Multichannel News

According to various sources, the Federal Communications Commission is not likely to release the final order on its incentive auction framework order until next week.

Broadcasters had been looking for the 400-plus page order to be released by May 30, 2014, but it is now looking like June 2 at the earliest.

The FCC voted on the order May 15, but it was a split 3-2 decision along party lines. Broadcasters will be going over the order with a fine-tooth comb. They are already contemplating taking the FCC to court over its decision to use new OET-69 data and/or methodology (there is a dispute between the FCC and NAB over which it is) to calculate TV station contours for the purposes of repacking after the auction.

In their dissents, both Republicans said the item was manipulating the market by limiting wireless bidders, was not necessarily holding broadcasters harmless in the band plan, and may not even be legal.

Prometheus Radio Project is suing the Federal Communications Commission over its latest attempt at resolving a congressionally-mandated media ownership rule review, including challenging its decision to limit joint sales agreements (JSA's) as arbitrary and capricious.

Prometheus filed its challenge with the Third Circuit Court of Appeals, which remanded the FCC's old media ownership rules back to the commission after Prometheus challenged the FCC's initial efforts to loosen its ownership rules back in 2002. Prometheus is challenging the Wheeler FCC's decision to combine the 2010 and 2014 quadrennial reviews into a single review, which won't be completed until 2016. At the same time the commission voted -- in a split decision -- to limit JSA's.

Prometheus argues that the FCC was arbitrary and capricious in not addressing whether to attribute sharing agreements. And while the FCC did adopt the limit on JSA's, making those of over 15% of a stations weekly ad time attributable under ownership limits, it did not explain why 15% is the appropriate threshold for TV (as it already is for radio), which Prometheus argues is arbitrary and capricious, as was the FCC’s decision to attribute JSA's but not other types of sharing agreements, as was the case in the agency’s decision to not require disclosure of SSAs.

As the proposed marriages of Comcast and Time Warner and AT&T and DirecTV move forward, this latest wave of consolidation is poised to have an effect on the telecommunications supplier market, creating a fresh batch of winners and losers.

That, of course, will extend to the realm of video gateways and set-top boxes, with at least one analyst believing that this new round of mergers and acquisitions will cause a shift in a market that is largely made up of Pace, Arris (thanks to its acquisition of Motorola Home in 2013), Cisco Systems, Technicolor and EchoStar.

“This mature, yet fragmented market, in which the top five vendors account for about 37% of the revenues, is ripe for further consolidation,” Sam Rosen, practice director at ABI Research, predicted, pointing out that Arris, with its focus on cable and IPTV, stayed ahead of Pace, which, in his estimation, is “over-weighted on satellite.”

D-Day's 70th anniversary events may have reduced coverage by news agencies outside of France.

The Association Press says it and other news agencies (AFP, Reuters and ENEX) have protested the French president's office decision to grant exclusive rights to the main ceremony (June 6) to two French broadcast networks, which are now trying to charge global news outlets, cable channels and online outlets collectively over a quarter of a million dollars for access to that exclusive coverage.

June 6 marks the 70th anniversary of the Allies successful effort to storm the beaches of France under withering enemy fire, liberate the country from German occupation and turn the tide of World War II. "The French host broadcasters, France Televisions and TF1, are demanding that global news providers AP, AFP, Reuters and ENEX pay nearly 200,000 euros ($265,000) collectively for live broadcast and online streaming coverage of the official ceremonies, which feature at least 18 heads of state," AP reported.

Although the cord-cutting trend remains small, consumers who have wielded the video shears are apparently happy with their decision.

About 84% of cord-cutters are “at least somewhat happy with their decision,” while 37% said they’re so happy that they have no plans to ever return to a traditional pay-TV service, nScreenMedia found in a new study that surveyed 1,000 US adults with broadband access. Of that same group, 8% said they were “pretty unhappy” with their cord-cutting decision, and 9% said they hated the decision and wished they had service again.

The report -- View My Video: Consumer Digital Media Consumption -- also found that 17% of US broadband subscribers surveyed say they once took a pay-TV service but have since left their provider, while 10% say they have never subscribed to pay-TV (the so-called “cord-nevers”), and 74% said they currently take a pay-TV service.

As Netflix prepares to invade six more countries in Europe, Bernstein Research analyst Carlos Kirjner attempted to size up the streaming giant’s global opportunities in a report.

The “opportunity is more limited than many realize,” the analyst wrote, noting that infrastructure and affordability issues will limit Netflix in markets such as Latin America. But the forecast still seems to present some pretty big numbers.

“Assuming generously that Netflix deploys aggressively in 17 new countries over the next 2-3 years, we believe that by 2023 the number of broadband households in these markets with fixed connections capable of supporting SVOD will reach 243 [million],” Kirjner suggested. He also sees Netflix reaching about 65 million international subs, or roughly a 50% share of the research firm’s estimated international SVOD market, but only “if it deploys service very aggressively across all 17 incremental countries in our assumptions.”

That’s a sizable jump from where Netflix is today internationally, with 10.9 million subs. While 14% of that total comes from the UK and Ireland, and 25% from Canada, Netflix, to Kirjner’s earlier point, has only been able to scratch together about 1.5 million customers in Latin America (1% of total households), despite having launched there more than two and a half years ago.

AT&T chief financial officer John Stephens answered a question that has been on many investors’ minds in the past few days, saying that regulators would have had difficulty approving a deal for Dish.

Stephens said while DirecTV’s was still the carrier’s first choice, Dish’s spectrum would have made it more difficult to obtain regulatory approval. “Dish has been very loud about their intentions to get into broadband,” Stephens said. “From a regulatory perspective, bringing a company that either is or intends to be in broadband with another broadband company would be likely to raise additional regulatory scrutiny.”

Two new reports demonstrate the accelerating scale of Washington lobbying in connection with the Comcast/Time Warner Cable merger and with the Federal Communications Commission's network neutrality proceeding.

Comcast is currently registered with 40 firms, and it spent $5 million lobbying Congress during the first quarter of 2014, according to Senate reports as quoted in Politico, which calls Comcast's campaign "a K Street stimulus package." Among Comcast's recent lobbying recruits is Joseph Gibson, who once served as chief minority counsel for the House Judiciary Committee and also as chief of staff for Rep. Lamar Smith (R-Texas), a former chairman of that committee.

For its part, Time Warner Cable has spent $33 million so far in 2014, according to official records.

Separately, Maplight, a Berkeley (CA) organization that compiles data about campaign contributions, has identified 28 House of Representatives members -- including Speaker John Boehner (R-OH), Majority Leader Eric Cantor (R-VA) and Communications Subcommittee Chairman Greg Walden (R-OR) -- who have urged the FCC not to adopt a Title II reclassification of the Internet and who also have received well-above-average campaign contributions from the cable industry.

The 28 House members (eight Republicans and 20 Democrats) who signed one of three recent letters to FCC chairman Tom Wheeler have received an average of $26,832 in contributions from the cable industry, says Maplight. That sum is 2.3 times more money than the average for all members of the House of Representatives, $11,651, according to Maplight's research.

Overall, Republicans signing the letters to the FCC have received, on average, $59,812 from the cable industry, five times more than average contributions to House members; Democrats signing the letters received an average of $13,640 from the cable industry, 1.2 times more than the average, according to the Maplight analysis.

Maplight tallies 29 members of Congress who own stock in Comcast, making Comcast the 25th most held stock among members of Congress. Minority Leader Rep. Nancy Pelosi (D-CA) owns more Comcast stock than any other member.

According to Maplight's tally of campaign contributions "from cable interests" since 2012, the top recipients who signed the recent letters to Chairman Wheeler are Reps Walden (who received $109,250), Cantor ($80,800), Boehner ($75,450), Upton ($65,000) and Barrow ($60,500).

DirecTV CEO Mike White said his company’s pending merger with AT&T will unlock tremendous growth potential for the satellite giant, even as investors sent shares of both participants southward amid doubts about the benefits of the merger.

While the declines in shares were small, they are in sharp contrast to what usually happens to the seller in such mega-deals -- in contrast, Time Warner Cable stock was up 7% on the day it announced its $69 billion deal with Comcast -- and could point to concerns investors have about the deal outside of potential hurdles to regulatory approval.

White, who will continue to head up the DirecTV unit after the deal closes, said the merger offers the satellite giant an opportunity for growth. And while White and Stephenson wouldn’t mention it by name, it appears that the Comcast/Time Warner Cable merger -- which will create a 30-million-subcriber cable powerhouse -- influenced their decision to seek out a deal.

White also sees a big customer service opportunity in the deal, allowing DirecTV to offer more products in a single truck roll. “To me the real opportunity is growth,” White continued. “For us this is a real unlock, it unlocks our way to better serve rural areas, when you think about the 15 million [customer] build out of rural areas.”

[Commentary] AT&T finally pulled the trigger on an acquisition of DirecTV. The merger creates a 26-million subscriber rival for the television business.

But as AT&T and DirecTV tout the benefits of the merger, analysts and observers are split as to the deal’s benefits. On the plus side, it could allow AT&T to free up bandwidth for its U-verse broadband service -- it currently allocates 15 Megabits per second for video and 10 Mbps for high-speed Internet service in about 25% of the country, and could give the telephone giant the incentive to upgrade its digital subscriber line plant (which maxes out at around 1.5 Mbps) to fiber.

Critics of the deal point to the merger as a temporary fix -- DirecTV’s video business is basically flat, adding just 12,000 net new customers in the first quarter -- and though the business is well run, operating DirecTV as a separate entity would require AT&T to support two cost structures in 25% of the country with just a one-product offering in the other 75%.

Here’s a look at some of the reasons for DirecTV to sit this one out.

• The price could be too “frothy” or too pricey for what is at best a stable business.
• The merger will solve AT&T’s cash problem, but only temporarily.
• On the surface, it doesn’t look much better from a DirecTV perspective.
• The broadband benefit to the deal is questionable.
• AT&T gets a national video footprint in a slow-to-no growth business.