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Spectrum Combats Cord Cutting With Spectrum TV Essentials: $14.99 for 60 Streamed Networks

Phillip Dampier February 20, 2019 Charter Spectrum, Competition, Consumer News, Online Video No Comments

In a move that clearly signals cord-cutting is taking a toll on Spectrum cable television, Charter Communications today unveiled a new streaming TV service priced to compete with “over the top (OTT)” streaming services like YouTube TV and DirecTV Now.

“Spectrum TV Essentials” will offer a package of 60 national cable networks for $14.99 a month, when the streaming service debuts in March. The lineup avoids costly cable channels focused on sports and will include no local channels.

“Spectrum TV Essentials is a OTT offering designed to provide Spectrum internet-only customers a new low-price, high-value video option,” said Charter CEO Tom Rutledge. “As we began to assemble the rights for this new video service, we received great enthusiasm and encouragement from these key programming partners, who share our view and embrace creating an innovative video offering we believe will resonate with our internet customers.”

Remarkably, one of Charter’s first programming partners for the newest slimmed-down cable TV package is Viacom, notorious for its bouquet of high-priced cable networks. Viacom has been so insistent on regular rate increases and forced bundling of multiple Viacom-owned cable networks, some cable systems like Cable One dropped all Viacom networks from their lineups just a few years ago.

A management change at Viacom apparently included a new willingness to combat cord-cutting.

“Viacom shared its strong belief and research that suggests there is a large untapped opportunity for a low-priced, entertainment-only bundle unencumbered by the high cost of broadcast retransmission consent fees and expensive sports programming,” Rutledge noted.

The 60-channel lineup is heavy on content from Discovery Networks, Viacom, Hallmark, and AMC. News junkies will be unhappy to find CNN, MSNBC, and Fox News are not on the lineup, although lesser-watched BBC World News, Bloomberg, and NewsmaxTV are there.

The full lineup:

A&E, AMC, American Heroes Channel, Animal Planet, AXS TV, BBC America, BBC World News, BET, BET Her, BET Jams, BET Soul, Bloomberg, Cheddar, CLEO TV, CMT, CMT Music, Comedy Central, Cooking Channel, Destination America, Discovery, Discovery Family, Discovery Life, DIY, Food Network, FYI, Game Show Network, Hallmark Channel, Hallmark Drama, Hallmark Movies & Mysteries, HDNet Movies, HGTV, HISTORY, IFC, Investigation Discovery, Lifetime, Lifetime Movie Network, Logo, MotorTrend Network, MTV, MTV2, MTV Classic, MTV Live, MTVU, NewsmaxTV, Newsy, Nickelodeon, Nick Jr., Nick Music, NickToons, Outdoor Channel, OWN, Paramount Network, Science Channel, Sundance TV, Teen Nick, TLC, Travel Channel, TV Land, VH1, Viceland, The Weather Channel and WEtv.

There will be no DVR option at launch, but Charter is reportedly testing cloud DVR technology for introduction later.

“We’re thrilled to expand and deepen our relationship with Charter. They share both our commitment to the evolution of the the Pay TV ecosystem as well as our understanding of the changing needs of consumers,” said Bob Bakish, Viacom CEO. “As the video marketplace continues to segment across price points and offerings, we believe a high quality, lower priced option for internet-only subscribers is very important. We’re excited to have our global brands as part of Spectrum TV Essentials at launch.”

Access will initially be available on the desktop through SpectrumTV.com and Spectrum’s Roku app. The service will also be available on iOS and Android phones and tablets, Apple TV, Xbox One, Amazon Kindle Fire, and Samsung Smart TVs.

Epix, Dropped from Some Cable Company Bundles, Launches Direct-to-Consumer Package

Phillip Dampier February 13, 2019 Competition, Consumer News, Online Video No Comments

Epix, the newest premium movie channel on the block, is giving up on exclusive pay television distribution and has launched a new $5.99/mo direct-to-consumer subscription service, beating anticipated services from AT&T WarnerMedia and Disney.

Epix Now streaming subscribers will have access to “thousands of movies” and original series, with full download availability and a growing catalog of titles available for 4K/Ultra HD streaming.

Epix, now wholly owned by MGM, has struggled to attract subscribers from its traditional cable and satellite TV partners, as consumers ditch premium channels to reduce their bill or drop cable TV service altogether. Charter Communications recently dropped Epix from Spectrum’s bundled pay television tier, now requiring customers to buy the network a-la-carte, likely resulting in a dramatic loss of subscribers.

Epix Now is currently available with a 7-day free trial on Apple TV, as well as iOS and Android phones and tablets, and is expected to arrive soon for Roku and Amazon Fire TV owners. The service is also sold through The Roku Channel, but will shortly be transitioned to a standalone app on that platform.

Launched in October 2009, Epix began as a partnership between MGM, Lionsgate, and Viacom. It was known for airing movies more quickly after leaving theaters than its competitors. But the network has been limited by a lack of exclusivity to first-run content from larger studios. Lionsgate largely lost interest in Epix after acquiring competing premium movie service Starz in mid-2016. A year later, Viacom made it known it wanted to exit the venture to concentrate on Showtime, its primary pay television network, and use the sale proceeds to pay down Viacom’s high debt load.

Streaming and Cord Cutting Take Toll on European TV Networks, License Fees

European broadcasters are frightened at the prospect of seeing viewers and crucial mandatory TV license fees erode away as an invasion of American on-demand streaming from Netflix and Amazon takes its toll on traditional television.

Netflix’s almost limitless budget for original local/in-country productions is threatening to outspend traditional European broadcasters and giving viewers a new reason to stop paying compulsory TV license fees, which do not apply to foreign-owned streaming services.

Unlike in the United States, where non-commercial public broadcaster PBS receives most of its financial support from corporate underwriting and voluntary contributions from viewers and listeners, many European countries finance their national, over-the-air public broadcasting services with a mandatory annual license fee.

In the United Kingdom, for example, a household must pay $200 a year if their home has color TV sets or $68 a year for black and white-only TV sets if they watch the BBC. These fees cover the costs of the BBC’s extensive commercial-free radio and TV service and keep it independent of the British government. That fee is a bargain compared to Denmark, Norway, and Austria where TV license fees exceed $300 US annually.

Enforcement officers using TV detector vans drive through neighborhoods looking for unlicensed TV homes by detecting signals emitting from a switched-on television. Warning letters and a visit from an enforcement officer quickly follow. But as streaming services take hold, it is becoming more difficult for licensing officers to determine if a resident is using their television to watch the BBC, which requires a license, or on-demand content from a streaming service like Netflix, which does not require a license.

It’s a growing issue in the United Kingdom, where TV license cancellations are now rising for the first time in five years, particularly as younger viewers move away from traditional linear-live TV programming. According to the Financial Times, by 2022 Netflix, Amazon, Facebook and Apple could outspend traditional UK networks by a factor of four. Independent of the BBC, Britain’s commercial ITV network is also reporting increasing viewer defections, especially among younger audiences. Traditional pay television, usually delivered by Sky satellite or Virgin’s cable system, is also experiencing dish/cord-cutting as viewers start to abandon traditional TV packages.

(Image courtesy: Financial Times)

UK networks are planning to respond to the threat by building on their current streaming successes, particularly BritBox, a joint venture of BBC Studios and ITV targeting North American audiences with on-demand British television series and original productions. BritBox has attracted a loyal following in the U.S. and Canada willing to pay around $7 a month, effortlessly raising almost half of the amount of a traditional UK TV license from North Americans without the expenses of traditional broadcasting, staffing, and collections. In the UK, a TV license grants viewers automatic access to iPlayer from the BBC, which offers live streams and short-term access to on-demand programming. Both UK broadcasters believe a service like BritBox, offering a more extensive library of older programming and full seasons of TV shows may interest UK audiences more — perhaps enough to pay another $7 a month for access, in addition to their TV license fee.

Other European broadcasters are dabbling in streaming ventures, but currently see less threat from the English-language dominant catalog of content from services like Netflix. In fact, many of those European broadcasters, particularly in Scandinavia, Germany, France, Switzerland, the Netherlands, and Belgium are earning extra revenue by licensing their native language content, subtitled for English language audiences, to streaming services like Netflix, MHz Choice, Hulu, and Amazon Prime.

AT&T: “2019 is the Money Year” – Company Plans Big Rate Hikes, Makes It Tough to Disconnect

Phillip Dampier January 29, 2019 AT&T, Competition, Consumer News, DirecTV, Online Video 5 Comments

AT&T shareholders are frustrated. They are not getting the dividend payouts and shareholder value they expected after AT&T put itself $170 billion in debt last year — the highest debt load of any non-financial American corporation.

As AT&T has bet big in recent years on video-related acquisitions, including DirecTV and Time Warner (Entertainment), investors are skeptical AT&T can properly monetize its video business. Many have sold shares after criticizing company executives over the company’s strategy and high debt, driving AT&T’s market capitalization down to around $225 billion, comparable with considerably smaller Verizon Communications.

But no worries, AT&T CEO Randall Stephenson, has reassured. AT&T expects those investments to yield results this year, helped by forthcoming broad price hikes for AT&T’s consumer services.

“2019 candidly is the money year,” Stephenson said in an interview with the Wall Street Journal. “This is a year when we get everything rationalized.”

According to AT&T, customers are irrationally paying too little for AT&T’s video-related services, which include DirecTV (~19 million customers) and DirecTV Now — the two-year old streaming service that has attracted nearly two million subscribers.

Stephenson

Although DirecTV has recently been extremely aggressive about offering deep discounts to convince satellite customers to stay, AT&T plans to pull back on those discounts as two million DirecTV customers see their two-year contracts end this year. Instead of granting renewed discounts for signing another contract, AT&T plans to deliver significant rate increases.

“As those customers come due, we’ll get closer to market pricing,” AT&T’s John Donovan told investors at a November investor conference. “We’ll be respectful of our customers, but [prices] will move up.”

That may prove a difficult sell for DirecTV satellite customers, who have recently been abandoning the satellite platform in favor of cheaper streaming TV alternatives. Even with package discounts, DirecTV is the pay television industry’s most expensive provider, collecting an average of $120.36 a month for its TV packages. In contrast, Dish Networks gets an average of $103.99, Charter Spectrum earns $91.14 and Comcast, $84.50.

DirecTV defections, largely over price, have been growing at an accelerated rate, with 1.4 million customers turning their back on the satellite provider over the last two years. Analysts expect AT&T will report 300,000 more lost subscribers in the last three months alone. At that rate, AT&T will lose at least $1 billion in operating profits in 2019 from its declining satellite TV unit alone.

(Image courtesy: WSJ)

DirecTV Now customers, who already absorbed a $5 rate hike last summer, and will face even more rate increases and channel reductions in 2019. Stephenson expects DirecTV Now’s price point to be in the $50-60 range, which means many customers will likely face an average of $10 in rate hikes this year. For AT&T, that would deliver “the right price” and gets the service “to where it is profitable,” according to Stephenson.

But customers are likely to balk if AT&T reduces channel lineups at the same time it raises prices. AT&T has already faced substantial DirecTV Now customer defections after last summer’s rate increase, and the company has also reduced new customer sign-ups by cutting back on new subscriber promotions, which often included a free set-top streaming device. Waiting to pick up exiled streaming and satellite customers are AT&T’s competitors, especially Google. YouTube TV has proved to be a DirecTV Now killer, now charging $40 a month for 60+ channels. It also comes with an unlimited cloud DVR feature and a complete lineup of local channels across most of the country. YouTube TV is reportedly still growing, attracting more than one million customers so far. AT&T executives claim the service is popular only because Google is suspected of subsidizing what they believe to be an unprofitable venture by around $9 a month.

Investors are also unhappy about customers slimming down their TV packages, because average revenue per customer is cut in the process, sometimes dramatically. Wall Street was accustomed to video packages bringing in at least $100 a month. In many cases, that revenue is cut in half after a customer switches to a streaming provider. AT&T hopes investor pressure on those new ventures and ongoing wholesale programming rate increases will both conspire to bring back familiar annual rate hikes for streaming services as well. Programming cost inflation almost feeds itself. As programmers set new wholesale rate records for their networks, other programmers believe there is now room to raise their wholesale rates as well.

Programming costs are not just important for consumers, either. Wholesale programming rate inflation was one of the reasons AT&T spent $49 billion to acquire DirecTV. Volume discounts for DirecTV meant the satellite provider was paying an estimated $20 a month less on programming than AT&T’s own U-verse unit, which had a much smaller customer base. AT&T’s purchase of Time Warner, which owns several popular cable networks, was also a hedge against programming rate increases because AT&T would effectively pay any increases to itself.

(Image courtesy: WSJ)

The Journal reports AT&T executives were unprepared for the speed cord-cutting has taken hold. Most most under-30 have abandoned the concept of paying for live, linear cable television at any price, preferring a combination of on-demand streaming from Netflix, Hulu, and other video streaming services with an over the air antenna to watch local stations for free. Older Americans are gradually following suit.

According to the Journal, AT&T’s latest tactic to slow down customer departures is to make cancellation as difficult as possible:

“There’s no way that we could make the numbers we were told to make,” said Altrina Grant, former manager of a Chicago-area AT&T call center. She said some agents would promise to call back a customer about a request to drop service rather than immediately disconnecting, which would count against their compensation. Irate customers would later call another employee to ask why their request wasn’t honored, she said.

“These reps were getting thousands of dollars because they knew how to manipulate the system,” Ms. Grant said.

Cyrus Evans, a former call-center manager in Waco, Texas, said employees’ pay could swing between $50,000 and $80,000 a year depending on their performance, which was often influenced by how many disconnection requests they could deflect. Mr. Evans said employees often got angry calls from customers who had been promised their service would end, only to receive a bill the next month. He said the incentive structure rewarded bad behavior.

Former AT&T workers said the company launched a new audit team in 2017 to crack down on support staffers making promises they couldn’t keep. Ms. Grant said this initiative led the company to fire some workers but several customer-care executives are still in their jobs.

AT&T disputes these allegations, claiming false promises to customers violate AT&T’s Code of Business Conduct and are “extremely rare.”

YouTube TV Now Offers Local Channels in Top-95 TV Markets

Phillip Dampier January 23, 2019 Competition, Consumer News, Online Video, YouTube TV No Comments

YouTube TV, which offers cable-free live television, today announced it now offers local network affiliates covering over 98% of the U.S., allowing consumers in smaller cities to cut the cord and still keep good reception from most local, over-the-air stations.

Since launching almost two years ago, YouTube TV has gradually added local stations from most metro areas, but many smaller markets were not covered. Effective today, YouTube TV adds most local ABC, CBS, FOX, NBC, and some independent stations in these areas:

  • Alabama: Dothan, Montgomery-Selma
  • Alaska: Anchorage, Fairbanks
  • Arkansas: Jonesboro, Monroe-El Dorado
  • California: Bakersfield, Chico-Reading, Eureka, Monterey-Salinas, Palm Springs, Yuma-El Centro
  • Colorado: Grand Junction
  • Florida: Panama City, Tallahassee-Thomasville
  • Georgia: Albany, Augusta-Aiken, Gainesville, Macon
  • Idaho: Boise, Idaho Falls-Pocatello, Twin Falls
  • Indiana: Evansville, Ft. Wayne, Lafayette, Terre Haute
  • Illinois: Peoria-Bloomington, Rockford
  • Iowa: Davenport-Rock Island-Moline, Ottumwa-Kirksville, Sioux City
  • Kansas: Topeka
  • Louisiana: Alexandria, Lake Charles
  • Maine: Bangor, Presque Isle
  • Massachusetts: Springfield-Holyoke
  • Michigan: Lansing, Marquette, Traverse City
  • Minnesota: Duluth-Superior, Mankato, Rochester-Mason City-Austin
  • Mississippi: Biloxi-Gulfport, Columbus-Tupelo, Greenwood-Greenville, Meridian
  • Missouri: Columbia-Jefferson City, Joplin-Pittsburg, St. Joseph
  • Montana: Billings, Butte-Bozeman, Great Falls, Missoula
  • Nebraska: Lincoln, North Platte
  • Nevada: Reno
  • New York: Binghamton, Elmira-Corning, Utica, Watertown
  • North Carolina: Wilmington
  • North Dakota: Fargo, Minot-Bismarck-Dickinson (Williston)
  • Ohio: Bowling Green, Lima
  • Oregon: Bend, Eugene, Medford-Klamath Falls
  • Pennsylvania: Erie, Johnstown-Altoona
  • South Carolina: Myrtle Beach
  • South Dakota: Rapid City, Sioux Falls
  • Texas: Amarillo, Beaumont-Port Arthur, Corpus Christi, Laredo, Lubbock, Odessa-Midland, San Angelo-Santa Barbara-Santa Maria-San Luis Obispo, Sherman-Ada, Tyler-Longview (Lufkin & Nacogdoches), Wichita Falls
  • Virginia: Charlottesville, Harrisonburg
  • Washington: Yakima-Pasco-Richland-Kennewick
  • West Virginia: Bluefield-Beckley-Oak, Clarksburg-Weston, Parkersburg, Wheeling-Steubenville
  • Wisconsin: La Crosse, Wausau-Rhinelander
  • Wyoming: Cheyenne-Scottsbluff

Additional small markets will be added later.

YouTube TV offers over 60 networks, on-demand programming, cloud DVR service with no storage limit and unlimited simultaneous recordings, up to six personal accounts (three simultaneous stream limit), for $40 a month.

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