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Broadcasters Are the New TV Bundlers

Mari Silbey

Broadcasters want a slice of the TV distribution business. It's a trend that's been building for several years now, but recent moves by the industry make it even more transparent that the old TV networks want to muscle in on cable company territory.

First, broadcasters are getting smart about their local affiliates. ABC Inc. , CBS Corp. (NYSE: CBS) and NBCUniversal LLC have all started initiatives recently to get locally owned affiliate stations to join with their national networks in licensing content to new over-the-top providers.

Here's how it works. Local affiliates have the option of joining a clearinghouse managed by their parent network that then provides licensing terms to OTT video providers like Dish Network LLC (Nasdaq: DISH) with its Sling TV offering and Sony Corp. (NYSE: SNE) with its PlayStation Vue service. The affiliates presumably get a chunk of any retransmission fees earned, but the national networks also win leverage on both sides of each licensing agreement. On the one hand, they make their content more valuable to OTT providers. On the other hand, they open up a wide avenue of new distribution possibilities for affiliates who would otherwise have to negotiate individual contracts with each OTT company.

This is the same math that cable providers have used for years. On the one side, they make themselves valuable to consumers by bundling lots of premium content together. On the other, they offer programmers broad distribution with one signed agreement.

There's a reason broadcasters are headed down the aggregation path now. They recognize that distribution is fracturing, thanks to new OTT delivery systems. They also see that they can act as a foil to big cable companies by enabling skinnier bundles -- bundles that haven't been bloated by years of content add-ons (some good and some not so good) and continuous price hikes.

Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.

The broadcast bundling doesn't stop there. CBS has been successful in selling both CBS All Access and Showtime online as individual properties, but now the company is combining the two for a discounted price. The network has gained remarkable traction with direct-to-consumer sales so far, raking in somewhere between 2 and 3 million subscribers across both OTT services. CBS also saw an increase in affiliate and subscription fees of 17% in the last quarter, suggesting that the new online offerings are having an impact on revenues as well.

NBC may also be getting in on the skinny bundle game. According to a Bloomberg report last month, parent company Comcast Corp. (Nasdaq: CMCSA, CMCSK) is preparing an OTT offering with its NBC assets once the regulatory conditions imposed on its acquisition of the broadcast network expire next year. Comcast is in a unique position because it's both a traditional cable provider and the owner of NBC. It's a fine line to walk because Comcast doesn't want to cannibalize its high-value cable TV service, but given the market for low-cost OTT options, the company would be wise to hedge its bets. (See Comcast Ready for Clash With Hulu.)

So is the pay-TV bundle dead? Hardly. There are just new bundlers in the game now.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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User Rank: Light Sabre
5/23/2017 | 2:07:35 PM
Re: Free Bundle
I've been one of those zero dollar folks for several years not and ignore the direct mail pieces from the satellite and cable companies to "come back" with those allluring but mostly misleading low monthly price offers. I can get most network programming too over the internet a day later, or in some cases a week later. CBS however is a little obnoxious ads they make some programs only available by subscription.
User Rank: Light Sabre
5/18/2017 | 7:37:06 PM
Re: Free Bundle

That's a good theory in many areas, but in the Midwest and its spring through fall thunderstorms, you have to be willing to deal with poor or no reception at times. Happened to me when we went to a local hotel when power went out. Hotel had satellite for Internet, had 1 MPS download speeds (basically worthless) all night. 

Additionally, attenna can get damaged in storm.

However, if cable rates keep going up, the attenna might be the best choice. There are always bars for when reception is poor.
User Rank: Light Weight
5/13/2017 | 2:41:19 PM
Free Bundle
Throw an antenna in your attic or better yet on your roof and get 15+ or so channels for $0 a month. There will be some up front cost but the free monthly fee is pretty compelling.  Football fans will get CBS and Fox for NFL games, well most of them.

Obviously this will not work for everybody but for most people it will.  The Zero Dollar bundle.
User Rank: Light Sabre
5/13/2017 | 9:52:26 AM
Re: amazon polska wersja
It seems that CBS has been the most successful in capitalizing on content in this new world. You have to give them credit where it is due - I would have not thought 10 years ago they would be on top of this. 
User Rank: Light Sabre
5/12/2017 | 2:00:13 PM
Cold cut
This is kind of like finding out that the local deli now offers SIX different brands of bologna. Lots of different brands and packages, but the contents are pretty much the same.
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