late 90s and early 2000s changed all that by allowing an explosion of channels of all types, and the end result was a vindication of ESPN’s all-sports strategy. People had been talking about the possibility of television growing to a thousand channels; now half that number was very much a reality, even as HD increasingly chewed up that capacity as the latter decade progressed. Brand-new channels sprung up that were even more niche, looking to fill out all the new space the cable operators had, while existing channels expanded their brand onto more specialized channels (including CNNSI and ESPNEWS) and previously niche channels found their corner increasingly crowded out and broadened their appeal in response. In a sense, digital cable ended the first war over sports on cable with ESPN scoring a resounding victory, while setting the stage for a second war. Why did Fox need to put sports on FX when they could spread FX itself to several other networks (including Fox Soccer’s rebrand to FXX) and still have enough room for two all-sports networks?

One of the new channels was the 1999 launch of NBA.com TV, which launched with highlights, live look-ins, and other NBA-produced programming; although it started as almost a glorified barker channel for the League Pass out-of-market package, some saw it as a bulwark for the league in case they needed to take their games in-house in the post-Jordan era, as well as a hedge on this Internet thing whose role in sports going forward no one was quite sure of yet.

The NBA has long been at the forefront of new revenue streams and innovation, especially during David Stern’s leadership. The standard was that sports leagues had a network partner and a cable partner, and each only aired your product one or two days a week, but as it entered a new round of negotiations with NBC and Turner in 2002, Stern was open to a brand new scheme hatched up by ESPN, which wanted to get into the NBA without having to compete with Turner. ESPN and Turner would share cable coverage of the NBA, with ESPN having games on Wednesdays and Fridays and TNT holding on to a Thursday doubleheader that would be the only games of the night. ABC would take over the broadcast package, but wouldn’t show any games until Christmas and only show 15 games total (less than half of what NBC was showing); TNT would show the All-Star Game, and the playoffs would air mostly on ESPN and TNT until the Finals.

Placing its product so heavily on cable was a big risk for the NBA, but the end result was that the league saw a 25% increase in its rights fees despite a recession and ratings tanking in the post-Jordan era, as well as games all throughout the week. The new deal also put games on the renamed NBATV, and began a long relationship between that network and Turner, almost by accident: the league originally wanted to partner with Turner on a new basic-cable general sports network, but cable operators balked.

The NBA blazed a trail that other leagues would eventually follow; the NHL Network launched in Canada in 2001 and the United States in 2007, while Major League Baseball, though late to the network party, eventually launched one in 2009, using its Extra Innings out-of-market package to blackmail cable operators into acquiring a stake in it. The NFL launched the NFL Network, its time filled mostly with programming from the NFL Films library and some basic studio shows, the year after the NBA’s landmark 2002 deal, and it would end up becoming the focal point of the controversy over sports on cable for the latter half of the decade.

The NFL’s 2005 rights negotiations turned out to be a landmark for multiple reasons. ESPN was looking to renew its Sunday night package while ABC looked to continue an over 35-year-long relationship airing Monday Night Football. But Disney was in disarray as Michael Eisner was on his way out as its head, having recently fought off a takeover bid by Comcast, and both Eisner and the NFL was concerned about the dwindling ratings for MNF. The league wanted to move the NFL’s main primetime package to Sunday, where people would already be home and where flexible scheduling could allow the league to ensure quality matchups throughout the season, but ABC was loath to interfere with the ratings hits they had found on Sunday night.

Bob Iger, Eisner’s heir apparent, was convinced NBC had no interest in the NFL, and so was willing to wait for the dust to settle over his own ascension, but the league’s executive vice president of media, former ESPN head Steve Bornstein, slowly brought Dick Ebersol around and inked a $600 million/year deal to take over NBC’s Sunday nights. It’s possible Disney could have kept both packages for much less than they ultimately paid had they jumped in sooner; instead, Iger was left with no choice but to accept a $1.1 billion deal to put Monday night games on ESPN. (Under the old arrangement, ESPN and ABC had paid $1.15 billion combined.) Just like that, ABC’s Monday night tradition was over.

NBC benefitted from the new flex-scheduling arrangement, but ESPN began setting cable ratings records left and right. By the time ESPN’s first season of Monday night games was over, it already accounted for the nine most-watched programs in ESPN history – in other words, more than half the Monday night games in just the first season had beaten every single Sunday night game on ESPN – including one game that became the most-watched program in cable television history, beating a 1993 CNN debate between Al Gore and Ross Perot, a record ESPN would set again each of the next three seasons and then hold until the BCS deal came along.

Monday Night Football still had cachet, was still a destination program, even if the NFL considered it on par with ESPN’s old Sunday night package and lower in the pecking order than what NBC had; it was the one game that had people’s undivided attention all day, and ESPN was able to build up to it all day and make it a true event. NFL games may have put ESPN on the map, but the move to Monday night established ESPN’s NFL games – and thus ESPN itself, and cable as a whole – as destination, must-have television. On the flip side, the end of Monday Night Football marked the end of ABC Sports itself; by the time the 2006 season, the first under the new deal, started, all sports programming on ABC had been rebranded as “ESPN on ABC”, complete with ESPN graphics. Soon, the sports that were airing on ABC began to inexorably dwindle.

But the NFL also opened a package of eight games on Thursday and Saturday nights up for bid. While Comcast on behalf of its Versus network, NBC Universal on behalf of USA, and Turner all expressed interest, the league ultimately opted to put the games on its own network, foregoing a rights fee in exchange for getting better distribution for its network whose profits the owners would all share in. It didn’t work as planned; for the rest of the decade the league constantly fought cable providers for carriage. Comcast initially offered the network to its digital cable subscribers the first year but moved it to a sports package the next, while Time Warner Cable and Cablevision, among others, held out entirely, many refusing to carry the network unless the league made the Sunday Ticket package available to them.

The league was able to get broad distribution for the network on Comcast again and break several other holdouts by offering a modified version of the Red Zone channel DirecTV had been offering Sunday Ticket subscribers as a premium service, but couldn’t get Time Warner Cable and Cablevision on board until it increased NFL Network’s schedule to a full season in 2012. It was the first high-profile carriage dispute arising from quality sports programming being placed on a marginally-distributed network cable providers were loath to carry at the prices they were being charged, but it would be far from the last.

The power of sports programming has the potential to create some strange bedfellows. It is such that two very different media companies can be drawn very close together almost entirely on the back of their complementary assets that they can bring to a sports contract, to the point of drawing speculation about a merger. Such is the case with the split between the CBS Corporation and Viacom in 2005, a split borne of personality conflicts between Les Moonves and the head of MTV Networks as well as a generally stagnant business, one that promised to insulate MTV Networks from the slower-growth businesses that CBS inherited, yet which created two companies with very similar revenues – and CBS was the one better situated to take advantage of the boom in sports rights… if it weren’t for most of the old Viacom’s cable networks joining the new Viacom.

By 2010 CBS wanted to get out from under a contract to air the NCAA Tournament that was set to lose it considerable amounts of money each year, to the point of engaging in talks to get ESPN to take it off its hands. Certainly the NCAA was very interested in moving most of the tournament to cable, which not only had the potential to increase the rights fees the NCAA collected but also allowed every game to be shown nationally, without the regionalization CBS had engaged in. CBS ended up retaining the tournament by forming an alliance with Turner to show games on TBS, TNT, and truTV in addition to the CBS broadcast network. Turner had never shown college basketball before and truTV, once known as Court TV, had never shown sports of any kind before, but Turner went so far as to start alternating the Final Four with CBS starting in 2016 (later negotiations allowed TBS to show the national semifinals in 2014 and 2015 while the national championship game remained on CBS).

CBS’ lack of any credible cable network prevented it from holding on to the tournament on its own, but neither was Turner in particularly good position to mount a bid without CBS. For the moment, the ability to partner with a broadcast network remains a critical piece of any effort to build a strong cable sports operation. To be sure, Turner’s strategy, as an owner of general-entertainment networks with almost-vestigial sports programming, has generally consisted of limiting itself to high-profile, big-ticket items like the major sports, but that didn’t prevent it from losing the rights to its portion of the NASCAR schedule, in part due to monetary losses. Since the NCAA Tournament deal, Turner has repeatedly looked for other properties to put on truTV, and has reportedly looked into turning it into a sports-heavy network, possibly moving over their MLB and NBA programming from TBS and TNT, but hasn’t been able to secure any other properties to put on the channel.

CBS’ broadcast network and Turner’s cable networks have talked about alliances for other sports rights, and CBS and Time Warner present complementary pieces in other ways as well – the two entities each own half of the CW network – with the only real point of competition between their respective television networks being the premium-cable networks HBO and Showtime. Even so, you’d expect any talks of an actual merger between the two companies to be limited to a very superficial analysis by a poster on a message board, yet it’s something respected financial analysts have discussed since the start of the NCAA Tournament alliance. There are a whole host of reasons to expect such a merger to remain limited to people’s fantasies, but given just how important sports have become, it’s easy to see just how enticing such a merger can look to armchair CEOs.

The prospect of ESPN and Fox competing to rack up sports rights, while also fending off advances from NBC, as CBS and Turner lurk trying to get their own piece of the action, has sports leagues salivating at how high it could drive their rights fees. Even for those without a horse in the race, the competition between the bunch of them can often seem like something out of a soap opera.

Major League Baseball has already seen the benefits the newfound competition can net them. Already it had benefitted from the steps taken by the NFL and NBA to move to cable: its 2006 rights re-negotiations placed almost the entire postseason on TBS, which ended its long tradition of national Braves games in favor of a general package of games on Sunday afternoons, with only the World Series and one League Championship Series remaining on Fox. (Previously Fox and ESPN had split the postseason with Fox airing both LCS’s and marquee Division Series games, effectively taking over Fox’s primetime in early-to-mid October.) But by 2012 it found itself in position to take advantage of its position as programming it would be hard to replicate, certainly in the near term, on sports networks.

First, it renewed its existing deal with ESPN. The new deal was not much different from what ESPN had before: ESPN kept its Sunday, Monday, and Wednesday night packages, only adding games on holidays, one game from the new Wild Card round, and any tiebreakers, yet ESPN paid close to double what it had been paying under the old contract. Doubtless a big part of the premium ESPN paid was to reduce the value of baseball to any other competitor, especially NBC, by locking them out of any of the most popular cable packages. Baseball intended to consolidate its remaining inventory to a single partner.

Desperate to maintain its presence in baseball that helped build TBS into what it became today, Turner began talking with CBS about an alliance that could allow CBS to air as little as the All-Star Game and World Series, but baseball was skeptical about the offer. That left the remaining inventory as Fox’s to lose, but Fox was unwilling to take on the weak Sunday afternoon package TBS had held for the price baseball was asking, so baseball ultimately split the rights between TBS and Fox. End result: Fox has two time slots every Saturday, with the vast majority of those games airing on Fox Sports 1, and splits the division series with TBS along the same league lines as the LCS, again with as many games as Fox wants, potentially up to and including (as is reportedly planned this year) every one of its LCS games, on Fox Sports 1, except for two games surrendered to MLB Network, while TBS reduces its Sunday afternoon commitment to the later half of the season. Both entities also paid double what they were before, despite TBS’ reduced commitment.

The biggest leagues and conferences may be salivating at having multiple competitors groveling at their feet for the valuable programming they represent, but smaller leagues, conferences, and events may benefit even more. With multiple ESPN networks, plus Fox Sports 1, NBCSN, and CBS Sports Network, there’s a lot of time in the day that needs to be filled. All these channels are desperate for programming, and that’s very good news for entities that might otherwise be completely ignored.

This is especially the case for CBS Sports Network, which is substantially weaker than the others, and which has signed contracts with the likes of Major League Lacrosse, the National Lacrosse League, the Arena Football League, and the last, abortive season of the UFL. After George Mason’s magical run to the Final Four and other NCAA Tournament success, the CAA managed to secure a substantial number of games on NBCSN, only to lose many of their best teams to the Atlantic 10, which also had a deal with NBCSN; NBCSN also has agreements with the likes of the Canadian Football League.

However, no sport may have benefitted more from the rise of cable sports networks than soccer, whose rise in the American sports landscape has been intertwined with the rise of digital cable, especially the Fox Soccer Channel, which launched in 1997 as Fox Sports World. For its entire existence through its closure last summer, Fox Soccer was the home to England’s Premier League, and as such was instrumental in spiking its rise in popularity. By the end, the Premier League was joined by games from Italy and occasionally France, as well as Europe’s biggest club competition, the UEFA Champions League, while GolTV, a significantly smaller operation launched in 2003, carried games from Spain and Germany, and sublicensed some of the former to ESPN.

Then Al Jazeera, the outfit best known as the news operation that aired Osama bin Laden’s tapes, stepped in, spiriting away the Spanish, Italian, and French leagues to create a network in beIN Sport that cable operators would have to carry, decimating GolTV and taking away a significant part of Fox Soccer’s depth. Fox Soccer, in many ways, became a victim of its own wild success; it built up the Premier League so much stateside that NBC swept the league away with a new deal that made it featured programming for NBCSN. Combined with also losing its MLS inventory to NBC, it made Fox Soccer’s conversion to the entertainment channel FXX inevitable, even with the Champions League set to be joined by World Cup soccer and other FIFA competitions. But starting next year Fox will take the German Bundesliga away from GolTV, leaving them with mostly South American leagues and potentially setting up the Bundesliga as the second-most popular European league in the states with most other leagues on the much-smaller beIN Sport.

Television has long had an impact on the biggest sports, but with sports increasingly becoming more important as programming for cable networks than in their own right, nearly every one has contorted itself to extract more money out of its partners, even in ways the fans may not like but will watch anyway. Such was the case when the NCAA considered expanding the basketball tournament to 96 teams during its 2010 renegotiations, as well as when baseball introduced its new wild-card games – in both cases motivated at least in part by a desire to increase inventory to sell to television networks. No doubt the evolution of the BCS to the new College Football Playoff was motivated as much by the desire to extract more money out of a TV partner as by the outrage surrounding the BCS system. And of course we’ve already seen how TV money has fueled conference realignment in college sports. Even smaller sports have been affected: Oracle head Larry Ellison signed an agreement to show the 2013 America’s Cup on NBCSN and designed a fast-yet-dangerous boat to make the race more TV-friendly, earning criticism and pricing almost all potential competitors out of the race.

Nothing shows the power of TV money to shape a sport, however, quite like the NFL. Forget the introduction of the Red Zone channel or the recent move to 4:25 ET starts for its late-afternoon doubleheaders. Consider that the NFL (and to a lesser degree, football as a whole) has come under fire in recent years over the issue of concussions and player safety more generally – yet the league has expanded its Thursday-night slate to a full season, meaning every team will have to play after only three days’ rest once a season, and continues to toy with the idea of expanding the regular season to 18 games, meaning more wear and tear on players’ bodies. But two more games means collecting another pound of flesh from the TV partners, and an expanded Thursday night slate means the possibility of selling some of it to a cable outlet – possibly one like Fox Sports 1 or NBCSN that would fall over itself to get the valuable programming of the NFL, even if the quality of play on Thursday nights has tended to be poor.

But when the NFL finally did sell part of the Thursday night package earlier this year, they made clear that whoever got the package would simulcast games on NFL Network, and that they were primarily looking to do business with a broadcast partner, not a cable network. The NFL didn’t like how the Thursday night games were lagging behind the other packages in viewership; by putting games on the largest possible platform, the league hoped make Thursday more of a destination night for football, thus increasing the value of the package for a longer-term deal. Audience size still matters, even for the almighty NFL, and broadcast television still provides the largest audiences. How much of the relatively weak Thursday night audiences are due to NFL Network’s still-relatively-limited distribution, how much due to some of the weaker teams the NFL’s rules require to play on Thursday night (the NFL has made clear it sees CBS’ part of the Thursday package as on par with NBC’s Sunday package), and how much due to the poor play that comes with only three days off, are all things the league will find out as the package plays out later this year. The requirement to simulcast games on NFL Network suggests that the NFL may still be leaving open the possibility of keeping games there without selling any at all over the long term.

Tomorrow: How the bubble may already be bursting and what the future might hold for sports and television in general.

The Nexus of Television and Sports in Transition, Part I: The Worldwide Leader in Profits

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Situated on US 6 about 20 miles southwest of Hartford, the town of Bristol, Connecticut, was one of the early New England industrial towns. Incorporated in 1785, a few years after the end of the American Revolution, its economy took off as it became known as a clock-making town, eventually becoming home to the American Clock and Watch Museum, and later became known as the “Bell City” for its role as a center of doorbell production. As you approach the town from New York along quaint two-lane Route 6, the 19th-century style of architecture New England is so famous for gives way to forests and then a large reservoir, until you cross a railroad track and begin seeing rows of strip malls and small houses on your left, nothing to distract you too much from the Connecticut foliage and fields. Approaching from Hartford on Route 6 in the other direction, the four-lane highway slows down and shrinks to two, then as soon as you hit the line you’re slammed with gas stations and car dealerships as the road widens again through modern suburbia. Approaching from Providence and other southeastern points (or even Hartford) on Route 72, the expressway seemingly isolated from all civilization comes to an end just short of the town line, but the road continues as a four-lane divided parkway, avoiding the Forestville area and continuing not to engage with the surrounding, though visible, community until after it passes Malones Pond, beyond which it speeds past apartment buildings and incongruous houses.

Approaching from New Haven, which is almost due south of Bristol, Google Maps recommends taking Interstate 91 to Meriden, then turning onto I-691. As I-691 approaches its west end, a single lane splits off to form an on-ramp to eastbound I-84, leaving the other two lanes to continue west. A sign welcomes you to Bristol’s neighbor Southington before the ramp even reaches I-84, and scenic vistas speed by along the long ramp as various roads pass underneath; by the time you finally reach I-84 only the single-lane nature of the ramp tips you off that you weren’t on it already. The freeway remains fairly straight but abruptly turns left as you hit Exit 30, then swings right and remains relatively straight again, but prepares to curve to the right as you take Exit 31 to route 229. As the off-ramp rises to meet the road, a collection of signs on the left informs you what awaits in Bristol if you turn that way, none of them mentioning the most salient feature of this road into Bristol. After the initial spurt of gas stations and a turn-off to a Target near the I-84 interchange, Route 229 settles down past some relatively nondescript houses and other businesses; though initially a four-lane highway, the southbound side soon shrinks to a single lane as the highway becomes lined mostly with trees, eventually opening up to more houses and a few churches, which, punctuated with occasional spurts of businesses, remains the general character of the highway for some time.

And then, before you even get to the town line, you see it. Until recently, the first thing you saw was just a mass of brick buildings, only different in height from any other office park, stretching off into the distance; then the road turns left, widens back to four lanes, and hits a stoplight at a dead-end road. Then you see the massive parking lot, the humongous artifice (most of it all one building) of brick and glass, a satellite dish facing the roadway. More satellite dishes face the dead-end road you passed up, where you could see the full majesty of what lies before you. This is the headquarters of ESPN, the most powerful brand in American media, once a plucky underdog in the American sports landscape, now a seemingly unstoppable multi-billion dollar juggernaut that has become the profit engine of the Walt Disney Company, far more important to the House of Magic than Mickey Mouse. Here, in a random town in the middle of Connecticut, is the capital of the American sports universe, a place that now finds itself at the epicenter of an increasingly heated debate over the increasingly important role of sports to the cable TV industry, the many millions of dollars flowing into Bristol and from there to leagues and conferences across America and the world and its starting point in the pockets of cable TV consumers, and even the future of the television business itself.

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Is Aereo Legal? Should It Be?

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(Disclaimer: I am not a lawyer, and I could very easily be talking out of my ass here. Take everything you read here with a grain of salt.)

The Supreme Court is set to decide, at least in part, the fate of Aereo; plaintiffs’ amicus briefs were due Monday, Aereo will present its opening argument by March 26 with amicus briefs in their favor due by April 2, and oral arguments will begin on my birthday, April 22. For those not familiar with it, Aereo is the service that has set up tons of tiny antennas and rents each one out to each of its customers. Customers can view free, over-the-air TV from their personal antenna over the Internet on whatever Internet-connected device they wish, and record said over-the-air TV on Aereo’s cloud DVR. Aereo claims that it is merely helping people access the free, over-the-air TV they’re entitled to, but if you think the foregoing description sounds like an unnecessary technological kludge, you’d be right. Broadcasters have been suing Aereo in any court they can, convinced that Aereo is getting away with not having to pay retransmission-consent fees cable operators are subject to, and fearful that cable operators might decide to do the same thing to get away from retransmission consent fees themselves.

That this is the issue is important, because the issue being presented to the Supreme Court is the notion that Aereo is engaging in a “public performance” in violation of copyright law. And as kludgey as the foregoing description is, it would be ridiculous to argue that it is based on it; Aereo isn’t engaging in any sort of “public performance” beyond what broadcasters are already doing with their free over-the-air signals, and any notion that what people do with their personal DVR service constitutes any sort of “public performance” is ludicrous, not to mention contradictory to past court decisions. In fact, it’s been argued that a decision against Aereo on this count could set a dangerous precedent that could preclude other technologies such as Slingbox.

Let’s be clear here. Aereo is clearly trying to take advantage of a loophole in the retransmission consent (not copyright) rules, and if it keeps winning in the courts Congress is going to have to step in, if only because it could render the retransmission consent regime unenforceable. Given that Congress is likely to close the loophole on which Aereo rests anyway, the Supreme Court doesn’t need to step in in order to kill Aereo. As such, it should avoid a decision that results in any sort of unintended consequences just to kill Aereo. The Supreme Court could rule on whether or not the loophole Aereo claims to have found exists, but it’s not its place to legislate it out of existence.

Broadcasters have argued that an earlier court decision in favor of Cablevision’s cloud DVR service doesn’t apply here, because Cablevision paid for the copyrighted content. But what about someone with an over-the-air antenna hooked up to a Slingbox? What has that person done to “pay for the copyrighted content”? Nothing, at least not to the broadcasters. Yet it’s obvious that such a situation is fully legal and within the intent of the law: Congress has mandated that television signals broadcast over-the-air be available free for anyone with an antenna to pick up, and the Betamax decision established the legality of recording content for personal use.

To close the loophole on which Aereo rests, Congress would need to figure out what differentiates the above situation from what Aereo is doing. One way it could do so is by noting that Aereo is charging for access to free over-the-air TV. In other words, Aereo is making money off of broadcasters’ free over-the-air signals, and so is bound to kick some money back to them. If Aereo were really interested in just helping people access the free over-the-air TV they’re entitled to from their own personal antenna, they wouldn’t be charging rent for access to that antenna (which implies that Aereo, not the consumer, actually “owns” that antenna). But that has nothing to do with copyright, and if that’s not what retransmission-consent law says already, that’s not the place for the Supreme Court (or any court) to decide that it does.

What does the Comcast-Time Warner Cable merger mean for you?

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It certainly doesn’t sound good when the two largest cable operators, substantially bigger than any of their non-satellite rivals (a year ago TWC had 12.2 million subscribers; even counting telco companies Verizon had only 4.7 million), announce they’re going to merge. As part of the deal, Comcast announced it would sell off systems representing 3 million subscribers to other parties, getting to 30 million and under a former 30% cap that had been thrown out by the courts. Were it not for that, the combined Comcast-Time Warner monolith would have had control over fully a third of the market, over seven times that of the next largest cable company, and nearly as big as DirecTV and Dish Network combined. But what would that actually mean?

Cable operators are natural monopolies; with the exception of a few “overbuilders” (none of which have more than a million subscribers), in most places you only have the choice of one cable operator if you don’t want to get a dish or Verizon or AT&T aren’t available. There’s basically nowhere where Comcast and Time Warner Cable were in direct competition with one another. The fear of a Comcast-TWC merger, it seems, is that such a behemoth could basically set up shop wherever it wanted and keep other cable operators from growing, but even then it’s hard to see how realistic that is. (Or maybe that Comcast could afford to rest on its laurels in terms of service, making it even more Comcrap.) Comcast’s purchase of NBCUniversal had the potential to be far more detrimental to the consumer in this light.

The image that comes to mind when it comes to horizontal integration on this scale is the former AT&T telephone monopoly, but even that was not broken up so much because of its overall reach but because of its vertical integration with AT&T’s business selling telephones and using its control of the phone network to undercut rival phone sellers. Perhaps the analogous fear is that Comcast will use its broad reach to show preferential treatment to NBCUniversal networks, crippling rival programmers by denying them access to 30% of the country or subjecting them to onerous conditions to get there, but it’s not clear that’s actually possible, certainly not as cable providers increasingly become Internet providers first and foremost – especially given the conditions Comcast agreed to as part of the NBCU deal, including abiding by net neutrality even after the courts threw the FCC rules out last month. If anything a larger Comcast (which, if it continues negotiating for Bright House Networks as TWC had, will be negotiating on behalf of 32 million subscribers) might actually lead to positive outcomes for consumers in the long term, standing up to increasing rights fees asked for by other programmers, especially ESPN – though of course Comcast’s own stake in content production might still give them an edge that results in worse outcomes for rival content providers and consumers. (Time will tell if the new Comcast’s approach to sports networks will be more like that of Comcast – which has largely avoided rocking the boat with anyone en route to a portfolio it proclaims as “your home for the most live sports”, legal wrangling with Tennis Channel excepted – or Time Warner Cable, with its high-profile showdowns with the likes of NFL Network, MSG, Viacom, and broadcast networks like CBS and Fox.)

Of course, where those fears might be well founded is in how much leeway Comcast has had even under net neutrality rules, including engaging in its own carriage disputes with bandwidth providers, throttling traffic on video sites, and imposing broadband data caps. A monolithic Comcast/TWC union could still conceivably, without restrictions imposed by Congress or the FCC or agreed to voluntarily by Comcast, create winners and losers in the Internet marketplace, to the point of being able to throttle cord-cutting for a substantial number of Americans. That underscores the importance of allowing as much video as possible to be transmitted over the air where it can lie outside of Comcast’s reach.

An Open Letter to FCC Chairman Tom Wheeler

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To: Federal Communications Commission Chair Tom Wheeler
CC: Other FCC commissioners, the United States Senate Commerce Subcommittee on Communications, Technology, and the Internet, the House Energy Subcommittee on Communications and Technology (and any other interested members of the House of Representatives), the National Association of Broadcasters, and all concerned citizens reading on MorganWick.com

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The Problem With Internet Companies Getting Major Sports Rights

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I have a much longer series of posts planned on the broader issues surrounding the current era of sports on television, but I wanted to make this particular point because I think it’s particularly important.

The NFL is reportedly still considering an expansion and splitting of its Thursday night package to sell to another partner, and is reportedly interested in potentially selling games to a tech company like Google or Netflix. This comes as the NBA, still in the process of negotiating its next TV package, has been speculated to potentially also sell games to a tech company. And that comes amidst years of speculation that tech companies like Google, Apple, Microsoft, Facebook, or Netflix, could be the best candidates to challenge ESPN and completely upend the sports TV wars.

But I’m still unconvinced that Internet companies are really the threat they’re made out to be. In my opinion, the speculation surrounding them is mostly superficial and based on only a few factors, without seriously considering the circumstances and what their entry into the market would actually mean, and I don’t believe they’re a realistic candidate to score sports rights, or that if they are that it would turn out to be a good idea, or that if it does that they would really be as revolutionary as they’re cracked up to be.

For one thing, I’m having a hard time seeing exactly how tech companies would distribute games and make money off them. I can’t imagine Google would simply slap games on YouTube, as that would mean they would need to collect money through advertising alone, when the great advantage of sports networks like ESPN is their dual revenue stream of advertising and subscriber fees. That means tech companies would need to restrict access to the games in some way, and most of the options don’t sound very promising. Would Apple restrict games to users of iOS devices and Apple TV, or Google restrict them to users of Android devices and Google TV? That seems like it would have the potential for disaster as people would be shut out for choosing the wrong product, especially if we’re talking about being the equivalent of a national television partner as opposed to getting a piece of the out-of-market package. A company like Netflix could distribute games to its subscribers, but that would be the equivalent of a premium channel at best. The best-case scenario probably involves Facebook or Google effectively blackmailing people into signing up for their services in order to view the games, but even then I’m not seeing how that would help them raise enough money to be competitive with sports networks.

And none of these approaches would avoid the other issues, certainly not the issue of being a middleman. The nature of TV is such that sports benefit from distributing their games through middlemen, which is why none of the sports leagues that own their own networks have abandoned their relationships with other partners; from its humble beginnings as the Outdoor Life Network, the entity now known as the NBC Sports Network has acquired more and more properties to obtain more distribution than any sport-specific network other than Golf Channel and, until this past August, Speed – and those two had a multiple-year head start on gaining distribution before the full effect of the sports TV wars set in. In theory at least, fans of any of its properties can drop in on coverage of any other property, thus broadening the exposure to that property. But the open nature of the Internet already provides exposure to anyone who wants to drop in, so I’m not sure what sports leagues would gain from selling games to Google when they could cut out the middleman and distribute games themselves. In this sense, Major League Baseball has already entered this territory; its MLB.tv service regularly offers one game for free each day to non-customers.

But none of that begins to approach the most fundamental issue, the basic distinction between the Internet and television, which I laid out before: the Internet is good at distributing many programs to a few people, but television is good at distributing a few programs to many people. The Internet effectively consists of one “channel” for each of its customers, meaning you have a channel that you can program yourself, allowing you to watch whatever you want whenever you want. But if many people want to watch the same thing all at once, i.e., some sort of live event (i.e., a live sporting event), they all have to watch it on their own individual “channels” – the server has to serve the event to each individual computer that asks for it. We saw the result with the massive issues NBC had with streaming of events at the London 2012 Olympics, and those didn’t reach more than a million or so people at a time. Things haven’t improved that much since then:

Perhaps the issues surrounding large-scale Internet streaming can be fixed with bigger pipes and more investment in servers and the like, but this structural issue will remain: why distribute the same event many times to each individual customer if you could find a way to distribute the event once and allow anyone, at least with the proper credentials, to hop on the stream with no additional strain on your end? On this front, it’s instructive to see how the mobile world, which (at least at the moment) already lives in the world where all television is over the Internet, is dealing with this issue, and it’s clear that they at least recognize it: AT&T has begun work on a network that will precisely allow them to push video out to many different devices at once. One thing strikes me about this project: it is a completely separate service that requires use of completely separate spectrum from AT&T’s normal 3G/4G network (indeed, spectrum that had most recently been used for a similar service). In other words, once you begin broadcasting the same signal for any device to hop on to, it is no longer the Internet, at least not as we know it. In this particular case, it becomes something fundamentally not that different from over-the-air broadcast television – indeed the spectrum in question may well have once been TV spectrum.

Once the distinction between and relative strengths of TV and the Internet are recognized, it’s clear that at least on a large scale, showing a single live event for everyone to view at once is something the Internet simply is not suited for. The great advantages of the Internet for viewing video are the ability to view it anywhere you want and to watch whatever you want whenever you want, but only the former applies to live events like sports, and even that goes away if the technology is developed to deliver content to many devices at once. Broadcast television is already halfway there, but is currently only reaching mobile devices through optional kludges attached to the existing broadcast standard, rather than having one standard suited to reaching all devices whether stationary or on the go. If the television industry recognizes its place in a future where Internet distribution of video reaches maturity – a place where its purpose becomes refocused specifically on the broadcasting of live events – adopts a standard that maximizes its investment in its existing infrastructure and reorganizes its business accordingly, it can survive and effectively compete in that future for years to come, even if that future is substantially different from what exists now.

Breaking Bad and the future of scripted linear television

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Of the many cable series that have attracted tremendous critical acclaim and popularity in recent years, there is one in particular that seems to be reaching its zenith in popular culture in its final year, one that has certainly received its share of critical acclaim but isn’t even the biggest critical darling (or, arguably, most popular show) on its own network. That show is Breaking Bad.

Grantland’s Bill Simmons describes how Breaking Bad airing its last few episodes head-to-head with Sunday Night Football over the next few weeks is forcing him to make the sort of decision that seemed to have been left behind in the pre-DVR era:

Back then, most people couldn’t record two shows at the same time, and you didn’t have to worry about an unexpected moment being spoiled on Twitter…So you simply recorded The Wire and watched the game live. And that became the habit on Sunday nights, at least for me — record the good Sunday-night show (Mad Men, Game of Thrones, Dexter, whatever), avoid it until the football game finished, then throw that episode down like television dessert…[But] this final season of Breaking Bad changed the rules…It’s the greatest final season of any television show. At least so far. Two different times this season (including last week), the show ended in such an electric way that I didn’t even know what to do with myself. After last Sunday’s episode, I somehow ended up in my backyard — I don’t even know how I got there. And there are three episodes left!…For the first time, I find myself choosing an already-filmed, can-watch-it-whenever-I-want television show over live football.

At a time when DVRs and online streaming threaten to make the traditional linear broadcast schedule obsolete for scripted shows, is Breaking Bad a glimpse into the future, a preview for how a scripted show on a linear television network can be so compelling as to pull a sports fan away from the almighty NFL? Outlining how Breaking Bad got to this point, Slate’s Willa Paskin describes an aggressively modern, yet potentially soon to be normal, rise to prominence, and identifies in Breaking Bad the qualities that can allow a scripted show to survive on linear television:

The ratings success of Breaking Bad shows that excellent programming can grow an audience, a big audience, if treated with proper patience…Breaking Bad is also, perhaps, proof of what a really propulsive plot can get you. Mad Men was media-friendly and stylistically aspirational from the very start, but it does not have the same What happens next?! vibe as Breaking Bad, and its slower-growing audience reflects that. Don Draper looks great and deep, but there is still nothing like a cliffhanger to make sure an audience checks in at the appointed time.

Once you’ve had a shot of a show like Breaking Bad, in other words, it’s like crack (or, perhaps more appropriately, meth): it keeps you coming back every week to find out how the story unfolds next. Social media reinforces this process and forces someone like Simmons to tune in at the appointed time, not a second later, lest spoilers litter the feed. HBO understands this well, which is why so many of its most popular and talked-about shows, like Game of Thrones and True Blood, are heavily serialized.

But while such shows can ensure that no one who starts watching will dare to stop, it can also make it difficult for any potential new viewers to join in, lost in the thicket of continuity built up over the seasons. This helps explain why broadcast networks have typically been reticent to air serialized shows in primetime. Instrumental in the slow growth in Breaking Bad‘s audience and AMC’s willingness to wait for that audience to build, Paskin notes, was the ability to catch up on past episodes on Netflix; even if the show premiered with middling numbers, any new viewer could watch all the previous episodes and be as up to speed as someone there from the beginning. (Webcomic aficianados may recognize this as the archive binge.)

If and when the day ever comes that a scripted show can just as easily be released over the Internet as over a traditional linear television channel – and that day may be fast approaching, given Netflix’s own investment in original series – there will need to be a good reason for it to be tied down to a slot on a linear television channel, a reason that can compel millions of people to tune in at one particular time, as opposed to watching at their leisure. Ironically, the best bet for compelling such behavior is another aggressively modern technology, social media, and the desire to engage with the discussion about the show on social media or simply avoid the spoilers that discussion inevitably contains.

In other words, the most important property that the TV show of the future can have is the modern equivalent of “water cooler value”, and that value is amplified when people are so engaged with the content they have to see “what happens next” as it happens. As I explained four years ago, the latter is best served with serialized installments doled out slowly on a regular basis to build anticipation for what comes next, which Paskin suggests belies Netflix’s own strategy of releasing entire seasons of its own original series at once. If it becomes harder for a scripted series to justify its place on a linear television schedule, then such serialized shows are investments requiring much more patience than broadcast networks have shown in recent years, and the ability to easily catch up on past episodes is instrumental to allow the audience for such a show to grow fairly quickly over the seasons. Regardless of whatever else you may think about the CBS-Time Warner Cable dispute that ended earlier this month, this is why Les Moonves’ desire to secure CBS’ right to sign digital distribution deals with platforms beyond cable operators was so relevant.

I personally think most of what currently passes for a scripted show on linear television will move to the Internet within a decade. What’s left, though, will need to provide a good reason for people to come back at the exact same time every week – and in doing so, they may want to take a few pages from webcomics’ playbook.

In Defense of Broadcast Television

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Technology has radically changed how we consume video, and how we will consume it in the future. Though much of the current landscape still reflects the cable television paradigm that became mainstream in the 80s and 90s, we are fast approaching a critical point that will establish the new paradigm going forward, as on-demand streaming of TV shows becomes more and more popular. The Internet has blown the “thousand channels” once promised by cable out of the water with a seemingly limitless selection of video, all waiting for you whenever you want. Soon, your television and cable box could be replaced by a computer that can pull up shows from the Internet, rendering any older concept of the “television” obsolete.

Yet another aspect of technology may in some ways shake up the landscape even more, if only in how it shakes up our definition of a computer itself. This is the rise of mobile devices such as smartphones and tablets, devices that connect to the same Internet as more conventional computers even if they do so in ways that present themselves differently to the end user. There may not be any distinction between TV and Internet in the future, but these devices are counting on it, because they have no way to connect to cable TV other than by using the Internet as an intermediary. And if the Internet itself changes when we consume content, mobile devices change where we consume content. Ironically, this shift could make the question of “when” less relevant by making sure you’re never unable to catch your shows when they’re on (unless perhaps you’re behind the wheel of a car). Perhaps partly because of this, for the moment the consumption of content on mobile devices reflects the current cable television paradigm even more than the general landscape, with cable companies embracing the future they call “TV Everywhere” where any channel you can watch at home you can watch on your smartphone, tablet, or computer – if you “authenticate” with your cable provider.

The notion that in the future, there will be people that get all their video off the Internet in some way should give one pause, raising the question of what the implications are on a more basic level. What sort of infrastructure are we building for the consumption of video, and is it the right tool for all the jobs we might end up asking it to do?

Consider what happens when you watch a video over the Internet. Your computer (or phone, or tablet) sends a message that it’d like to watch a certain video, which the ISP (or wireless carrier) relays to the server on the other end. The server sends the video back through the network to the ISP, which delivers it to your computer. If someone else wants to watch the same video at the same time, specifically a streaming video showing something happening live, even if they’re on the same ISP or wireless carrier, they go through the entire process over again: their computer indicates that they’d like to watch a video, and the server on the other end sends it back to them. Not only the server on the other end, but even the ISP in the middle, has to deliver the stream to each of you individually; you can’t piggyback off the other guy. In effect, if a million people are watching the same thing, they’re effectively watching it on a million different “channels”.

This helps explain why NBC’s streaming coverage of the 2012 London Olympics ran into so many problems with just a million people watching at most (could you imagine if everyone who wanted to watch the Super Bowl wanted to watch it this way?), and why ESPN is reportedly trying to get wireless providers to exempt their WatchESPN service from data caps. The Internet is good at delivering a large amount of content to a few people each, but not so good at delivering a small amount of content to a lot of people each. That is the strength of over-the-air broadcasting, and admittedly linear cable television as well, and it’s a strength that shouldn’t be overlooked, even in areas beyond video; imagine if your device, whatever it is, was capable of passively receiving data from a wireless provider, broadcast station, or cable company, without specifically asking for it. A broadcast station can send out a single signal from a single antenna, and that signal can be seen by anyone with an antenna capable of picking it up; a cable company similarly sends the same signal across all its pipes, and your cable box simply tunes into the sliver you want (though cable companies have increasingly shown interest in “switched-broadcast” technologies that switch out a single sliver when you change channels).

It may seem as though all this means is that the Internet will never eclipse the existing linear television infrastructure, but the other principle once upheld by broadcast television, that anyone with the proper equipment can tune in for free, is one worth preserving even if the majority of people have been willing to pay for more options; the state of sports, which probably makes up the majority of this sort of live event, should serve to underscore that. If anything, the Internet seems to me to be more of a threat to cable than to broadcast. When you look at everything out there on cable, very little of what’s out there consists of the sort of live event people wouldn’t be willing to watch on their own time later; the Internet holds the potential to absorb most of the promise of choice cable once offered. If the demand for traditional linear television is more limited, if it reaches a level broadcast can fulfill on its own, cable television, not broadcast, becomes a relic of times gone by, squeezed out by the double whammy of the Internet and a resurgent broadcast.

Broadcasting, however, has not really effectively competed with the Internet. The digital television standard America finished transitioning to in 2009 had a number of flaws, both in and of itself and in the manner in which it was implemented, but perhaps the most critical was that it failed to anticipate the magnitude of the advent of mobile devices, devised as it was in the early 90s and with implementation beginning in the early 2000s, years before the birth of the iPhone. It was woefully ineffective at being received by anything but a traditional, stationary television set. The industry has responded by adopting a modification that allows broadcasters to transmit a second, low-resolution feed that can overcome interference, but it’s a kludge to overcome the deficiency of the original standard in the first place, and it says a lot that you probably haven’t heard of it or any of its implementations – with the end result that ABC has rolled out a separate app that allows users of mobile devices to watch the programming of participating stations over the Internet… but only – say it with me now – if you authenticate with a participating cable provider, an absurd outcome that results from broadcast stations attempting to play the cable networks’ own game by acquiring “retransmission consent” fees from cable companies, resulting in the seeming paradox that over-the-air broadcast stations would seemingly prefer that people not consume their content over the air.

In an age where this paradox has reached the seemingly inevitable conclusion of News Corporation COO Chase Carey’s threat to make most of the Fox network’s most valuable programming cable-only if anything happens to cripple Fox stations’ retransmission consent leverage, an age where, with only the ever-powerless and ignorant consumer seemingly left to defend the technology of broadcast, the FCC seems to be proceeding full-steam ahead to reclaim vast amounts of broadcast television spectrum on behalf of big wireless companies that don’t need it, it’s important not to lose sight of the important role the technology of broadcasting can serve in the video landscape of the future.