The spectrum squeeze, Chapter 3,672

The Elvis tune “Suspicious Minds” must be humming in the boardrooms of broadcasters these days, because, like ol’ Swivel Hips, we’re caught in a trap, a squeeze play over the broadcast spectrum that at one time gave us our edge in the media world. The government, funded by the Telcos, wants the spectrum for wireless broadband — and they WILL win — but we need to hang onto it as long as we can. It’s a fascinating study in modern politics that just got a little more complicated.

It seems that sales of over‐the‐air antennae are skyrocketing as a growing number of people cut the expensive cord to cable, according to the Wall St. Journal. Over‐the‐air is free, and as my mother always used to say, “For free take; for buy waste time.” Now, you’d think this would be good news for broadcasters, because that’s digital spectrum being used for broadcasting.

As they say in the infomercials, “But wait! There’s more!”

Cable channels have become the most lucrative part of the entertainment business, mainly because of huge fees paid by cable and satellite subscribers, a cut of which is passed on to the channels. Broadcast stations found it difficult to extract cash payments from distributors until relatively recently. And even now these fees are a relatively small, albeit growing, part of broadcast stations’ revenue. SNL Kagan estimates stations will pull in nearly $1.5 billion in such fees in 2011, compared with $38 billion in fees for cable channels.

So while broadcasters “could” promote the idea of cord‐cutting and sell against the average monthly bills for basic cable service and broadband service of $91.44 (SNL Kagan), they can’t, because they’re profiting from the same thing. The Journal article quotes Perry Sook CEO and President of Nexstar Broadcast Group as saying that he “sees the advantage to broadcasters of fewer channels—even against greater online competition—but worries that the potential ad revenue wouldn’t make up for lost subscription fees.”

It always comes down to profit, and there’s nothing wrong with that. It does, however, get in the way of a clear message and position about spectrum. The National Association of Broadcasters, of course, says that broadcasting may in fact outlive cable. That’s not likely, but this story is still being written.

Stay tuned.

Comments

  1. http://steve says

    “… but we need to hang on to it as long as we can”.

    that sounds like a suggestion to keep the defense on the field as long as possible because “we” have no offense.

    i’m surprised to hear that sort of thinking coming from you.

  2. Steve, I think we need to do both. Too much money to leave on the table otherwise.

  3. http://steve says

    great, that sounds more like the terry i know and love to read.

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