An Ignoble Experiment

eBook: TV Everywhere Gets Personal

After a significant legal setback last week in their efforts to shut down Web-based free broadcast TV service Aereo, some broadcasters may be ready to take a once unthinkable course of action. News Corp. has threatened to turn the Fox broadcast network into a pay cable TV network rather than see its signal continue to be tapped by Aereo. Univision also reportedly has threatened similar action.

News Corp. COO Chase Carey raised the possibility of pulling up Fox's broadcast stakes Monday at the National Association of Broadcasters show. "We believe that Aereo is pirating our broadcast signal," he said in a statement later released by News Corp., adding, "One option could be converting the FOX broadcast network to a pay channel, which we would do in collaboration with both our content partners and affiliates."

These comments come a week after an appeals court shot down a broadcaster request to stop Aereo from continuing to broadcast. Carey's comments mostly are being viewed as an idle threat for now, though AllThingsD later reported that TV industry analysts on Wall Street might be supportive of such a move, given the potential for broadcasters to gain enough affiliate fees and advertising revenue through pay TV to replace what they would lose in the retransmission fee revenues they enjoy under the broadcast model.

Within the industry, it is believed that broadcasters will continue to fight Aereo through legal action and Congressional lobbying for the time being. It is unclear whether other major broadcasters have studied the possibility of a proposal such as News Corp.'s, but amid reports that pay TV service providers have been examining Aereo's technology and how it might allow them to set up their own antenna systems for tapping broadcast signals, it would no longer come as a surprise to hear them discuss it.

For more:
- here's the News Corp release
- see this New York Times story
- read this AllThingsD analysis

Commentary: Aereo could help cable operators bring broadcasters to their knees

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2. Shaw to acquire business ISP ENMAX Envision

By Dan O'Shea

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3. NLRB authorizes union complaint against Cablevision

Canada's Shaw Communications said it has agreed to acquire broadband Internet service provider ENMAX Envision from Canadian electric utility ENMAX Corporation for about $225 million.

The deal appears to be in line with the efforts of cable TV companies throughout North America to pursue greater opportunities in the business communications market as their core cable TV markets are squeezed by new competition and changing viewing habits. ENMAX Envision specializes in business service in the Calgary market, and will be combined with Shaw Business as the company expands its efforts to reach more business customers.

The acquisition announcement comes a couple of months after Shaw also said it was planning to expand its headquarters office in Calgary, an announcement made several months after a fire caused extensive damage to the company's Calgary Court offices last summer. In recent months, Shaw also has been looking to recast its image with a new brand identity and marketing campaign.

Shaw said the ENMAX Envision acquisition will be financed with cash on hand and through Shaw's existing credit facility. CIBC World Markets Inc. acted as exclusive financial advisor to Shaw in connection with the transaction.

For more:
- here's the Shaw press release

Read more about: Shaw Communications, enmax envision
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By Dan O'Shea

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4. Verizon: FiOS Flex View on demand service is a retention tool

Update: Cablevision comments responding to the NLRB action have been added below since this post was first published.

The National Labor Relations Board (NLRB) said this week it will issue a federal complaint against Cablevision (NYSE: CVC) for allegedly using illegal intimidation, harassment and bribery in efforts to stop Bronx-based employees of the cable TV operator for pursuing unionization activities.

The NLRB said it is giving Cablevision several days to seek a settlement. The Bronx complaint follows similar controversy related to Cablevision's alleged treatment of employees in Brooklyn who have been pursuing union activities since voting to join the Communications Workers of America union in early 2012.

CWA Local 1109, which is representing Cablevision employee union efforts in Brooklyn, said Cablevision illegally fired 22 workers who tried to meet with management about the slow pace of bargaining on Jan. 30, which in turn led to the filing of charges of unfair labor practices now pending before the NLRB. The union said, however, that all 22 workers have been returned to their jobs as a result of massive community and political pressure.

The CWA said the Bronx workers were inspired by their Brooklyn counterparts to begin their own unionization efforts, but that Cablevision management hired a union-busting law firm to help fight the effort, as well as allegedly taking the following measures, as detailed in the press release:

• In a speech to Bronx workers two days before the NLRB vote, CEO James Dolan personally threatened to deny workers job opportunities and training if they voted for the union.

• Dolan illegally sought to try to address workers' grievances and offer benefits to induce them not to vote for the union in a speech in February 2012.

• Cablevision illegally gave raises of $2 to $9 per hour--as much as $18,000 a year--to nearly 10,000 employees outside of Brooklyn, but not to the Brooklyn workers, in order to induce workers to vote against the union.

For its part, Cablevision issued the following response: "The CWA's allegations are not accurate and are part of the CWA's ongoing campaign to damage Cablevision's reputation. This complaint is not a finding of any wrongdoing and now the matter will proceed to an administrative law judge and we look forward to an impartial hearing so that the facts can be fully understood."

The company statement also said that Cablevision's Bronx employees voted overwhelmingly against joining the CWA union in a vote carried out last June, and more recently, Cablevision Brooklyn employees petitioned the NLRB seeking a vote to potentially de-certify the CWA union.

Like the mobile industry, cable was once virtually a union-free sector, but that has been changing in recent years. What has been happening in the Bronx and Brooklyn is part of what can be expected as a new labor era begins in cable.

For more:
- see this press release

Read more about: Cwa, Cablevision Systems
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By Sue Marek

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5. 'Zero TV' trend heightens as industry gathers at NAB

LAS VEGAS--Verizon Communications (NYSE: VZ) views its Flex View on demand service as a necessary piece of its FiOS offering because it keeps customers from churning. In fact, a Verizon executive said that FiOS customers who use Flex View on demand are three times less likely to churn than customers who do not use the mobile service.

Speaking at the National Association of Broadcasters conference panel on TV Everywhere held here, Maitreyi Krishnaswarmy, director, interactive video services at Verizon FiOS TV said that people who view Verizon FiOS content on the iPad or other mobile devices average 47 minutes of engagement per session. Likewise, customers who view content on Microsoft's (Nasdaq: MSFT) Xbox average 58 minutes per session. "Engagement is high," Krishnaswarmy said.

Krishnaswarmy noted that this compares to the average household, which views about 4 hours of TV per day. However, she said that it's hard to measure whether that statistic is meaningful engagement because many households have the TV on even if no one is watching it. She said that tablet or smartphone viewing is considered engaged viewing because these devices are more personal.

SNL Kagan Senior Analyst Ian Olgeirson noted that while many companies are offering TV Everywhere services such as Verizon's Flex View service because it strengthens the relationship with the content provider and the customer, progress has been slow and revenue models are uncertain. But at the same time, programming costs are rising, and that's creating tension in the market. "Operators expect a 10 percent or more increase year over year in content costs, especially sports," Olgeirson said. "There are these rising programming costs but operators are not seeing widespread introduction of incremental revenue models."

Krishnaswarmy said that operators such as Verizon believe the content does drive revenue in that it prevents churn. However, for content providers, finding a sustainable revenue model is more critical. "For content companies to have an incentive for multiscreen rights they need to see new revenue stream. We care about getting the right content to a customer and not giving them a dead end," she added.

Read more about: FiOS, Verizon
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By Dan O'Shea

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