Canoe Ventures

The impact of video cord-cutting and a growing intolerance for heavy advertising loads seem to be taking a toll on the cable industry’s lucrative advertising business.

Canoe Ventures, owned by Comcast, Charter Spectrum, and Cox, reports the number of ads being viewed by video-on-demand users rose just 4% in 2019, just a fraction of the growth the company reported over the past three years.

Many ad-supported cable networks make parts of their programming libraries available for on-demand viewing by video subscribers. Cable companies sell advertising that fills the original commercial breaks, sometimes resulting in a viewing experience comparable to live viewing — ads and all. But customers are increasingly turning away from cable video-on-demand, either because they are canceling their video packages or are becoming more intolerant of heavy ad loads.

Canoe Ventures claims its slowed growth comes from selling out ad inventory on the cable video-on-demand platform. But during the first six months of 2019, 13.1 billion ads were collectively viewed by customers, which is nearly identical to the 13 billion ads viewed during the same months in 2018. Assuming Canoe Ventures has nearly sold out all available space on its ad insertion platform, that should result in consumers seeing more ads. But with ad viewing almost flat, that likely means less video-on-demand content is being watched.

Dish Network had until 11:59pm MDT on Sunday, July 21 to cut a deal that paid The Walt Disney Company more money or satellite and streaming customers could have lost access to five Disney-owned networks: National Geographic, FX, FXX, FXM (Movies), and NatGeo Wild.

“Our contract with Dish for the FX and National Geographic networks is due to expire soon, so we have a responsibility to make our viewers aware of the potential loss of our programming,” NatGeo and FX said in a statement last week. “However, we remain fully committed to reaching a deal and are hopeful we can do so.”

The deadline came and went and so far, the networks remain on the lineup after both parties agreed to extend talks.

The cable networks were formerly owned by 21st Century Fox, but were part of a package sale worth $71.3 billion to Disney in March.

Separate negotiations are also underway with the Fox Regional Sports Networks, which also achieved a temporary extension. Both sides indicate they are optimistic they will arrive at a deal.

Negotiations with Meredith Corporation’s 17 over the air TV stations did not fare as successfully. Satellite and streaming customers lost access to those stations last week.

Your cable or streaming TV bill will increase once again as Fox executives told cheering investors this morning it would hike prices for carrying Fox TV stations and its suite of cable networks, including Fox News Channel, Fox Business, Fox Sports 1 and 2, and the Big Ten Network.

“We plan to meaningfully accelerate growth of both direct retransmission and non-[owned and operated] revenue and we believe the broadcast economics we receive are quite underpriced relative to the quality of the content we are providing,” said Fox chief operating officer John Nallen, speaking at a Fox Investor Day event.

Fox’s contracts with most cable, satellite, and streaming providers are coming up for renewal over the next three years, and it should not surprise providers to see substantially higher renewal pricing than ever before to continue carrying Fox’s networks. Fox plans to leverage the increasing amount of live sports on its broadcast network and the relative popularity of Fox News Channel to demand higher compensation. Fox was already collecting 29% more in retransmission consent-related revenue during the third quarter, but that percentage is expected to grow dramatically as new contracts are signed.

Fox News is already the most costly cable news network, and as other broadcast TV networks demand ever greater compensation from cable and satellite providers, Fox executives feel they are not asking as much as they could for their channels. That is an important consideration for Fox, which slimmed down dramatically after a sale of most of its assets to Disney. The ‘new’ Fox is made up of the Fox television network, 28 owned and operated Fox affiliated TV stations, cable news and business, and three sports channels. Nallen sees no need to expand the network lineup further.

“We are no longer lending the potency of our marketing brands toward any other initiative, brand or channel development,” Nallen said. “The purity of this sustained value opportunity from our Fox brands is critical as we are not tethered to any properties that are just getting harder to defend. This frees us up to capture the full value of all our brands across broadcast and cable.”

Nallen knows some cable operators have grown increasingly disenchanted with selling television service, and acknowledged some cable companies may balk at Fox’s new asking price, especially as cord cutting continues to accelerate. He told investors he is technology agnostic about who he sells Fox networks to, so it would come as no surprise if a streaming TV service eventually breaks into the top four Fox channel distributors. At the same time, as prices continue to rise, some traditional cable operators could eventually stop selling television service altogether.

Ad breaks on Pluto TV are not always elegant. This screen can appear for a minute or more instead of commercials.

Viacom is not wasting any time remaking Pluto TV into a more formidable possible cable-TV replacement, after acquiring the streaming service in March for $340 million. Now the service is adding Pluto-branded versions of Viacom’s cable networks that anyone can watch for free.

Unlike Hulu, Netflix, or Amazon Prime Video, Pluto TV has no subscription fees and is entirely supported by commercial advertising.

Much like in the early days of cable television, many of the networks on the Pluto lineup still feature second-rate programming or niche interest, low-budget original programming. But Viacom obviously intends to change that perception, launching special Pluto-branded versions of name-brand cable networks like BET, Comedy Central, MTV, Nickelodeon, and others.

In an effort to protect their contractual relationships with cable and satellite providers that pay substantial fees for Viacom’s cable networks, Pluto TV’s free versions are not exactly the same as what you’d find on your cable or satellite dial. But many of the most popular shows found on those networks also can be found on Pluto TV’s Viacom channels, some at different times or perhaps a day or two later.

Recognizing many viewers have turned away from live, linear television in favor of on-demand viewing, Pluto TV has also created binge channels that will “pop up” from time to time, allowing viewers to catch up with earlier seasons of popular shows or see a current show’s missed episodes on channels where they repeat continuously.

Because Viacom also has an extensive content library of its own, it was not difficult to assemble a range of “Signature Channels,” which group shows from multiple networks together on a series of theme-based channels. For example, CMT Westerns feature reruns of classic western TV shows seen on various networks. Several MTV networks target different audiences, like MTV Guy Code, MTV Teen, and MTV Dating. Comedy Central gets a side-network as well. Comedy Central Pluto offers many of the shows you’d find on the primary cable network, plus there is Comedy Central Stand-Up, which features continuous stand-up comedy routines.

Although Pluto TV retains the familiar concept of “channel” numbers, grouped by theme, Viacom is clearly starting to shift the viewing experience more towards individual shows instead of networks.

There are now so many individual channels on the Pluto platform, we won’t list them here. It is easier just to visit and view for yourself.

Pluto TV by Viacom is clearly a work still in progress. There are some significant issues. Commercial advertising inserts are clumsy and often cut shows off mid-sentence on some channels. Sometimes, an extended “we’ll be right back” screen appears where advertisements normally would. There is also no built-in way to record shows for time shifted viewing, and Pluto TV has so far refused to offer an online program guide beyond the next two hours of viewing, so you cannot easily know what shows will be aired when.

Other weaknesses are in sports and news. The network news channels are identical to those you can see on their respective websites by yourself, and a number of advocacy news channels including Newsmax, The Young Turks, and RT America are poor replacements for typical cable news channels. CNN’s presence on Pluto TV is limited to a curated playlist of stories airing on the network that day, and Sky News, Bloomberg, and Weathernation are not comparable to MSNBC, CNBC, or The Weather Channel.

Sports programming is mostly talk shows about sports and events larger sports networks would never cover. Pluto Sports also runs movies about sports.

Still, Pluto TV is free, and with the huge number of channels, chances are excellent you will find something to watch without much trouble.

Discovery has announced an exclusive agreement with BBC’s Natural History Unit that will open up decades of natural history and wildlife programming for on-demand viewing on Discovery’s forthcoming subscription streaming platform, planned for a 2020 launch.

“This is our largest-ever content sales deal,” said Tony Hall, BBC director general. “Global subscribers are in for a real treat — the best content on a great new platform.”

The BBC Natural History Unit is the world’s largest producer of radio, television, and online content dealing exclusively with natural history and wildlife programming. Launched in 1957, the department produces around 100 hours of television and 50 hours of radio programs annually. Some of that programming comes from well-known naturist Sir David Attenborough, himself responsible for hundreds of hours of award-winning BBC nature documentaries.

A limited amount of programming produced by the unit is already available on other platforms, like Netflix, usually branded as BBC Earth. But only a limited catalog of content is on offer, typically licensed for streaming for one year. The new agreement between Discovery and BBC will make Discovery’s forthcoming subscription video service the exclusive streaming home of all BBC nature and wildlife programs, except in the United Kingdom, Ireland, and China. More importantly, Discovery can make the full BBC catalog of nature programming available for viewing.

Discovery’s plans for its subscription streaming platform have quickly evolved since first announced last year. The original plan was to offer a $5-8/mo service showcasing programming from over 30 networks already operated or owned by Discovery worldwide. The well-known cable network announced its plans for a streaming service after completing its $14.6 billion acquisition of Scripps Networks Interactive in 2017. The acquisition allows Discovery to blend its own nature and history programs with lifestyle content from Scripps’ networks like HGTV, Food Network, and DIY.

Now, Discovery is planning several different tiers of its streaming service, each offering subscribers a very deep catalog of non-expiring content. The BBC Natural History programming add-on is expected to cost under $5 a month. Other planned add-ons may feature a rich catalog of educational videos for do-it-yourself home projects, a video cooking school, and others to teach people sports like golf or tennis.

Zaslav

Discovery CEO David Zaslav sees the opportunity for Discovery to launch the “Peloton of food,” a reference to the stationary bike manufacturer that also sells exercise routine subscriptions to owners. In such a scenario, a celebrity chef like Bobby Flay could host hundreds of hours of cooking content, teaching subscribers how to cook everything from a turkey to a complete cajun-style meal.

Discovery has already put its wheels in motion, launching streaming services with sports programming including cycling and golf which may feature products such as the SkyTrak+.

Zaslav envisions the future of Discovery’s streaming service to be the Netflix of factual content programming. He noted most of the huge entertainment companies are clashing head to head by competing with scripted entertainment programming. Discovery will differentiate itself with documentaries, education, sports, and nature specials.

“The scripted movie packagers are big boats, and they’re banging into each other,” Zaslav said. “They’re fighting over who can be the widest and who can be the fastest. Right now, we have some great lanes.”

Zaslav admits Discovery’s earlier forays into streaming, including its participation in TV Everywhere — offering a limited number of shows for streaming to authenticated cable or satellite subscribers — has not been very successful. Contract restrictions often limited how long series can remain available for viewing, and the catalog of options was never particularly deep. With the new ad-free streaming platform, Discovery envisions releasing a massive menu of content, frequently updated with new shows from its own production unit and its partners. Most of Discovery’s own programming was produced for its cable networks, but nothing stops Discovery from creating content specifically for its streaming platform. Discovery’s new agreements should also allow it to keep content available indefinitely.

Discovery plans on spending hundreds of millions of dollars to develop and market its new services. It will face the challenge of convincing customers that subscribing to yet another streaming service is worthwhile. A 2018 survey from Magid Research found consumers were willing to spend up to $38 a month on a combination of streaming services like Netflix, Hulu, and Amazon Prime Video. Discovery hopes to launch its new platform in time to grab subscribers before new competitors from Disney, WarnerMedia, and Apple take hold and possibly tap out would be customers.

The deal with the BBC is part of a larger transaction between the two programmers over their European networks. The BBC is spending $225 million and assuming $90 million in debt to acquire Discovery’s share of several UKTV networks, including Alibi, Dave, Drama, Eden, Gold, W, and Yesterday. In turn, Discovery assumes full control of lifestyle channels Home, Good Food, and Really.