Retransmission Wars: Cablevision Is the Pot Calling ABC's Kettle Black
The continuing wars between cable operators and media companies over retransmission fees get so confusing that it would take me days to separate fact from spin as the two sides battle it out. Still, one claim made by Cablevision in its current retrans feud with ABC stands out to me for its wrongheadedness. (ABC, like News Corp. before it, is demanding a hefty retrans fee from Cablevision to continue carrying the channel.)
In the four-minute infomercial above, the New York metro area cable operator says some of ABC's woes are attributable to the fact that it has "not invested in state of the art interactive advertising technologies. Instead, relying on 1960s technology." As though there was something unusual about that among broadcasters, or in the TV business in general!
The fact is the entire broadcast advertising business is still almost wholly reliant on an archaic set of technologies, metrics and business practices. For better or worse, it has its reasons. As it has been for decades, the industry depends on big advertisers buying tens of millions, and sometimes hundreds of millions of dollars, of advertising in bulk, based on Nielsen numbers that use a set of households in the small thousands to extrapolate the viewing behavior of hundreds of millions. At a time when digital media can be measured down to the individual click, that may seem ludicrous -- but that's the way it is for ABC and its competitors.
In fact, you could argue that this archaic system -- and mindset -- actually sustains the network TV business. If broadcast advertising were to dig deeper, using set-top box data, to know if millions of people tuned out of a particular ad, it's highly likely the ads would be less valuable. Ignorance is bliss.
Further, a more interactive advertising system, which would have stronger measurement, would also break down some of the bizarre barriers that currently exist between what cable can charge for commercials and what network TV can charge. And the result probably wouldn't be in network TV's favor.
Even cable shows that have audiences bigger than some broadcast shows go for much lower CPMs than broadcast. Meanwhile, the broadcast nets usually see percentage increases in their take during the "upfront", the advance sales market for the upcoming TV season. Again, ignorance is bliss. If advertisers knew what they were really getting for their money, they might think twice about what they spend on broadcast.
Another thing that makes Cablevision's claim out of bounds is that it's not as though cable, or Cablevision itself, is doing particularly well in terms of adopting new advertising technology. As a Cablevision subscriber, I can tell you that if there is interactive advertising on the service, I've never seen it. Instead, the commercials Cablevision sells on its own are mostly low-rent ads from local car dealers that could have just as easily been produced in well, the 1960s. Its free on-demand programming, which might be a likely place for it, attracts commercials from a handful of advertisers, and none of them are interactive.
I find most of these retrans disputes so manipulative that I'm not sure which side I should land on. Like most Cablevision customers, I'm just concerned with whether I'll get to watch the Oscars on Sunday night or not. But while you can take ABC to task for many things in joining the ranks of media companies who want a hefty retransmission fee, its advertising technology -- or lack thereof -- isn't one of them.
Previous coverage of retrans wars at BNET Media: