Dish Makes Bid for Sprint

Dish Network has put forward a bid to acquire Sprint Nextel for $25.5 billion, providing them entry into telecommunications markets - and mobile broadband in particular.  It also provides the potential to offer the combination of multichannel TV, broadband data, and mobile services that competitors AT&T and Verizon provides. 

  Dish, and fellow DBS operator DirecTV, have largely been limited to providing TV service in an increasingly converged digital marketplace.  They've made deals with other telecomm operators to offer bundled service packages in competition with cable and cable telco operators, but these efforts have become problematic as partners have increasingly turned into competitors.  Analysts suggest that the acquisition of Sprint would provide Dish with their own telecomm service, significantly grow their ability to provide digital bandwidth in package deals, and provide new business opportunities to create systems that could give consumers access to media, content, and communication services across a number of devices.  And placing them in a better competitive position with rivals AT&T, Verizon, and Comcast.

Consumers would be happy with the Sprint purchase, says Dish. "Someone who gives you more than 2 [gigabytes] for the same money, that's attractive," said Thomas Cullen, Dish executive vp of corporate development of Dish. "Nobody is going to have a bigger pipe than Dish-Sprint." The proposed deal could give customers 50 gigabytes.

The deal would also provide Dish with additional leverage over TV content providers, and position it for future growth.

Specifically Dish would gain in the one area many media executives -- traditional, digital, and otherwise -- know is coming: an aggressive rise of all media on mobile platforms.

In addition, rumors are starting to spread about a possible deal between Dish, with its Hopper service, and broadcast redistributor Aereo (as if the traditional TV networks and content producers weren't already fretting about those technologies and services).  It'll be interesting to see how this all plays out.

Source -  Dish Looks To Give More To Consumers - And Perhaps Rankle TV Nets, Too,  TVWatch

Streaming News: Dish out, Amazon beefs up

Dish, currently engaged in licensing struggles with cable networks and local broadcasters, has abandoned its goal of rebranding Blockbuster as a Netflix competitor.  Dish purchased the bankrupt Blockbuster in April 2011, with a goal of moving the Blockbuster brand into an online movie streaming service, while also using its remaining 1700 stores (at the time) to cell mobile handsets for a satellite-networked mobile service.  However, the FCC didn't approve a petition that would allow Dish to divert some of its satellite capacity from direct broadcast service to a terrestrial data and voice transmission system, and efforts to secure streaming rights for films and TV programming proved too expensive.

  Since first acquiring Blockbuster, Dish has managed to sell off or close almost half of Blockbuster's stores, and said more would be sold or closed as leases run out.  Dish CEO and founder Charlie Ergen explained, "you can't make enough money from just selling DVDs."  Still, the Blockbuster purchase wasn't a total bust - Dish used Blockbuster's inventory to create a DVD rental by mail service branded as "Blockbuster@Home," which also included some streaming services from Dish's On-Demand partners.

In the meantime, details are starting to emerge on Amazon's licensing deal with Epix.  In addition to the standard upfront fee to licenses a movie for streaming, Amazon agreed to pay a premium once the number of subscribers to the Prime Instant Video service reaches a certain level. A Reuters story opined,

"The generous terms of the deal, announced in September, provide the strongest evidence yet that Amazon is willing to pay up to be a player in this market as it faces a dwindling demand for DVDs--once its core entertainment offering--and tough competition for its Kindle Fire tablets."

Some analysts termed the 'pay for performance' aspect made the Amazon-Epix deal an example of 'online video deals 2.0'.  According to Wedbush Securities analyst Michael Pachter, "Hollywood loves it because they can say Amazon is paying us 'X' and we want more from you... It's a club they can use to beat Netflix over the head."

Sources -  Dish abandons plan to re-vamp Blockbuster as Netflix competitor,  FierceOnlineVideo
Amazon ratchets it up a notch with Epix streaming movie deal, FierceOnlineVideo

Cord-Cutting on the Rise

With the diffusion of broadband and the growth in online video options, there is a growing concern that viewers will drop expensive pay TV services from multichannel providers and go to local broadcasters and online video outlets for their programming.  This "cord-cutting" is starting to have a significant impact, with multichannel providers losing more than 400,000 subscribers in the last quarter.

  The economic impact on multichannels and networks is worse, as this number doesn't include those subscribers who dropped some or all of the premium services while maintaining basic subscriptions.  The premium movie channels and specialized networks are major profit centers for multichannel services.  A broad range of big entertainment companies, from content producers to networks to multichannel distributors generate much of their profits directly or indirectly from subscription fees paid to channels or bundlers.
  While the numbers aren't good, analysts note that the second quarter is traditionally a weak period for pay-TV subscriptions, with many subscribers moving or dropping services for the summer.  Historically, pay-TV services get most of those back later in the year.  However, the net year-on-year growth rate in terms of subscribers has slowed, and dropped below the overall growth rate in U.S. households with TVs.  Pay-TV's share is declining, whether due to cord-cutting or other factors.
  The cable industry has been particularly hard hit, as what had been (locally) monopoly markets have become fairly competitive, first with the rise of DBS (satellite) services, and more recently with telco-based multichannel providers.  Still, the multichannel market continued to grow overall - it was not until 2010 that the market experienced a net loss in subscribers.  Since then, there have been subscription losses in 5 of 9 quarters.
  For most of the last decade, cable systems have managed to keep revenues growing, offsetting the decline in subscribers with gains in premium services (HD, DVR, premium channels), local advertising revenues, and the provision of broadband services.  One-fifth of Charter's customers subscribe to broadband only. and Time-Warner Cable reported a 28% increase in broadband-only subscriptions over last year.  Even so, several cable operators reported declines in video revenues.
  DBS operators are also looking to broaden their revenue base, as both experienced drops in subscriptions last quarter (for DirecTV, it was the first quarter with a net reduction in subscriptions). Dish is working on building a wireless broadband network to enter that market.  DirecTV is looking to its expansion into Latin America, and bundles of international channels, to feed continued growth.

  The market for viewers (subscribers) is growing ever more competitive - not just in terms of sources for live TV, but in terms of increasingly accessible archives of movies and TV programs, specialty channels, and a massive supply of user-generated content.  Audience research shows that more people are watching videos delivered through the net, and that they the time they devote to online video is growing.  Every indication suggests that online viewing will continue to grow, and will cut into the time spent watching TV delivered by traditional distribution systems.  And as the cost differential between broadcast/online sources and multichannel sources increases, more people will end up cutting back on premium channels and services, or cutting the cord outright.  And multichannel video providers will need to find new markets to enter, or find new services that provide a better cost-benefit ratio for viewers, if they want to grow.

Source - Evidence Grows on TV Cord-Cutting,  Wall Street Journal

 

Univision adds new networks

Univision has landed its first distribution deal, with Dish Network, for three new cable networks set to launch on April 1 this year.  The flagship sports network, Univision Deportes will launch first, offering games from top Mexican soccer teams and other content from a Mexican sports channel..  Next to launch will be an all-novela network, building on the extensive and popular programming base for the long form drama series.  A 24/7 Spanish-language news channel will follow, hoping to take advantage of the U.S. election campaign as it starts to heat up.  Univision also announced programming deals that will enable it to add a second sports channel later in the year.  As part of the deal, Univision will make the novelas and other Spanish-language movie content available for Dish's Blockbuster@Home video-on-demand service.  The deal also calls for Dish to include retrs-consent payments for Dish carriage of Univision and Telefutura local TV stations.

Source:  Univision Lands First Carriage Deal For New Networks, MediaDailyNews

Video Subscribers down for most U.S. MSOs

For cable and DBS MSOs, the second quarters numbers are generally down, at least in terms of the video side.  As the table below show, DirecTV showed small gains in the number of video subscribers.  The rest of those listed saw declines - cable subscribers have actually been declining generally over the last few years, mostly moving to other Multichannel Services (DBS and teleco-based IPTV operators).  The major MSOs have been gaining voice and data subscribers, although mostly from their existing video subscriber base.

Q2 2011 Results - U.S. Multiple System Operators (MSOs)
MSO	Revenues	Revenue Gain/Loss Y-O-Y	Video Subscriber Adds/Losses	Voice Subscriber Adds/Losses	Data Subscriber Adds/Losses	Total Subscribers
Comcast	$14.3 billion	50.5%	(238,000)	193,000	144,000	49.1 million
DirecTV	$12.9 billion	13%	26,000	N/A	N/A	19.43 million
Time Warner Cable	$4.94 billion	4.4%	(130,000)	32,000	54,000	53 million
Dish Network	$3.59 billion	13.3%	(135,000)	N/A	N/A	14.05 million
Charter	$1.79 billion	1.1%	(79,900)	6,600	18,500	5.20 million
Cablevision	$1.68 billion	9.1%	(23,000)	27,000	5,000	3.64 million

Source: "Cable in the second quarter of 2011" - FierceCable 

Will Fox move off-air?

Fox is among the winners in the latest round of retransmission consent deals, reportedly receiving upwards of $1 per month per subscriber from cable systems.  Now the network wants 75-80% of that from its affiliates (after all, they argue, it's their programming that makes the affiliates' signals valuable).  If not, Fox seems to be threatening to move the channel to cable/DBS distribution, bypassing the over-the-air broadcast stations that now serve as its affiliates.

From TVWatch column

DirecTV first with 3-D channel

A new 3-D television network launched Sunday on DirecTV.  The network , called 3net, is a joint effort of Discovery Communications, Sony, and Imax Corp, and will reach some 18 million households in the US.
Probably several hundred of them having 3-D TVs.

"3-D television network set to launch on DirecTV," Broadcast Newsroom.