Home » Issues » Recent Articles:

AT&T’s Vision for HBO: Hook ’em With Freebies, Addict Them Wanting More, Monetize Everything

Phillip Dampier July 9, 2018 AT&T, Competition, Consumer News, Online Video 1 Comment

This isn’t going to be your parent’s HBO much longer.

In a recent town hall attended by 150 employees, AT&T laid out its new vision for the premium network it recently acquired. one almost similar at times to the business plan of a drug pusher.

“We need hours a day,” said John Stankey, a recent transplant from AT&T’s executive suites now tapped to run WarnerMedia — AT&T’s new name for what used to be Time Warner (Entertainment) and owner of HBO. Stankey was complaining that HBO was out of touch with the times, attracting too few viewers to its multiplex of premium channels only a handful of times a week, if that. In a world shared by Netflix, that was not nearly good enough.

HBO, which began life as Home Box Office in November, 1972 is by far America’s oldest cable television channel. Originally a venue for high profile, unedited, commercial-free movies, along with sports and specials, HBO grew into a well-respected producer of high budget (often millions of dollars per episode), cutting-edge original movies and series, showcased to loyal audiences on Sunday nights for years. Series like The Wire, The Sopranos, Sex in the City, Oz and Game of Thrones are well-known across the country, but fewer than half of Americans subscribe to HBO to watch them. HBO has also been the critics’ choice for original content, showering awards on the network in unprecedented numbers for almost 20 years.

Now that AT&T is in charge, that is all about to change, as executives prepare to shift HBO away from “quality over quantity” towards “quality and quantity.” Stankey also made it clear the changes are first and foremost about making money — a lot of it earned by keeping subscribers on HBO property so their viewing habits can be studied and sold.

Stankey

“It’s going to be a tough year,” Stankey warned. “It’s going to be a lot of work to alter and change direction a little bit.”

“It’s not hours a week, and it’s not hours a month,” Stankey said of how long he expects HBO subscribers to spend time watching the service. “It’s hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes. I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”

That will be a major shift for a network overseen top to bottom since 1992 by Richard Plepler, HBO’s chief executive. Plepler expanded on HBO original movies by launching expensive scripted series in the late 1990s that stood out by escaping broadcast television network censorship. But Plepler was very selective about the number of shows on HBO’s schedule, with some series taking years to develop. Under Stankey’s leadership, HBO will now be expected to dramatically expand original content, much like Netflix has done to keep viewers coming back for more.

“As I step back and think about what’s unique about the brand and where it needs to go, there’s got to be a little more depth to it, there’s got to be more frequent engagement,” Stankey said, adding HBO’s brand has to broaden its appeal to new audiences.

That will require a big boost to HBO’s budget. The pay movie channel is already extremely profitable, making almost $6 billion in profits over the last three years. It invested $2 billion in programming development, much less than the $8 billion Netflix is investing in less costly, but more prolific programming. HBO’s business plan depends heavily on American cable subscribers paying $10-15 a month for the network. It also earns money selling its original shows to television outlets in other countries. Its high monthly cost has always limited subscriber numbers, especially these days with cord-cutting and bill shaving. Premium movie channels are often the first networks to be dropped in return for a lower bill.

Plepler

To monetize its subscriber base, HBO either has to cut the cost of the network, transform it into must-have television, or a combination of both. Stankey is unhappy HBO has wavered around 40 million subscribers (out of 142 million American potential households) for years. He told audiences the network has to find ways to move the network beyond its perpetual 35-40% penetration “to have this become a much more common product.”

There was a clear sense of tension between Plepler, who is part of the New York City entertainment scene, and Stankey, a business-focused Texan with decades of experience in the Bell System — later AT&T. Plepler’s deference to Stankey’s new vision seemed uncomfortable at times, as Stankey made it clear who was now in charge:

Stankey: “We’ve got to make money at the end of the day, right?”
Plepler: “We do that.”
Stankey: “Yes, you do, just not enough.”

Plepler’s clearly defined tenure and vision at HBO had not wavered much since taking over in the early 1990s. But that vision was nervously discarded almost immediately as Stankey looked on.

“I’ve said, ‘More is not better, only better is better,’ because that was the hand we had,” Plepler explained. “I’ve switched that, now that you’re here, to: ‘More isn’t better, only better is better — but we need a lot more to be even better.’”

As a result, HBO, which used to be the darling of critics and well-to-do viewers in big cities on the east and west coast is getting a radical makeover. Onlookers can expect a much more aggressive marketing effort and free samples of the service to attract and hold new customers. It will have to keep its pricing closer to the competition, particularly as many consumers already subscribe to 1-2 different streaming services. Then it will have to give people a reason to subscribe to just one more service.

Competition Drives Internet Prices Down 45% in Toronto This Summer

Fierce competition by eastern Canada’s largest internet service providers are driving down prices across the Greater Toronto Area by as much as 45%.

Bell’s fiber to the home service, making its way across parts of the GTA, is now offering unlimited gigabit (1,000/940 Mbps) internet for $79.95 a month, a major drop from its original price of $149.95, if customers sign up before the end of July. Those signing up by July 7 can also get a $50 gift card.

Rogers, the country’s biggest cable company, has been pushing its own limited time promotional offer for its gigabit (1,000/30 Mbps) package, which is more widely available than Bell’s Fibe but also suffers from anemic upload speed. Rogers was selling the package for $152.99/month, but it’s now $79.99 for the first year. The offer is good throughout Ontario, New Brunswick, and Newfoundland.

The two telecom companies are trying to boost subscriber numbers during the slow summer months when quarterly financial reports can show a decrease in customers.

Canadians have generally had less access to gigabit speed plans than their American neighbors. Experts believe these companies are cutting prices to hook people on super-fast internet plans that will change consumer attitudes about gigabit speed from an unaffordable luxury into a necessity. Like Americans, Canadians are gravitating towards faster speed plans at an accelerating rate. They also continue to choose unlimited plans wherever available.

There are the usual terms and conditions in the fine print to consider:

Rogers: Offer available for a limited time to new Rogers internet subscribers within Rogers cable service area in Ontario (where technology permits). Subject to change without notice. Data usage subject to Rogers Terms of Service and Acceptable Use Policy. See rogers.com/terms for full details. Taxes extra. One-time activation fee of $14.95 and one-time installation fee (waived for Self-Install; Basic $49.99 or Professional $99.99) apply. Savings as compared to regular price for 12 months. Advertised regular price applies in month 13, subject to any applicable rate increases.

Speeds may vary with internet traffic, server gateway/router, computer (quality, location in the home, software and applications installed), home wiring, home network or other factors. See Acceptable Use Policy at rogers.com/terms. An Ethernet/wired connection and at least one additional wired or wireless connection are required to reach maximum download speeds of up to 1 Gbps for Rogers Ignite Gigabit Internet. Offer available until July 31, 2018 within Rogers cable service area (where technology permits) to new customers subscribing to Ignite Internet 60u or above.

Bell: Offer ends on July 31, 2018. Available to new residential customers in Ontario, where access and technology permit. For certain offers, the customer must select e-billing and create a MyBell profile. Modem rental required; one-time modem rental fee waived for new customers. Subject to change without notice and cannot be combined with any other offer. Taxes extra. Other conditions apply, including minimum system requirements. Subject to compliance with the Bell Terms of service; bell.ca/agreements.. Speeds on the internet may vary with your configuration, internet traffic, server, environmental conditions, simultaneous use of Fibe TV (if applicable) or other factors; bell.ca/speedguide.

$50 gift card promotion: Offer ends on July 7, 2018. The selected internet tier must include unlimited usage. An unloaded gift card will be mailed after the customer maintains a continuous subscription to the same eligible Bell services and has an account in good standing for 60 days following the installation of all services. All services need to be activated by July 31, 2018. Not combinable with any other offers or promotions. Subject to change without notice. One gift card per account. When received, customer must register the gift card online at bellgiftcard.com to request loading of the amount. Allow 30 days for gift card to be loaded and ready to use. If you cancel your services before you activate your gift card, you will not be able to use your gift card. Gift card and use are subject to the card program. Other conditions apply; see bell.ca/fullinstall.

Relationship Between Spectrum and New York State Growing Worse By the Day

Whatever pleasantries were exchanged between Charter Communications and the New York Department of Public Service (Public Service Commission) earlier this year are now gone as the relationship between the cable company and state officials continues to deteriorate.

The first shot across the bow this summer came in Charter’s June 28th letter in response to a demand by the state to unconditionally accept the state’s terms of its 2016 Merger Order granting the acquisition of Time Warner Cable by Charter Communications. Except the cable company did not actually agree unconditionally to those terms. As part of a dispute over Charter’s fulfillment of its responsibilities in the Merger Order regarding rural broadband expansion, one section seemed to predict future litigation:

“While Charter’s acceptance of these commitments is unconditional, this acceptance remains subject to applicable law. Charter does not waive its positions as to the meaning or proper interpretation of its commitments (including Charter’s position that the negotiating history of Appendix A must guide such interpretation), or any of its legal rights including its right to seek review of the Commission’s June 14, 2018 Orders and the Commission’s interpretation and application of the January 8, 2016 Order.”

On July 3rd, Charter’s attorneys sent another letter to the telecommunications regulator doubling down on this language:

“Charter fundamentally disagrees that the Commission’s June 14th Order accurately reflects the agreement that was reached with Charter with respect to the Merger Order. The company intends to appeal the Order….”

That notification was included in a letter requesting an extension of the deadline to file a revised rural buildout plan to replace disqualified addresses with other New York addresses where broadband service is not currently available. Charter warned it would pursue “administrative and legal appeals” and did not want to take the time update its buildout lists until those challenges (and appeals) are exhausted. The company’s lawyers made sure to reserve all of Charter’s rights in an even lengthier footnoted disclaimer:

“Certain subjects discussed in this filing pertain to non jurisdictional products and services. Discussion of nonjurisdictional products and services is not intended as a waiver or concession of the Commission’s jurisdiction beyond the scope of Charter’s regulated telecommunications and cable video services. Charter respectfully reserves all rights relating to the inclusion of or reference to such information, including without limitation Charter’s legal and equitable rights relating to jurisdiction, compliance, filing, disclosure, relevancy, due process, review, and appeal. The inclusion of or reference to non jurisdictional information or to the ordering clauses or other requirements of the Order as obligations or commitments to provide non jurisdictional services shall not be construed as a waiver of any rights or objections otherwise available to Charter in this or any other proceeding, and may not be deemed an admission of relevancy, materiality, or admissibility generally. The requests discussed herein should not be construed in any way as a waiver by Charter of any of its legal rights, including (without limitation) Charter’s right to seek review of the June 14th Order or otherwise seek review of the Commission’s interpretation and application of its January 8, 2016 Merger Order.”

The key takeaway from this legal word salad is “non jurisdictional products and services” — code language from Charter to the state suggesting New York regulators have no legal authority to stand on imposing rules, regulations, and requirements on deregulated services like broadband. Charter’s lawyers defended the company against accusations it failed to meet the agreed-on schedule for rural broadband buildout to 145,000 unserved/underserved New Yorkers using similar language. Charter only began suggesting the state’s broadband expansion plan violated federal law after the state declared the company was out of compliance and fined.

Any legal action by Charter will likely rest on claims the federal government deregulated much of the cable business, including broadband service. Therefore, the state lacks enforcement power to compel Charter to offer broadband service to any unserved area, much less on a timetable. Remember, however, Charter was only too happy to agree to the terms of the merger agreement, with all its terms and conditions, to get the merger finished, without any complaints. Now it seems to have second thoughts.

“Charter finds that the task of revising the detailed Buildout Plan and the other requirements is far too large an undertaking to be accomplished with the necessary care and diligence required within the 21-day timeframe mandated in the Commission’s June 14th Order,” the cable company’s lawyers wrote, asking for an extension of the deadline.

Today, the Department issued a terse response to Charter’s legal team, authored by Kathleen Burgess, secretary of the Public Service Commission:

“Your request for a stay of the revisions of Charter’s Buildout Plan and the other provisions required by the Commission’s Order is not a matter for the Secretary. Your request for a 60-day extension is excessive and not adequately justified. Therefore, your request for an extension is denied.”

Two things seem clear: New York will continue to fine Charter for further missed deadlines, and it seems likely this matter is headed for court.

Spectrum Dumps Time Warner Cable’s Phone2Go App Today, Citing Low Usage

Phillip Dampier July 5, 2018 Charter Spectrum, Consumer News No Comments

Charter Communications will close down Time Warner Cable’s Wi-Fi calling app Phone2Go on July 5, 2018, citing low customer usage.

Originally introduced in 2014, Phone2Go was marketed as a free Wi-Fi calling app alternative to Skype or Vonage. The Android and iOS app linked to Time Warner Cable/Spectrum’s phone service, allowing customers to make free calls, text and video conference over the app when away from home or abroad. Each account supported up to five devices, which allowed distant relatives, friends, or family members to make and receive free calls.

“One of the important advantages of Phone2Go is you can give an ID to a relative or friend who lives abroad. And they can make calls as if they were in the United States. So they can call you say on your cellphone, they may be say in Europe and you are in the U.S. and they would only pay the local rate,” said Time Warner Cable Phone general manager Jeff Lindsay back in 2016.

The app was never popular with customers, however, because call quality was often poor and the app was infrequently updated. It was also cumbersome to change or add devices, and once registered to a device, it was very difficult to re-register those devices for use with another account. After Charter Communications acquired Time Warner Cable, there were frequent and long-lasting service outages affecting the Phone2Go app, which may have driven off what loyal users it had.

Spectrum is contacting customers registered for the app by phone to alert them the Phone2Go service would be discontinued on Thursday.

“New Fox” Will Be Centered on Fox News & Live Sports

Phillip Dampier July 5, 2018 Competition, Consumer News, Online Video 1 Comment

Rupert Murdoch’s slimmed-down television empire will refocus on targeting America’s red states and live sports fans.

After Murdoch completes the sale of most of 21st Century Fox and its studios to either Disney or Comcast, the “New Fox” that will remain will include Fox News Channel, Fox Business Channel, the Fox television network, MyNetworkTV, some sports channels, and 28 owned and operated local television stations. In short, it will be a $23 billion company focused almost entirely on legacy television.

To maximize the value of those remaining assets, “New Fox” will double down on live television to attract and hold the “core Fox viewer,” one who instinctively watches Fox News, enjoys live sports, and more than likely lives in a conservative-leaning state.

Brandon Ross, an analyst at BTIG Research, believes “New Fox’s” crown jewel will be the Fox News Channel, not the Fox television network.

“The strongest asset that’s in their portfolio going forward is Fox News,” Ross said, noting that dedicated viewers of the network will likely see promotions from other Fox-owned networks that will increasingly cater to the interests of the average Fox News viewer. Research shows Fox News attracts an older, conservative, and very loyal audience that is more likely than other demographic groups to also watch live television sports and pay for cable television.

Murdoch’s recent content deals hint he intends to increase Fox’s focus on live sporting events. Last week, CNN reported Fox acquired the rights to broadcast “WWE SmackDown” for the next five years. Earlier this year, it signed another five-year deal to air Thursday night NFL games.

Fox’s scripted television shows will likely take a hit as a result, as investments shift towards live news and expensive sports programming. Murdoch may be signaling it won’t continue trying to keep up in the battle between Amazon, Hulu, and Netflix vs. traditional linear/live television over scripted dramas, original movies, and other pre-produced content. Murdoch’s ability to rely on traditional scripted shows for revenue may also be waning as online content companies break the traditional 24-26 week ad-supported television season.

Netflix’s original content budget was around $6 billion in 2017, more than CBS spent on its own shows. This year it expects to spend up to $8 billion, more than CBS, FOX, and ABC. Fox can still fall back on the two strengths network television still commands — live news and sports. News programming, particularly the kind of political opinion shows Fox airs during the evening, are extremely cheap to produce and attract a loyal audience. Sports programming, in contrast, is extremely costly to acquire. But like news, surveys show more than 90% of viewers watch live, commercials and all.

Jay Rosenstein, a former CBS Sports executive, told CNN that is what makes sports so valuable for a legacy business like Fox.

“There’s been a certainty about sports programming that doesn’t exist with scripted or unscripted programs,” he added. “With sports, you have a known quantity.”

Live sports is one of the few types of programming left where viewers don’t instinctively reach for the remote to fast forward through advertising. Scott Rosner, the academic director of Columbia University’s Sports Management Program, said networks like Fox depend on that to make money.

“What that means is you are sticking around as the viewer,” Rosner said. “You’re far more likely to watch advertising that is being put in front of you.”

That adds up to a lot of advertising revenue because no other programming comes close to beating the ratings of live football games, according to Ross. Networks spend a lot on sports programming, but also earn a lot from lucrative and frequent ad breaks.

Networks opening their checkbooks to spend billions on sporting rights prefer long-term, stable contracts even if they have to spend more to get them. The streaming services, as well as some social media sites, are also dabbling in live sports streaming, and with their deep pockets, traditional broadcast networks could eventually be outbid. At Fox, they have about five years before they need to worry about renewing the contracts they just signed.

“New Fox” will also recoup some of their recent investments from viewers like you. Many expect Fox and their television stations will raise retransmission consent fees charged to your cable, phone, satellite, or online provider to carry Fox-owned networks and stations on the lineup.

Search This Site:

Contributions:

Recent Comments:

  • Bill Callahan: Buffalo? Syracuse?...
  • Fred Hall: Haha.....someone at Sinclair didn't provide enough "grease" for Ajit's palm...
  • Joseph Lindberg: I pay $93.45 for just TV select $6.00 or so for two TV boxes each the cheap ones not dvrs and $14.99 or something in tax and $64.99 for the TV select ...
  • Norm Mueller: Do not even consider this company for your service provider, or you will forever regret it like I do. This started because Comcast's promotional rate...
  • Katherine. Voss: I sent all my contract buyout forms. Got no credible response. This is a scheme. I am sending information to proper agencies....
  • Noemi Romero: i have been waiting for 3 month and 2 weeks now for my refund and every time i call is like no one knows what the hell i am talking about. like seriou...
  • Josh: Sounds risky....40 million subscribers is insanely high, and clearly that guy running it since ‘92 knows what he’s doing. I forgot AT&T owns hbo ...
  • alan: i stopped pissing $ away on paying to see commercials 20 years ago did the direct tv , dishnet card programing my own cards ..then that became a sma...
  • Denis Cartledge: I live in a small (Australian) New England regional town, population ~3,500. The main north south New England Fibre Trunk runs up our main street, wh...
  • James Thompsen: You pay more you get mor.... hey wait an Effin minute!...
  • Joshi: Honestly, I'm glad Comcast did not win the bid. If they won, things would have gotten a lot worse since they bought out NBC Universal and Dreamworks s...
  • Stephen Collins: The modem increase is the most unconscionable of the bunch....

Your Account: