At a Glance
For channel owners, the expansion in the number of channels available has led to a corresponding decline in their negotiating strength with platform providers. Channel owners can strengthen their hand if they have a concentration of channels to offer. Posted: May 16, 2003 The vast expansion of cable TV channels available to pay-TV viewers has been a double-edged sword for channel owners. This digital explosion has opened up a world of opportunities to expand into new markets, but the capabilities and resources required to exploit it have increased as well. How to enter a new market—whether as a platform provider, branded channel, content licenser or some combination of all three—will be a complex decision. In fact it is highly unlikely that even a dominant player in one market will be able to successfully export its operating model intact to a new region. All players may have to accept that they will need to operate differently and achieve differing market positions in different markets. A truly global media strategy is no longer viable. For channel owners, the expansion in the number of channels available has led to a corresponding decline in their negotiating strength with platform providers. Dominance in one marketplace—even where the channel owner and platform provider are the same entity—does not necessarily guarantee an easy entry into a new market. Experience has shown that attempts to go head-to-head with incumbents as a platform provider can be ruinously expensive, even where this is possible. Nor does the strength of an individual channel brand in one market guarantee it will be able to attract a critical mass of viewers in another. Negotiation with platform providers is essential. Channel owners can strengthen their hand if they have a concentration of channels to offer. These channels can be bundled together with the strongest brands in a packaged offer to the platform provider and in turn receive a higher percentage of carriage fees and advertising revenues. By having a number of channels in related areas channel owners can use “crowding-out” tactics similar to those employed by magazine publishers. By concentrating a number of titles in one sector, such as TV listings or baby magazines, large publishing groups have been able to dominate retail shelf space and readership at the expense of single title publishers. Single channel operators have a bleak future, even where they possess premium content, such as the rights to sporting events. Premium sports channels have driven the growth of Pay TV subscriptions, both in their own right and through the clever use of bundling to ensure that premium services were only available to subscribers to the basic channel package. But the consequent inflation in the cost of sporting rights means that, however desirable to viewers, even a premium sports channel is unlikely to be profitable in its own right unless it is bundled as a package with other channels. Single channel operators are therefore likely to be superseded or absorbed by channel aggregators. As these aggregators enter new markets they will face a range of choices, from launching their own channels to selling their content (if they own the rights) to other broadcasters. These choices will depend on how they own and manage the rights to that content. Rights exploitation is complex enough even at the level of the individual program. Very few types of content—some sporting and news events for example—are suitable for truly global exploitation. Some programs will have a very short shelf-life while others, such as children’s cartoons can still be broadcast decades after their original transmission. But rights ownership stretches far beyond transmission of programs into such areas as repeat fees, video sales and merchandising and a wave of new developments such as interactive media and mobile phone ring tones. Exploiting these rights will be the key to the success of channel aggregators, but unfortunately few current operators are clear even as to what rights they in fact possess let alone how to manage or exploit them. For an example of this you need look no further than the United Kingdom, where despite having access to the worldwide market for English-language programmes, a £3bn annual spend on program creation translates into a mere £400m in export sales. Few media companies currently possess the infrastructures to manage this complex pattern of rights. Worse, few even contemplate the exploitation of wider rights such as video sales or merchandising except as an opportunistic afterthought to the first transmission. In future the exploitation of the full spectrum of rights will have to be built into the very process of commissioning and creating programmes. An example would be anticipating the potential for a future interactive product by shooting extra footage from different camera angles during production. Only when channel aggregators have fully “industrialized” the process of rights exploitation will they be able to properly exploit the value of their content in other markets. For even the strongest players, global reach, let alone global dominance, seems a distant prospect. Talk to someone about this topic  To Top
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