Wall Street to the TV Guys: Please Bail on Broadcast for Cable!
Is News Corp. really going to yank Fox off the airwaves in response to Aereo?
Snap consensus judgement from the various corners of the TV Industrial Complex: No way. At least, not anytime soon.
People I’ve talked to who work in TVland think that News Corp. COO Chase Carey’s comments are just that — comments, not a plan.
It’s possible that over time, if broadcasters do think that Aereo or Aereo-like technology really threatens the fees they get from pay TV operators for their over-the-air programming, they’ll move more of it to cable networks. And, in fact, programmers have already started moving lots of high-profile sporting events from free TV to pay TV.
Near-term, however, people seem to think that both practical and legal restrictions — for instance, deals that Fox and CBS have with the NFL for football broadcast rights — would prevent this from happening. More important: There isn’t any reason to do so right now, since only a handful of people are actually using Aereo to get broadcast TV for free.
All that said, Wall Street seems to like the idea.
Earlier this year, Bernstein analyst Todd Juenger gamed out a scenario where all four broadcasters moved from over-the-air to pay networks, and concluded that it wouldn’t be a terrible idea, at least financially. By Juenger’s thinking, the lost “retransmission fees” and advertising dollars the broadcasters would lose from over-the-air programming would be replaced by even higher “affiliate fees” and advertising dollars they could get on cable.
And Juenger thinks that move might benefit pay TV distributors, too: “There is enough logic here to suggest it wouldn’t be completely crazy for a cable operator to make a pre-emptive offer to broadcast networks in a given market to convert to a cable model.”
In any case, for whatever reason, TV investors are cheering Carey on. Look what happened to shares at Fox owner News Corp. (which also owns this website), ABC owner Disney and CBS this afternoon after 1:30 pm ET, when Carey made his remarks at an industry conference:
The outlier here is NBC owner Comcast, whose shares also moved up after Carey’s remarks, then down again. Perhaps some investors are less comfortable with what this means for America’s biggest pay TV operator.