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Microsoft Puts Pay-TV Plan on Pause

An apparent case of pay-TV sticker shock for Microsoft Corp. (Nasdaq: MSFT) leads off today's cable news collection.

  • Microsoft Corp. (Nasdaq: MSFT) has mothballed its plans to create a subscription TV service of its own and has put talks with studios on hold, reports Reuters. The cited reason: The licensing costs were too high for even Microsoft to swallow. Instead, Microsoft's been busy forging deals directly with service providers, including Comcast Corp. (Nasdaq: CMCSA, CMCSK), AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), to pipe VoD and (in some cases) live TV channels to the Xbox 360, and score some one-off content deals with media giants such as News Corp. (NYSE: NWS). (See Comcast, Verizon Connect With the Xbox 360.)

  • Federal Communications Commission (FCC) Commissioner Robert McDowell has questioned what Comcast's intentions were when it bought Advanced Wireless Services (AWS) spectrum at auction in 2006, reports Deadline.com. "Were they [the airwaves] purchased under false pretenses?" he asked at 2012 International CES Wednesday, noting that Comcast's CFO recently told an investors conference that the MSO had no plans to build networks for the spectrum. Sprint Corp. (NYSE: S), by the way, was among the original members of the SpectrumCo LLC joint venture that obtained the AWS spectrum in question. McDowell's remarks come as the FCC seeks public comment on the recent spectrum deal struck between Comcast and other MSOs with Verizon Wireless . The Antitrust Division of the U.S. Department of Justice , meanwhile, is said to be preparing an investigation into the deal. (See DoJ Sniffs Around VZ Wireless-Cable Deals .)

  • Time Warner Cable Inc. (NYSE: TWC) is developing an app for Panasonic Corp. (NYSE: PC) Viera TVs, a move that will eventually allow the MSO to stream video services to those sets without a separate set-top box, reports NewTeeVee. At last year's CES, the MSO announced similar deals with Sony Corp. (NYSE: SNE) and Samsung Corp. , but has yet to launch the apps. (See CES 2011: TW Cable, Sony Make IPTV Connection and CES 2011: Samsung Puts MSOs in the Picture.)

  • CableOne is testing EchoStar Corp. LLC (Nasdaq: SATS) Aria, a white-label platform that includes a cloud-based IPG (interactive program guide), access to a library of authenticated TV Everywhere content, and the company's line of set-tops, reports CED. EchoStar, which has set a goal of securing 1 million subs for Aria by the end of 2013, was not immediately available for comment. Light Reading Cable reported in mid-2010 that EchoStar and TiVo Inc. (Nasdaq: TIVO) were in the running for CableOne's next-gen box business. (See Cable ONE Sizes Up EchoStar, TiVo Set-Tops and EchoStar's Cable Target: 1 Million Subs .)

  • Amazon.com Inc. (Nasdaq: AMZN) is lending its support to Digital Entertainment Content Ecosystem LLC (DECE) 's UltraViolet, adding a big retail name to a "digital rights locker" that lets consumers buy DVD or Blu-ray titles and stream them on tablets, PCs and other connected devices. So far, UltraViolet has attracted 750,000 households since its launch last fall, says Bloomberg. (See UltraViolet Reviewers Sing the Blues .)

    — Jeff Baumgartner, Site Editor, Light Reading Cable

  • msilbey 12/5/2012 | 5:45:52 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    If Microsoft thinks the licensing costs are too high, what are the chances of another newcomer successfully jumping into the TV distribution business? And as for changing the business model to any kind of a-la-carte delivery, can you imagine what those licensing costs are when you don't bundle content together for the bulk discount? 


    I do believe that people are finally starting to understand that free-lunch, a-la-carte TV is not around the corner, but it's taken several years of hysterical hype to get there.

    msilbey 12/5/2012 | 5:45:51 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    What about Amazon?


    I think there's also the possibilityof a content company trying to blur the lines a bit. Like HBO GO. Or maybe a couple of major content players going in together?? Still the issue of who owns the network. It's a fascinating and complex problem. 

    Jeff Baumgartner 12/5/2012 | 5:45:51 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    Very small is my answer. But with MSFT apparently out of the picture for this, I still think there are two viable candidates with the guts and cash to try it: Apple and Google.   But , as you point out, can they live with the economics of an a la carte regime? Maybe not a la carte in the truest sense of it, but maybe smaller , stripped down tiers that even the cable guys want to pursue to address cusotmers who don't want ESPN or are cash-strapped and need access to cheaper channel bundles.  JB


     

    Jeff Baumgartner 12/5/2012 | 5:45:50 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    Good one. I think we've got our trio of potential pay-TV wannabees with the desire and means to maybe pull it off .  Anyone else have a viable short-lister to take Microsoft's place? JB


     




     
    craigleddy 12/5/2012 | 5:45:48 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    No, if Microsoft, which has deep pockets, truly was scared off by the program licensing costs, then that's a serious warning sign to other potential candidates. I also have been wondering if Apple might attempt to create a full pay-TV service, or Google/YouTube rather than trying to create their own 100 channels or fiddle around with fiber in Kansas City.


    Whenever I float that idea to cable people, I'm usually met by derisive laughter. "What about the programming fees, you moron!" Still, I'd keep an eye on those two, since they just might be crazy enough and rich enough to incur the cost for market position.


    Tougher for a content company to pull off, but some might seek to be more than they already are.  


    Say, maybe if these players each stick to their knitting and do what they do best, they can all make money. What a concept!


     

    joanengebretson 12/5/2012 | 5:45:44 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    It's surprising that Robert McDowell is questioning whether the cable companies ever intended to build out spectrum they acquired six years ago. That's ages in the mobile communications business.


    Seems likeit would be awfully hard to substantiate an accusation like that, so why bring it up? There does not appear to be a logical explanation.

    opticalwatcher 12/5/2012 | 5:45:42 PM
    re: Microsoft Puts Pay-TV Plan on Pause

     "I'd keep an eye on those two, since they just might be crazy enough and rich enough to incur the cost for market position."



    No one's crazy enough to run a business where what the customer pays doesn't cover the cost of the source material.


    The MSOs have a stranglehold on the content. Netflix had a loophole by buying and renting out DVDs. Then they had a big enough market that they could negotiate for better pricing for streaming. But there market is still much smaller than the MSOs (isn't it?). It's going to be difficult to convince the content owners to offer deals when their market is small. And how can they grow their market in the mean time?

    AESerm 12/5/2012 | 5:45:41 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    Not sure 'a la carte' is the right way to frame what Google (YouTube) is doing. They're cooking up an entirely different carte (menu). John Seabrook's article in current New Yorker outlines the project. Biz model: Upfront funding of new content (advances against future ad rev), shared ad rev once advances are earned, exclusive YouTube rights for 1 year, but creators retain ownership. 

    Jeff Baumgartner 12/5/2012 | 5:45:40 PM
    re: Microsoft Puts Pay-TV Plan on Pause

    To me it looks like McDowell's wondering aloud (based on the CFO's comments, so that's where McDowell's trying to substantiate it) if Comcast had any intentions at all to build out the spectrum it bid for and won. But to be fair Comcast and the other MSOs that had won AWS spectrum at auction still had time to act on those holdings, so technically I think it's hard to say they had done anything that violated the rules. 


    Dish, meanwhile, is posturing about using its spectrum (obtained through M&A) for a network buildout, but there is no way they are doing that on their own. JB


     


     


     

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