# STAVRA Will Not Have Local Channel A La Carte Option



## Jaspear (May 16, 2004)

The local channel a la carte option has been stripped from the bill:

Broadcasters Beat Effort To Introduce Local 'A La Carte' Pay TV Pricing, For Now



> TV station owners dodged a bullet last night, although possibly just temporarily, as the Senate Commerce Committee drafts a must-pass bill that governs satellite companies' dealings with broadcasters. Chairman Jay Rockefeller (D-W.Va.) and Ranking Member John Thune (R-SD) agreed to take out a broadcast a la carte provision that pay TV companies wanted: It would have enabled subscribers to decide which local stations they wanted to receive, and pay for.


I'm not surprised. But the article does quote someone from Guggenheim Securities who opines that it could reconsidered next year pending the outcome of the midterms.


----------



## slice1900 (Feb 14, 2013)

I wonder what level of a la carte it was. Were they talking only about adding "significantly viewed" or otherwise nearby stations to the subscriber? Making DNS i.e. NY/LA locals available to everyone?

Or would it have theoretically allowed a subscriber to request locals from, for example, Austin, Atlanta and Boise? (obviously they would have to be delivered via IP since no provider is set up for something like this today)


----------



## texasbrit (Aug 9, 2006)

I think it was allowing a viewer to select just the ones of his EXISTING locals that he wanted. So if I never watch Fox, I could opt out...


----------



## slice1900 (Feb 14, 2013)

texasbrit said:


> I think it was allowing a viewer to select just the ones of his EXISTING locals that he wanted. So if I never watch Fox, I could opt out...


Is that not allowed now? I can drop locals and save $5/month, but the packages are different for commercial accounts.

I figured the reason you can't drop locals for a residential account is because they're included in the package. Is it currently illegal for Directv to offer a residential package that doesn't include local channels?


----------



## James Long (Apr 17, 2003)

slice1900 said:


> Is that not allowed now? I can drop locals and save $5/month, but the packages are different for commercial accounts.


They were talking about dropping individual local channels ... don't want to pay for your local Fox affilate? Opt out of that one channel without dropping all locals. Caveat: There would not be a replacement channel (unless a Fox affiliate happened to be on the SV list for the community).


----------



## NR4P (Jan 16, 2007)

Too bad they caved to the broadcasters pressure. Very powerful lobbying groups.


----------



## SomeRandomIdiot (Jan 7, 2009)

NR4P said:


> Too bad they caved to the broadcasters pressure. Very powerful lobbying groups.


Actually you should be glad they caved. They were not going to cut your bill and make you pay additional for viewing the OTA Broadcasters which is what 35% of the viewing on MVPD is.

Note above, DirecTV is charging $5 for locals on commercial accounts already - and they have yet to pay the local broadcasters $5.

Who do you think is pocketing the difference?


----------



## James Long (Apr 17, 2003)

As a line item I do not consider locals as profitable. There is too much expense put into local receive facilities, backhauls and spot beam satellites that are only used to provide local stations. Add to the infrastructure expenses the direct costs paid to stations and the $3 residential, $5 commercial (DirecTV), or $5 DISH that is allocated toward locals is practically a token payment.

That is why residential customers can no longer opt out of locals. The infrastructure costs are in place whether there is one subscriber in a market or 100,000. The more subscribers that the satellite carriers can charge in a market the closer they can come to breaking even.

The profit from delivering locals comes from competition with other providers ... cable provides locals (as they are REQUIRED to provide by law ... no opt out) so satellite chooses to provide locals in each market. It is a huge expense, but not having local stations is a competitive disadvantage.

Unfortunately the stations know that, and the popular stations use that pressure to charge cable and satellite operators for carriage.


----------



## KyL416 (Nov 11, 2005)

And it's not the popular stations people would opt out of anyway, most people will probably opt out of independents like ethnic stations they never watch, most of which select must carry. Of course the average viewer isn't aware of this so all they will see is that they opted out of 10 of their locals and got no discount.


----------



## James Long (Apr 17, 2003)

KyL416 said:


> And it's not the popular stations people would opt out of anyway, most people will probably opt out of independents like ethnic stations they never watch, most of which select must carry. Of course the average viewer isn't aware of this so all they will see is that they opted out of 10 of their locals and got no discount.


If it was done as a pass through as proposed, the must carry stations would not be paid and would be included for free. The consent to carry stations charging money would be the line items people could choose not to have.

Look at it like the PI (public interest) channels. One gets the PI channels regardless of their subscription level. I would expect to get the non-comm stations (who are required to choose must carry) and commercial stations that choose must carry for free with any subscription level.


----------



## SomeRandomIdiot (Jan 7, 2009)

Note that D* and E* did not take off until they started offering the local channels. Even in 2014, 35% of TV Viewing via the MVPDs are local channels.

If no locals, while being offered by other MVPDs, that system would find themselves losing customers big time - it would be the reversal of what happened in the late 90s prior to DBS supplying local channels.


----------



## James Long (Apr 17, 2003)

I subscribed before locals were offered via satellite. At the time I figured if I wanted to watch anything local I could just change to the local OTA channel on the TV. After I added a DVR I found that I was not watching much OTA since it was not on my satellite receiver. Millions of subscribers like me subscribed to satellite without locals.

After satellite added my local market I discovered shows that I didn't know existed ... and was able to catch up on some series because of their reruns on cable channels. Then I got a receiver with an ATSC OTA tuner and was able to watch the subchannels satellite didn't carry (and HD). Now I have a receiver without OTA (satellite feeds only - including locals). I have not bothered to buy the tuner.

Local stations are a large part of television viewership .... and locals via cable or satellite is important in the age of ATSC TV where OTA signals are either good or gone. The days of putting up with a little snow on an NTSC signal are gone. With ATSC a flawed signal reception is no signal reception.

DISH pushed ahead a few years ago and began to offer locals in every market (a condition for being able to offer distants again - which DISH needed for short markets). But the major growth spurt for satellite was at a time when most markets were not offered via satellite. One could argue that once all or most markets were offered satellite subscriptions leveled off ... but it would be a coincidence not cause and effect.

Now that locals are in most or all markets they would be hard to take away ... and one could say the same about any popular channel. Once the subscriber has it they don't want to lose it. But subscribers in general seem to be more accepting of channels that are missing when they make the decision to subscribe. Whether or not the MVPD has locals is just another comparison point such as what other channels are carried and at what price.


----------



## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> But the major growth spurt for satellite was at a time when most markets were not offered via satellite. One could argue that once all or most markets were offered satellite subscriptions leveled off ... but it would be a coincidence not cause and effect.


You are incorrect.

All one has to to is look at the sub chart of DirecTV from inception and roughly 1m per year net sub additions.

Once Locals were available the subs went up to 3m a year.

EchoStar shows the same type of trajectory change once locals were added.

Even a blind man can see it. Case Closed.


----------



## James Long (Apr 17, 2003)

Thank you for your OPINION. I disagree with the conclusions you have drawn from coincidence, but you are welcome to have your own opinion.


----------



## inkahauts (Nov 13, 2006)

SomeRandomIdiot said:


> Actually you should be glad they caved. They were not going to cut your bill and make you pay additional for viewing the OTA Broadcasters which is what 35% of the viewing on MVPD is.
> 
> Note above, DirecTV is charging $5 for locals on commercial accounts already - and they have yet to pay the local broadcasters $5.
> 
> Who do you think is pocketing the difference?


You really think all the locals cost less than $5? Wasn't it cbs shooting for $2 all on its own?


----------



## SomeRandomIdiot (Jan 7, 2009)

inkahauts said:


> You really think all the locals cost less than $5? Wasn't it cbs shooting for $2 all on its own?


Not unless the it is 2020 and someone forgot to tell us.

The average fee to network stations is right below $1 in 2014.

Google for Les Moonves statements yesterday. It is $2B by 2020.

$2B = /12 months = $166.6M a month

125M TVHH in USA by 2020

$166.6M / 125M = $1.33 per TVHH for CBS

65% for CBS....35% for local...

So $2 Total for the local station and cbs combined.

BTW, by 2020, ESPN will have doubled as well.


----------



## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> Thank you for your OPINION. I disagree with the conclusions you have drawn from coincidence, but you are welcome to have your own opinion.


Well, it is my OPINION and it is DirecTV's opinion - but I guess you have a better knowledge of DirecTV than it's President?

"With the passage of the Satellite Home Viewer Improvement Act, the last barrier for consumers to purchase satellite TV has finally been lifted," said Eddy W. Hartenstein, president of DirecTV.

"Investing in spot beam technology will benefit our customers and enable us to add additional local channels in markets we are already serving or plan to serve, as well as extend local channel services to additional smaller markets."

If, as you state, Local in Local was not the driver, then DirecTV did not need to invest in the very expensive venture of uplinking all the local tv stations, which begs the question, why did they do it then?

Also, DirecTV picked up 2M subs by the time 1999 ended with Local in Local starting late that year. They added 2.9M subs in the next 12 months after local in local was launched, both numbers records that have not been replicated prior to or since that time. In all other years the additions were roughly 1M.


----------



## James Long (Apr 17, 2003)

DBS offered much more than locals. It grew out of the BUD industry where people wanted more than locals. Direct broadcast satellite brought the core "cable" channels to homes without large dishes, without geographical limitations (living outside of the cabled community) and without the high price of cable. It also brought content that people couldn't get on medium and small cable systems.

Early DBS competed against analog cable. The playing field has leveled over the years with digital cable offering many more channels than analog cable offered - and the prices of satellite have gone up to the point where satellite is just cable from the sky.



SomeRandomIdiot said:


> All one has to to is look at the sub chart of DirecTV from inception and roughly 1m per year net sub additions.
> 
> Once Locals were available the subs went up to 3m a year.


DirecTV has not had a year with a million net new subscribers since they crossed the 15 million mark in 2005 ... and at that time most of the US did not have locals via satellite. DirecTV's two best years were 2004 with 1.7 million new subscribers and 1999 when DirecTV bought PrimeStar's 1.6 million subscribers. I don't know where you got your "3 million a year" additions. Certainly not from DirecTV's accurate annual reports.

The younger DISH Network had it's last million net new subscriber year in 2006 when they crossed the 13 million mark. DISH had terrific growth their first few years without locals. A new company competing against two other systems getting 350k subscribers their first year, tripling their second year. Getting close to 2 million (total) by the end of their third year. All while competing against the established satellite carrier. As with any new product, growth comes with acceptance - and having 3 million DISH subscribers telling neighbors what they can get on a small dish helps one get to 5 million. (With a nod to the then 7 million DirecTV subscribers - over 10 million small dish subscribers letting others know small dishes were a good option.)

Locals are important ... but read the rest of the sentence. There were a lot more influences in the marketplace than offering locals in select markets that led to DirecTV and DISH's success.


----------



## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> DBS offered much more than locals. It grew out of the BUD industry where people wanted more than locals. Direct broadcast satellite brought the core "cable" channels to homes without large dishes, without geographical limitations (living outside of the cabled community) and without the high price of cable. It also brought content that people couldn't get on medium and small cable systems.
> 
> Early DBS competed against analog cable. The playing field has leveled over the years with digital cable offering many more channels than analog cable offered - and the prices of satellite have gone up to the point where satellite is just cable from the sky.
> 
> ...


Interesting

So you don't believe the President of DirecTV and his statements.

And your numbers are wrong.

That's not my opinion. That's fact.

DirecTV: Subscriber's per Year 
1994 320,000
1995 1,200,000
1996 2,300,000
1997 3,301,000
1998 4,458,000
1999 6,679,000 
2000 9,554,000
2001 10,218,000
2002 11,181,000
2003 12,290,000
2004 13,000,000
2005 15,000,000


----------



## James Long (Apr 17, 2003)

SomeRandomIdiot said:


> And your numbers are wrong.


Your claim was a move from 1 million per year to 3 million per year.
Even assuming your chart is correct, there was NO year with 3 million new subscribers.
There was a year with 2.2 million new subscribers ... the year 1.6 million Primestar subscribers were bought.
And according to the numbers you provided the next year was 2.8 million.
After that, less than a million for two more years.

If you are basing your claim of one million per year jumping to three million per year on those two years not only have you failed to present ANY year that DirecTV added three million subscribers, but you have included a year where DirecTV bought 1.6 million subscribers from another company. Their actual subscriber increase was 600k.

As I have clearly stated ... there are other influences than locals in the growth of direct broadcast satellite.

So now you have ONE year of less than three million subscribers to "support" your claim bookended by the worst two years DirecTV had up to that point (other than their first).

I did not see your edit this morning ... but you seem to be all hung up on locals being the ONLY reason direct broadcast satellite grew - being willfully ignorant of all other influences. Do not forget that the statement you quoted was a forward looking statement of Mr Hartenstein's opinion. It was a rosy outlook, not a historical statement of fact. Mr Hartenstein left DirecTV in 2004. (That is a historical statement of fact.)


----------



## damondlt (Feb 27, 2006)

In 2009 Directv added a Net subscriber addtion of 939,000. 
That is the closest to a million I've seen in the last 10 years.


----------



## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> Your claim was a move from 1 million per year to 3 million per year.
> Even assuming your chart is correct, there was NO year with 3 million new subscribers.
> There was a year with 2.2 million new subscribers ... the year 1.6 million Primestar subscribers were bought.
> And according to the numbers you provided the next year was 2.8 million.
> ...


Let's see, who should I believe. The quote from the President of DirecTV, varies Wall Street Industry Analysts and MVPD publications......or a mod on DBS Talk?

With all due respect, I'm inclined to believe the former with all the facts, as opposed to the opinion of the later, who clearly does not have all the facts the formers did.

EDIT:

Add Charlie Ergin of Dish to the list:

WSJ March 3, 1998

Mr. Ergen also wants to win permission from Congress or the U.S. Copyright Office to deliver local TV channels to all households, as cable companies do. Offering those channels is crucial, he says; many potential subscribers reject satellite TV because it lacks them. He has begun delivering the channels in six cities, but complex provisions of the copyright law bar him from offering the signals to most homes, putting him at a disadvantage to cable. "If we get a level playing field," he says, "we have a chance to be successful."

But it will take a few years, and if the broadcast and cable lobbies succeed in keeping him from offering local channels at all, EchoStar is in trouble.

http://online.wsj.com/articles/SB888876670866655000

With that, I WILL 100% believe the President of DirecTV, the head of EchoStar, Industry Analysts, the Wall Street Journal and MVPD publications instead of an op on dbstalk.com


----------



## James Long (Apr 17, 2003)

You are missing the point. You are still quoting forward looking statements. And quite frankly, to be taken seriously you need to apologize for your lie earlier in the thread about subscriber counts.

Don't make this personal. I have pointed out the factual errors in your claims. Try to be rational about this if you want to be taken seriously.


----------



## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> You are missing the point. You are still quoting forward looking statements. And quite frankly, to be taken seriously you need to apologize for your lie earlier in the thread about subscriber counts.
> 
> Don't make this personal. I have pointed out the factual errors in your claims. Try to be rational about this if you want to be taken seriously.


Only you would find fault that 2.875 Million is not 3 Million Subs. I admit 2.875 Million is not 3 Million. Happy?

You willing to admit that your 2.8 Million claim is wrong as it is 2.875 Million?

Forward looking statements from Charlie Ergen said Dish was EchoStar is in trouble Without local channels. If you read the article, you would see that Charlie was trying to raise money, which he was having big trouble raising because of this. It was not until Local in Local that Institutions would lend him the money he needed to fund Echostar.

We have REVERSE / REAR VIEW MIRROR / HISTORICAL statements from the President of DirecTV stating "With the passage of the Satellite Home Viewer Improvement Act, the last barrier for consumers to purchase satellite TV has finally been lifted," said Eddy W. Hartenstein, president of DirecTV. The quote was not a forward looking statement but made after the launch of Spotbeam bird.

Also, Wall Street Analysis and MVPD Trade Publications note in HISTORICAL terms that Local in Local was the only reason DBS succeeded.

Forward looking statements or not, who knew more about what was needed for DBS to succeed?

1) The Opinion of Charlie Ergin
2) The Opinion of DirecTV President Eddy Hartenstein
3) The Wall St Journal
4) Wall Street Banker / Investment Bankers

or

5) James Long

Again, I go with the former, not the later.

And bottom line, without local in local, DBS could have gone the way of Quad-8, C-Band, Betamax, or laserdiscs....some traction in the beginning, but quickly hit a plateau that never got them over the hump and hitting full market potential.

No matter how much you think you know, they knew more then than you know about DBS during that time today.


----------



## James Long (Apr 17, 2003)

I accept that you were wrong.

As for your other conclusions ... DBS got their first 10 million subscribers before SHVA took effect. Together the companies reached $5 billion in revenue. Not too shabby.

Please try to stick to the topic at hand. This discussion isn't about "some random idiot" vs "some former lurker". This discussion is about direct broadcast satellite.


----------



## Gloria_Chavez (Aug 11, 2008)

This is the way it plays out.

Moonves has said publicly that CBS will be receiving 2 dollars a month per sub by EOY 2017. That's the benchmark that all the other OTA broadcasters are targeting.

So, by 2017, Fox Broadcasting, CBS, ABC, NBC, Univision will each receive 2 dollars a month. Telemundo (which will air the World Cup in 2018) will settle for 1.50 a month.

So, by early 2018, each PayTv subscriber will be paying 11.50 a month, just for OTA TV.


----------



## Jaspear (May 16, 2004)

Gloria_Chavez said:


> This is the way it plays out.
> 
> Moonves has said publicly that CBS will be receiving 2 dollars a month per sub by EOY 2017. That's the benchmark that all the other OTA broadcasters are targeting.
> 
> ...


Which is why the a la carte option did not make it into STAVRA. Heaven forbid that the people actually paying the freight, would get so much as the chance of even a little relief.


----------



## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> I accept that you were wrong.
> 
> As for your other conclusions ... DBS got their first 10 million subscribers before SHVA took effect. Together the companies reached $5 billion in revenue. Not too shabby.
> 
> Please try to stick to the topic at hand. This discussion isn't about "some random idiot" vs "some former lurker". This discussion is about direct broadcast satellite.


The rest of the universe accepts you are wrong.


----------



## SomeRandomIdiot (Jan 7, 2009)

Gloria_Chavez said:


> This is the way it plays out.
> 
> Moonves has said publicly that CBS will be receiving 2 dollars a month per sub by EOY 2017. That's the benchmark that all the other OTA broadcasters are targeting.
> 
> ...


That is incorrect. He stated just this week it's $2B in 2020.

I've broken it all down ($1.37 per TVHH in 2020) in post 16 of this thread.

Also, $2 is roughly 65% CBS and 35% Local Station.

As James Long will point out, these are forward looking statements so the numbers are not exact to the penny.

And btw, you WILL be paying 11.50+ a month for ESPN in 2020.


----------



## Gloria_Chavez (Aug 11, 2008)

It's 2 dollars a month by EOY 2017

------------------------------------------------
CBS Wins Carriage Battle With Time Warner Cable (Analysis)

http://www.hollywoodreporter.com/news/cbs-wins-carriage-battle-time-619471

Both sides were tight-lipped about the terms, but sources say CBS made a deal that will run four or five years and secured an increase to more than $1.50 per subscriber, up from between 50 and 85 cents per month under the old contract. Adding in the cost of the CBS Sports Network and Smithsonian Channel, it is expected that CBS will receive more than $2 per subscriber per month by the end of the pact.
------------------------------------------------

Will we be paying ESPN 11.50 by 2020? Perhaps. 11.50 would constitute a CAGR of 13% (against projected annual inflation of 2.40% thru 2020).

So, a steep price hike. But the market will bear what the market will bear.


----------



## SomeRandomIdiot (Jan 7, 2009)

Gloria_Chavez said:


> It's 2 dollars a month by EOY 2017
> 
> ------------------------------------------------
> CBS Wins Carriage Battle With Time Warner Cable (Analysis)
> ...


The $2 you quoted is for CBS, CBS Sports Channel and Smithsonian. The $2B by 2020 is about Retransmission, which is NOT CBS Sports Channel and Smithsonian and this was a thread about Retransmission of Broadcast Channels.

Actually, you are paying close to $11.00 for all the ESPN packages today. The $11.50 would be the wholesale price, which DirecTV pays and then marks it up for its 25% Margin - and although that sounds bad, its less than cable's ~40% markup.

If you think $11.50 is out of the question, remember that current contracts call for $8 just for ESPN alone by 2017 (now $6.04 wholesale) without any of the other ESPN Channels.


----------

