Multichannel Video Programming Distributors Research Articles

Blackouts in Retransmission Consent Negotiations: Empirical Analysis of Factors Predicting Their Frequency and Duration

This paper examines the factors predicting the frequency and duration of local broadcast television blackouts by Multichannel Video Programming Distributors (MVPDs), as a consequence of breakdowns in retransmission consent negotiations. Using a database of 372 retransmission agreements executed between 2011-2018, the paper uses a binomial logistic regression to identify the factors predicting blackouts, and ordinary least squares (OLS) regression for the duration. It finds the broadcasters’ network affiliations, the number of cable subscribers affected by a retransmission agreement, and a time trend to be the most significant predictors.

There’s Probably a Blackout in Your Television Future: Tracking New Carriage Negotiation Strategies Between Video Content Programmers and Distributors

Video programmers and distributors execute contracts for the mutually beneficial delivery of content to consumers. However, when the parties fail to reach closure on new terms and conditions before reaching the end date of an existing agreement, cable and satellite television operators must “blackout” the content thereby triggering consumer anger and mutual financial injury. Blackouts typically have occurred infrequently and for short time periods, because both parties understand the self-inflicted financial harm these service disruptions generate. Additionally, so-called Multi-channel Video Programming Distributors (“MVPDs”) have been able to pass onto subscribers higher programming costs through increased month rates without significant declines in subscribership. The marketplace for video programming has experienced significant change in recent years calling into question the ability of MVPDs to raise rates well above annual measures of general inflation. Likewise, content distributors have experienced unprecedented declines in subscribership and consumer resentment at having to pay rates, often in excess of $50 monthly, for programming tiers containing dozens of channels, many of which few subscribers have an interest in viewing. New designations, such as cord cutting and cord shaving, refer to the increasing number of video consumers who abandon an MVPD subscription, or incur lower monthly rates by downgrading to a less expensive service tier. Video consumers also have evidenced greater interest in so-called non-linear content, available as downloadable files and streaming on demand, in lieu of conventional “live,” linear content transmitted by television broadcasters and conventional cable and satellite MVPDs. The marketplace success of Amazon Prime, Hulu and Netflix evidences growing willingness of consumers to use their broadband network access for “Over the Top” access to alternative and competitive content sources. This paper assesses whether the video marketplace has, or soon will require major changes in the terms and conditions under which content providers and distributors agree to carriage terms. The paper will explain that while MVPDs, do not operate as common carriers, such as public utilities, they bear legal rights and responsibilities, predicated on marketplace conditions necessitating regulatory support for television broadcasters. Laws and regulations by the Federal Communications Commission now appear to be based on contestable assumptions about the public interest value in promoting local content sources, diversity in programming and ownership and offering broadcasters the option of mandatory carriage by MVPDs (“must carry”) in exchange for relinquishing demands for financial compensation from MVPDs. Additionally, both traditional MVPDs and market entrants using broadband networks for content delivery, have access to ample content alternatives, many of which also can trigger blackouts if carriage agreements lapse. The paper seeks to answer whether television broadcasters have overestimated the value of their content when electing to seek compensation instead of compulsory carriage by MVPDs. The paper also will assess whether non-broadcast video content providers make similar overestimates given the greater willingness of MVPDs to tolerate more frequent and lengthy blackouts occurring throughout the year.

Factors Affecting the Frequency and Length of Blackouts in Retransmission Consent Negotiations: A Quantitative Analysis

ABSTRACT This paper examines the factors predicting the frequency and duration of local broadcast television blackouts by Multichannel Video Programming Distributors (MVPDs), as a consequence of breakdowns in retransmission consent negotiations. Using a database of 372 retransmission agreements executed between 2011 and 2018, the paper uses a binomial logistic regression to identify the factors predicting blackouts, and ordinary least squares (OLS) regression for the duration. It finds the broadcasters’ network affiliations, the number of cable subscribers affected by a retransmission agreement, and a time trend to be the most significant predictors.

A Retrospective Analysis of Vertical Mergers in Multichannel Video Programming Distribution Markets: The Comcast-NBCU Merger

Using data on the prices paid by multichannel video programing distributors (“MVPDs”) for basic cable networks, I conduct a retrospective analysis of the price effects of the Comcast-NBCU merger. Estimates from both the difference-in-differences and lagged-dependent variable models indicate no systematic increase in the prices for Comcast’s networks following the merger, including general interest programming, news channels, and national and regional sports networks. Programming costs, however, exert a potent influence on affiliate prices, with full pass through in many cases. The evidence suggests either that there was no net positive effect on incentives to raise prices above competitive levels following the vertical merger, or else that the behavioral remedies placed on the Comcast-NBCU merger have been effective. Accordingly, excessive concern about the prices of programming following a vertical merger in the MVPD market appear unwarranted, at least when addressed by behavioral remedies.

Designing, Planning, and Executing Immersive Audio for the 2016 Rio Olympics

NBCUniversal, Comcast Cable, and Dolby Laboratories worked together to build, test, and optimize the Dolby Atmos production and delivery of the 2016 Rio Olympics Opening Ceremony. The Opening Ceremony was delivered in 4K/High Dynamic Range (HDR) and Dolby Atmos to selected VIP viewing parties across the U.S. via the Comcast Xfinity platform and distributed to several multichannel video programming distributors along with an ATSC 3.0 over-the-air test channel on WRAL in Raleigh, North Carolina. This is that story.

Serve and Volley: A Political-Economy View of Tennis Channel’s Six-Year Carriage Battle With Comcast

The availability of live sports content on television has reached an all-time high, with the proliferation of dozens of regional sports networks (RSNs). Sports networks charge individual subscriber fees, anywhere from 20 cents to more than $8.00 per month, and frequently negotiate carriage agreements with multichannel video programming distributors (MVPDs) to receive those fees. Since 2010, the independently operated Tennis Channel has fought to gain broad-based carriage from Comcast Cable Corporation, the nation’s largest MVPD. Using a political economy of media framework, the purpose of this paper is to examine court and regulatory filings to understand how an independent RSN positions itself against the established MediaSport complex and the oligopolistic power concentrated with a select few media companies.

Cable Market Power: The Never Ending Story of Consumer Overcharges and Excess Corporate Profits in Video and Broadband

The never ending story of the abuse of cable market power in the multichannel video programming distribution (MVPD) and the broadband Internet access service (BIAS) markets involves the central themes of communications policy over the past fifty years. Public policy must create the conditions for competition and entry. However, the economic characteristics of communications networks make it extremely difficult for workable competition to grow and inevitably lead to the abuse of market power, if regulation is too light or deregulation is premature. Cable TV needed policies like local franchises and guaranteed access to programming under the compulsory license §111 of the 1976 Copyrights Act to get off the ground. Cable quickly became the dominant video transmission and Congress twice deregulated cable long before competition existed. Cable abused its market power to raise consumer prices and prevent entry of new video distribution systems, like head-to-head (intramodal) competition from overbuilders and intermodal competition from new technologies like satellite (intermodal competition). Today, cable operators and broadcasters team up to vigorously resist the entry of Internet-based competition and consumers still suffer from the billions of dollars of overcharges as a result. Internet-based cable operators like Filmon, who are the best hope for competition, qualify for the same compulsory license that wireline cable operators have used for four decades.

The Future of HBO NOW: Investigating the Effects of the Charter-Time Warner-Bright House Merger on Over-the-Top Services

This paper aims to examine the effects of media ownership concentration on over-the-top (OTT) services. To do so, it will examine the Time Warner-Charter-Bright House merger as a case study, as well as explore current regulation for OTT services, particularly as multichannel video programming distributors (MVPD), and compare concerns for OTT services that previous moves to consolidate media ownership, like the failed Comcast-Time Warner merger, raised. Specifically, this paper will examine the relationship of HBO and HBO NOW, as an OTT service, and potential impacts of the merger on such content. Charter has argued that the merger will not negatively affect OTT services and lauds their benefits to consumers. However, the argument from those who have voiced opposition to the merger suggest that Charter will restrict the distribution of OTT services in order to preserve the exclusivity of its content. The case of HBO NOW offers a unique position as it is selling their content directly to consumers as OTT but also continues to be included in cable bundles through its traditional HBO cable channels. This paper hopes to explore this tension within the context of the Time Warner-Charter-Bright House Merger in order to address the effects of media consolidation on innovation and consumers.Including popular press, as well as press releases and blog posts from the relevant companies, data will be gathered from filings with the FCC, SEC, among other regulatory groups and activist organizations. This paper intends to conclude with a determination on how the merger might affect OTT services and a recommendation for changes to media law and policy on ownership in order to promote access to citizens, improve consumer welfare, and reduce barriers to entry in these media markets. The relationships explored in this paper between infrastructure, innovation, media ownership, and law and policy, are important sites of investigation – particularly for understanding how these forces impact citizens.

Vertical Integration in Multichannel Television Markets: A Study of Regional Sports Networks

Regional sports networks (RSNs) have become among the most important and expensive programming carried by multi-channel video programming distributors (MVPDs), many of which have acquired RSNs in whole or in part. Under Nash bargaining theory, vertical integration creates incentives to charge downstream distribution rivals license fees in excess of what an independent RSN would negotiate. We show that the Nash framework also implies that this premium increases with the size of the MVPD’s local downstream footprint, and we estimate a reduced-form econometric model of RSN affiliate fees, which yields results consistent with theory. Finally, we discuss various policy implications.

Does genre type influence choice of video platform? A study of college student use of internet and television for specific video genres

With the introduction of multichannel video programming distributors and different types of video platforms, consumers have more choices of channels and platforms than ever. Specifically, the present study focuses on television and the Internet as video platforms.Given the dynamics of the video programming industry, this study examines (1) how motives for watching video content predict intention to use television and intention to use the Internet as a video platform, (2) how the motives for watching a particular video content genre differ by video platform types, and (3) how audience’s choice of video content genres differs by video platform types. A survey method was used to obtain data for this study. Before the main survey was conducted, a pilot test was undertaken to test the wording of the questionnaire and reliability of items for constructs. A total of 149 students at a large university located in the southern part of the country participated in the main survey. The study reveals that motives for viewing the same genre of video content differ according to video platform types. It also discovers the underlying reason behind the popularity of certain genres online.

The Effects of Cable Clustering on the Flow of Cable Programming Networks

Over the past two decades, the horizontal concentration of most media distribution markets at the national level has increased, and the same is true for the multi-channel video programming distribution (MVPD) market as well. In particular, regional concentration or clustering (the combination of geographically contiguous cable systems) in the cable TV market was typical after the 1990s, because it enabled cable operators to take advantage of the economies of scale to provide a full range of digital and broadband services. As a result, in 2008 87.5% (50.7 million) of all basic cable TV subscribers were served by cable systems within clusters, with the average size of each of those clusters consisting of 600,000 subscribers.Theoretically, clustering itself allows cable operators to offer more cable programming through economies of scale (the “pro-competitive” effect). However, when regional concentration is combined with vertical integration, the incentives of vertically integrated MSOs to favor carrying their own affiliated cable network may increase while, at the same time, the incentives to foreclose a rival network increase (the “anti-competitive” effect). Therefore, such a combination of concentration and integration may also serve to strengthen the foreclosure strategy of a vertically structured MSO. In order to empirically test the effect of cable clustering, this study analyze the carriage decisions of vertically integrated and regionally concentrated MSOs regarding affiliated or rival cable networks, primarily using a 2009 Warrens Publishing’s Television and Cable Factbook database. It was found that the vertical favoritism of vertically integrated MSOs still remains; however, the increase in regional concentration may serve to mitigate this vertical favoritism. Note: This study has not been presented or published at anywhere.Biography: Sung Wook Ji is a fixed-term assistant professor in the department of Telecommunication, Information Studies and Media at Michigan State University. His primary research interests center on the social and economic impact of new media technology on the media industry and its policy implications. Specifically, his research focuses on the new media technologies (Internet and IPTV) and how those technologies have changed our society from the perspective of Economics.

Effects of Mergers and Competition on Consumer Benefits in the Multi-Channel Video Programming Industry in Korea

This article examines the welfare benefits of cable television (CATV) merger and acquisitions in the multi-channel video programming distribution (MVPD) market. In particular, it seeks to answer whether cable subscribers are better off in competitive markets than in concentrated markets. This article estimates the impact of mergers by examining Korea's regional market-share data for MVPD operators with a hierarchical-choice model. First, the estimation results show that the consumer value of the CATV platform, in terms of the category values in a nested logit model, was significantly lower in the concentrated markets than in the more competitive markets. Second, the study compares these findings with those in the literature about the U.S. market. The following question is prompted: Why is direct broadcast satellite competitive with CATV in the United States but not in Korea? This article points out that differences in regulatory policies, particularly as they relate to the treatment of vertically integrated networks, do have significant effects on the effective boundary of MVPD competition across platforms. To support this argument, this article provides details on the policies and market characteristics of the Korean MVPD industry.

Regional Sports Networks, Competition, and the Consumer

This paper examines competitive issues surrounding sports media rights and multichannel video programming distribution (MVPD) markets. Cable and satellite providers often have significant interests in the Regional Sports Networks (RSNs) that jointly coordinate and market the media rights for regional or local sports teams in various U.S. markets. But these markets have a number of features that should factor importantly into analysis. For example, there is often limited in sports media rights and MVPD markets. Ongoing changes in programming content and packaging, and the bundling of sports and non-sports programming also means that market definition is an important issue. Finally, unique consumer preferences for quality and consistency in sports programming should be considered. The paper argues that changes in the structure of RSN and MVPD markets and non-merger agreements should be closely scrutinized by antitrust and regulatory agencies. This includes mergers at the horizontal MVPD and RSN levels and those that create vertically-integrated content/distribution platforms. Such scrutiny should pay close attention the systems competition issues raised by the two dominant modes of MVPD--cable and satellite. Both antitrust and regulatory agencies should make full use of remedial conditions in dealing with problematic mergers and the Federal Communications Commission should pursue directives geared toward promoting and maintaining in the carriage of sports-related programming.

A La Carte and 'Family Tiers' as a Response to a Market Defect in the Multichannel Video Programming Market

Many policymakers have recently expressed concern over the practice of multichannel video programming distributors (MVPDs) such as cable and satellite video providers, to a large number and variety of channels together into a take-it-or-leave-it package. In this BULLETIN, we describe a set of circumstances in which a market defect will lead to the bundling of potentially objectionable content with generally desired content. Our model focuses on the role that advertisers and video programming vendors play in the network bundling of MVPDs. Our economic model illustrates the role these third parties play in an MVPD's decision to deliver particular channels of video programming to households in a bundle of desired and potentially objectionable programming that does not give consumers the option to exclude objectionable programming from the purchased bundle. Forced appear in both monopoly and competitive structures because the conditions that give rise to this market defect make these bundles resistant to changes in market structure. As a result, policymakers should look at all participants in the multichannel video distribution market, not just retail distributors, as potential sources of forced bundling problem.

Vertical Foreclosure in Video Programming Markets: Implications for Cable Operators

This paper argues that a cable operator with sufficient market power in the downstream multi-channel video programming distribution (MVPD) market can deny access to unaffiliated programmers, resulting in an upstream programming rival's exit or impaired dynamic efficiency. Further, market dominance by cable operators may harm consumers of video programming through higher prices and less choice in the downstream MVPD market. The reason is that as unaffiliated video programming becomes affiliated programming, the latter is then withheld from rival MVPDs. This analysis is then applied to the recent acquisition of Adelphia by Comcast and Time Warner.

Declaration of J. Gregory Sidak in Opposition to The Merger of EchoStar Communications Corporation and Hughes Electronics Corporation (DirecTV)

In this declaration, I evaluate the competitive consequences of EchoStar's proposed acquisition of Hughes Electronics, which markets its direct broadcast satellite service (DBS) service under the DirecTV brand name. Whether characterized as a merger to monopoly or as a merger to duopoly, the proposed merger would substantially injure competition. It would reduce competition in the sale of multichannel video programming distribution (MVPD) services to consumers by reducing the combined firm's incentive to compete on price and non-price terms.In Part I of this declaration, I analyze the effect of the proposed merger on competition in the sale of multichannel video programming distribution services to consumers. I first present analysis of the pre-merger and post-merger concentration in the MVPD market. Using both Bertrand and Cournot models of oligopolistic interaction, as well as a model of perfect collusion, I then calculate the price increase and the loss in consumer welfare that would result from the proposed merger. My estimate of the annual welfare loss ranges from $691 million to $1.77 billion per year, depending on the characterization of the strategic pricing interaction among firms. Next, I show why the single national price that EchoStar and DirecTV propose, so as to mitigate the consumer harm from the proposed merger, would still result in a higher post-merger price. I present evidence that EchoStar's own antitrust analysis shows that the proposed merger would harm consumers. Finally, I critique arguments made by Professor Robert D. Willig, who has submitted expert economic testimony on behalf of EchoStar and DirecTV in support of their proposed merger.In Part II, I analyze the effect of the proposed merger on one important aspect of non-price competition: the carriage of local broadcast stations. I show why the proposed merger would likely reduce the rate of growth in the number of DBS households with access to local broadcast stations.In Part III, I review the claimed efficiencies from the proposed merger. I show that those efficiencies could be achieved without the merger. I also show the magnitude of the claimed reductions in marginal cost that would be necessary to offset the consumer harm that the proposed merger would cause.I file this declaration in my individual capacity as a consultant to the National Association of Broadcasters and not on behalf of the American Enterprise Institute, which does not take institutional positions on specific regulatory, adjudicatory, or legislative proceedings.