An Ignoble Experiment

2. BSkyB in talks with 21st Century Fox for German, Italian pay-TV assets

Amid widespread complaints from industry executives as well as some members of Congress, FCC Chairman Tom Wheeler is going back to the drawing board to revise proposed rules for regulating broadband access to the Internet. He promised the commission won't allow companies to create fast and slow lanes to segregate Web traffic.

Wheeler

Wheeler had proposed last month banning broadband providers from blocking or slowing down websites, but allowing them to strike deals in which companies could pay them for faster delivery of Web content to customers. But the pitch drew criticism from the tech sector, including Google (NASDAQ: GOOG) and Netflix (NASDAQ: NFLX), both of which complained the new rules would segregate the Internet into fast and slow lanes.

Wheeler is sticking to his original approach, but is including language that would make clear the FCC will carefully scrutinize the deals to make sure broadband providers don't unfairly put non-paying companies' content at a disadvantage.

In a letter to Silicon Valley executives late last week, Wheeler wrote, "I will not allow some companies to force Internet use into a slow lane so that others with special privileges can have superior service." The letter was in response to another missive signed by many of Silicon Valley's most prominent companies.

The FCC's new draft would also seek comment on whether "paid prioritization" agreements should be banned outright and whether large broadband companies should be banned from offering deals to some content companies but not others. Wheeler wants to know whether broadband Internet should be considered a public utility, a move that require more stringent regulation, according to The Wall Street Journal. To date, broadband has not been classified as a utility and there is strong opposition from the industry to the idea.

For more:
- The Wall Street Journal has this story (sub. req.)
- Business Week has this story
- CNET has this story
- the Washington Post has this story

Read more about: FCC
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By K.C. Neel

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3. Musical chairs at Cisco, Cablevision, Comcast

British Sky Broadcasting Group PLC is negotiating with 21st Century Fox Inc. to acquire the company's pay-TV assets in Germany and Italy. The move is an effort to bulk up BskyB's European stronghold in the midst of major entertainment holding changes on the continent.

BskyB would buy 21st Century Fox's 57 percent stake in Sky Deutschland, worth around $4.4 billion as of last week. A mandatory takeover of the rest of the company would come next. 21st Century Fox owns all of Sky Italia, a major sports broadcaster in Italy.

The combined group would have almost 19 million customers when Sky Italia's 5 million customers and Sky Deutschland's 3.7 million customers are added to BskyB's current 10.6 million customers.

The deal, should it come to fruition, will pit long-time partners and foes Rupert Murdoch and John Malone, who runs Liberty Media, against each other. Liberty Media has spent about $50 billion over the last decade building up one of Europe's largest media empires and currently serves about 25 million customers.

Europe still has a lot of upside growth in the pay TV arena, with only 41 percent of the people having TV subscriptions compared to 90 percent of U.S. consumers, according to research from Ovum Ltd.

Murdoch and Malone have a long and storied history, sometimes as partners and at other times, fierce competitors. Malone's Tele-Communications Inc. and Murdoch's Fox Broadcasting were the first two companies to cut a retransmission consent deal in 1993, a deal that at the time was considered a win-win for both sides of the pay TV business. But it would also set the stage for some very contentious and nasty negotiations between distributors and programmers that exist to this day.

The two executives also tussled about a decade ago when Malone wrested control of DirecTV (NASDAQ: DTV) from Murdoch and resulted in Murdoch's retreat from the U.S. distribution business.

Of course, all this maneuvering by Murdoch is really a familial reshuffling of sorts. BSkyB is 39 percent-owned by 21st Century Fox Inc., which until June was part of the same company as News Corp. before it was split from the programming side of the company. The original News Corp. in 2011 abandoned a planned bid for the rest of BSkyB after a reporting scandal at the company's U.K. newspaper unit.

But to address possible conflicts of interest, BSkyB said all board discussion of the issue is solely within a committee composed of its independent directors, which doesn't include directors affiliated with 21st Century Fox.

For more:
- The Wall Street Journal has this story (sub. req.)
- Hollywood Reporter has this story
- Bloomberg has this story

Read more about: Rupert Murdoch
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By K.C. Neel

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4. Industry split on whether NBC overpaid for Olympics

Yvette Kanouff is reportedly leaving Cablevision Systems (NYSE: CVC) to serve as senior vice president in charge of Cisco's service provider video group. Her departure from Cablevision takes Yanouff back to the supplier side of the business.

Kanouff

She currently serves as Cablevision's executive vice president of corporate engineering and technology and is one of the industry's most visible tech executives.

Before joining Cablevision in 2012, Kanouff was chief strategy officer and president at Seachange International. She also worked on Time Warner Cable's (NYSE: TWC) Full Service Network, an interactive digital video program from TWC that was ahead of its time but paved the way for the industry's entry into digital and interactive services.

Kanouff's exit comes less than a month after the departure of Stephanie Mitchko-Beake, Cablevision's former SVP of video infrastructure software and one of the primary developers of Cablevision's network-based DVR service.

While Yanouff is headed to Cisco, Ken Klaer is leaving the company to serve as Comcast's (NASDAQ: CMCSA) senior vice president, premises technology. Klaer was most recently part of Cisco's Service Provider Video Technology Group, overseeing development and execution of CPE product strategies.

At Comcast, Klaer will oversee a team that develops set-tops, gateways and other consumer premises devices that power the MSO's video, voice, data and cross-platform applications.

For more:
- Multichannel News has this story
- and this story

By K.C. Neel

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5. Cali fans rage as end of Clippers-Thunder NBA game cut off

NBC locked up its exclusive coverage of the Olympic Games through 2032 with its preemptive $7.7 billion bid, underscoring the company's long-term strategic plans. But there are some differences of opinion within industry circles as to whether the company paid too much for the Games or whether it got them for a bargain.

The recent Sochi Olympics contributed $846 million to the broadcast unit's top line, according to the Hollywood Reporter, which exceeded first-quarter expectations with revenue up 72 percent, to $2.6 billion. And that's in spite of lagging ratings (compared with Vancouver in 2010, when the U.S. team performed much better and the locale meant many marquee events were televised live).

The price tag may seem hig,h but it's really less than a 3 percent increase per games from NBCU's $4.4 billion, four-Games renewal in 2011, in which it outbid its closest rival by $1 billion. The Games also come with the promise of higher digital profits: the pact covers all media platforms--including free-to-air and subscription TV, Internet and mobile. The latter two have become increasingly significant to NBC's Olympics strategy.

Overall engagement during Sochi notched a record 242.3 million media exposures thanks to lifts from digital, says NBC. And carrying the world's biggest sporting event for two-plus weeks every two years also is a boon to the company's growing NBC Sports Network, which executives hope can someday rival ESPN.

The move is reminiscent of a gambit by former NBC Sports boss Dick Ebersol, when he acquired the 2004, 2006 and 2008 Games for $2.3 billion. NBCU's latest accord was reached some six weeks ago at IOC headquarters in Lausanne, Switzerland. Fox and ESPN have been engaged in Olympic bidding in the past, but have never exhibited the financial fervor that NBCU and its predecessor NBC have expressed in terms of rights fees.

For more:
- Hollywood Reporter has this story
- Multichannel News has this story
- Philadelphia Business Journal has this story

Read more about: Olympic Games, NBC
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By K.C. Neel

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