Cable operators, touting family tiers as an indecency solution, are limited by carriage contracts on how many customers they can sign up for the new packages. Agreements effectively limit the number of subscribers who can sign up for family tiers because cable operators make penetration guarantees to programmers, said industry officials. Renegotiating those agreements would take a great deal of time, they said.
Large telecom firms will have the capacity to sell video service to as many as 20% of existing customers by the end of 2006, Moody’s Investors Service said. But despite the huge investment they are making in fiber to do so, incumbent local exchange carriers (ILECs) “will be challenged to generate industry average returns on the capital invested to support their fiber build out strategy,” said Dennis Saputo, Moody’s senior vp, in a statement accompanying 2 reports by the credit rating agency. Competition from cable operators, with 73 million customers, and a potential for price shrinkage will challenge ILECs, said Moody’s. AT&T plans to spend $5 billion on Project Lightspeed to offer IPTV, while Verizon is expected to spend about $8.4 billion in 2006 on its FiOS fiber network (CD Jan 11 p1). That upgrade is a “transformational event,” Verizon CEO Ivan Seidenberg said this week. Microsoft, in tandem with AT&T and Verizon, said it’s trying to help them save money. “Driving the costs of set top boxes down, as low as they can go, is obviously a huge benefit to everyone in the equation,” Ed Graczyk, Microsoft TV mktg. dir., told us Wed. “The flexibility doesn’t stop there.” Telecom firms “will benefit to the extent that cable companies hold off the pace of their market launches” of VoIP, said a Moody’s report. ILECs may target DBS providers’ 25 million customers since satellite is “not likely to offer comparable product offerings or bundled pricing,” it said.
The FCC should take more care in reviewing applications for TV license renewal, media activists told Chmn. Martin and Media Bureau chief Donna Gregg. In a letter also sent to 3 FCC commissioners, the activists challenged Gregg’s Dec. suggestion that the Commission streamline processing of renewal applications (CD Dec 15 p13). “The current renewal process should be reformed, not made worse,” wrote ex-Comr. Gloria Tristani of the United Church of Christ, Charles Benton and Campaign Legal Center Policy Dir. Meredith McGehee. They cited complaints about lack of local news coverage. Late last year Media Access Project sought to block renewal filings by 20 stations, including major Milwaukee and Chicago stations, over their volume of state and local political news (CD Nov 2 p5). The Media Bureau and an FCC spokesman had no comment. The FCC should give greater scrutiny to stations when reviewing renewal requests submitted every 8 years, said Tristani. “The concern is that the process has become pro forma and perfunctory…and if anything, the process needs to be strengthened,” she said. “You can’t do that quickly and by further streamlining a process that is already bare-boned.”
Liberty Global (LGI) will probably sell WiMAX service in Australia and Chile this year, said CEO Michael Fries. The largest owner of cable systems outside the U.S. owns 3.5 GHz spectrum in the 2 countries, and will use the product to help meet regulatory buildout requirements in Chile, Fries told a Citigroup investor meeting in Phoenix late Tues. The company, whose chairman is John Malone, has RFPs out for WiMAX in the 2 countries. Fries estimated it will cost $14 per home passed in Chile. But he downplayed the importance of WiMAX for growth, repeating earlier comments that it’s better suited for broadband and VoIP than video. “Neither of them are huge in terms of spend[ing], but both of them are huge in terms of giving us the education we need… I think WiMAX will struggle to achieve scale as a stand-alone product,” said Fries, adding: “I think it’s going to be slightly longer than people believe to develop standards.” LGI also has spectrum licenses in European countries including Norway and Switzerland, said Fries. WiMAX is unlikely to be “a major revenue driver” for the firm, said Janco analyst Matthew Harrigan, who recommends buying the stock. “I think it’s a nice complement to their existing business, and maybe it enables them to go into some unserved areas.” In Europe, the company is focused on expanding sales of VoIP and broadband. With those services, Fries said, “beating on speed and meeting on price has worked in 2005, and you'll see more of that in 2006.” Amid speculation that LGI may sell assets in France, no decision has been made, said Fries: “We're looking at our options there. Are we a buyer, are we a seller? I'm not so sure what we do.”
Cisco’s purchase of Scientific-Atlanta (S-A) may be completed sooner than expected. It will close by March 31, said Tom Robey, S-A vp-investor relations. Announcing the $6.9 billion deal Nov. 18, the firms said it would be complete by April 29. “The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act… was terminated on December 30,” said S-A in an SEC filing last week. The transaction will close this quarter, after a shareholder meeting Feb. 2, Robey told us Tues.
SeaChange doesn’t plan to appeal a ruling that upheld a lower court decision it violated a patent owned by C- Cor’s nCube, a VoD gear maker. A damages award to C-Cor was upheld Mon. by U.S. Appeals Court, D.C. (CD Jan 10 p7). “I believe this effectively finalizes the lawsuit,” said a SeaChange spokesman, when asked about plans to appeal. SeaChange, estimating damages at $7.8 million, said in a statement that no software shipped since a May 2002 decision infringes on the patent. C-Cor was skeptical. “We have not seen any work around from SeaChange” of the patent, said a spokeswoman. “We believe a work-around would be difficult to accomplish.”
Controversy over NBC’s “The Book of Daniel” led 3 more affiliates to decide against carrying it, according to our tally, derived from comments by a group promoting “traditional family values” and the network. The American Family Assn. (AFA) has said Nexstar’s WTWO Terre Haute, Ind., was the first station to boycott the program, whose characters include a drug-using Episcopal priest (CD Jan 5 p7). KARK-TV Little Rock followed, said AFA. Emmis’ KSNW reversed its decision not to carry the show, said a company spokeswoman. “The station heard from many Wichita viewers that want the chance to view the show and make the decision for themselves, and we are offering them that opportunity,” she said. KBTV Port Arthur-Beaumont, Tex., and WGBC Meridian, Miss., decided to drop the show, said an NBC spokesman. A WB affiliate, KWBF, will carry the program -- scheduled to premiere during primetime Jan. 6 - - in Little Rock, said the official. Several of the stations’ gen. mgrs. didn’t return our calls. AFA said NBC has received more than 600,000 e-mails opposing the show; the spokesman said he believed that figure was overstated, but lacked an exact count.
Controversy over NBC’s “The Book of Daniel” led 3 more affiliates to decide against carrying it, according to our tally, derived from comments by a group promoting “traditional family values” and the network. The American Family Assn. (AFA) has said Nexstar’s WTWO Terre Haute, Ind., was the first station to boycott the program, whose characters include a drug-using Episcopal priest (CD Jan 5 p7). KARK-TV Little Rock followed, said AFA. Emmis’ KSNW reversed its decision not to carry the show, said a company spokeswoman. “The station heard from many Wichita viewers that want the chance to view the show and make the decision for themselves, and we are offering them that opportunity,” she said. KBTV Port Arthur-Beaumont, Tex., and WGBC Meridian, Miss., decided to drop the show, said an NBC spokesman. A WB affiliate, KWBF, will carry the program -- scheduled to premiere during primetime Jan. 6 - - in Little Rock, said the official. Several of the stations’ gen. mgrs. didn’t return our calls. AFA said NBC has received more than 600,000 e-mails opposing the show; the spokesman said he believed that figure was overstated, but lacked an exact count.
News from Washington Post Co.’s flagship newspaper will be available on radio broadcasts in the D.C. area by April 1. The owner of The Washington Post is working with Bonneville International in what one media critic said was the first arrangement of its type. Washington Post Radio will be carried on Bonneville’s 107.7 FM and 1500 AM. As part of a rejiggering of the broadcaster’s frequency allocations in the city, all-news station WTOP will be moved from those 2 locations to 103.5 FM, and all- classical WGMS will replace a popular music station on 104.1 FM, all owned by Bonneville. The “experiment” is “wonderful,” said Andrew Schwartzman, exec. dir.-Media Access Project, an activist who’s often critical of large media firms. “If they can successfully leverage Washington Post content onto radio, they are spreading their costs,” he said. He said the paper may also be able to boost circulation, at a time of declining readership of many large metropolitan dailies.
AT&T started selling video service last month in the San Antonio area, an official confirmed, as had been expected (CD Nov 7 p11). The company was mum on many details of what the spokeswoman called a “controlled market entry,” and declined to say where in the market it was being offered. Several hundred employees and customers are expected eventually to get the service, with “limited direct marketing efforts,” said the spokeswoman. AT&T’s Project Lightspeed is using set top boxes from Tatung in San Antonio, with software from Microsoft, she said. The firm has said it plans to use devices from Scientific-Atlanta, being bought by Cisco, and Motorola for the $5 billion IPTV project (CD Aug 19 p5). AT&T’s video plans, which differ from Verizon’s fiber approach, have drawn some analyst scepticism. “Questions remain over the scalability of the IPTV platform,” wrote UBS’ John Hodulik in a bulletin. The firm will have 95,000 video customers by Dec. 31, “which represents 1% of expected fiber qualified homes,” he wrote. “We're on track to start scaling the service in mid 2006,” said the AT&T official, declining to identify areas where video may be offered. The company is sticking with plans for the product to be available to 18 million subscribers by mid 2008, she said.