Cable Programmers Weighing Value of New Media Platforms
Cable network owners such as Disney, Scripps and Discovery have somewhat different views on prospects for putting their shows on new platforms such as Apple’s iPad, they told investors on earnings teleconferences this week. Disney seems to be the most aggressive about the iPad, and already is developing applications for some of its cable and broadcast properties.
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Disney thinks that the iPad “could be a game changer in terms of allowing us to create essentially new forms of content,” Disney Chairman Bob Iger said late Tuesday. “The interactivity it will allow on a portable device with such a high quality screen is going to enable us to start developing product that is different from the product you typically see on an Internet-connected screen.”
Disney’s digital media revenue surpassed $2 billion in 2009, Iger said. “There will be more products adopted and rolled out, not only in the United States but across the world, and it will change our businesses in dramatic ways over time,” he told CNBC Wednesday, according to a transcript. “I think it’s already having a profound effect."
Other content owners, though less enthusiastic about Apple’s device, also want to put programming on multiple platforms. Though Discovery Communications has held back most of its long-form programming from online distribution because the company hasn’t found a way to make money from it there yet, it’s beginning to jump into social media, CEO David Zaslav said. “We're really getting aggressive in what I would call the social/viral community,” he said. “As you take a look at Facebook and YouTube and Twitter, we have a chance to lean in on those platforms because we have real people who have real fan bases.” He was discussing the non-fiction nature of Discovery’s programming. “We've been really pushing all of our characters … to participate on all of these social platforms."
Scripps Networks Interactive’s focus is less on the device and more on consumer behavior, Chief Financial Officer Joe NeCastro told investors Wednesday. “Every quarter or every year there’s a new technology buzz,” he said. “We really think more about our customers and how they're interacting with the technology than the technology itself. … As long as we stay focused on consumer behavior we will find our ways through the complexities of which technology and which platform will win the day."
As programmers look at new platforms, they remain focused on increasing affiliate revenue from traditional distributors, their executives said. Scripps spent $4.4 million in Q4 on legal and marketing expenses associated with its carriage negotiations for the Food Network and HGTV, which were pulled for a time from Cablevision. The resulting carriage contracts were “well beyond even our greatest expectations,” said Scripps Executive Vice President John Lansing.
Now broadcast networks want to be paid cash for retransmission consent for stations they own that are affiliated with the networks, some cable networks may struggle, Scripps Chairman Kenneth Lowe said. “Some of those dollars that went from retransmission consent to cable networks like ours may be shifting back to the network model.” That will make markets for both programming development and affiliate revenue more competitive, he said. “Looking forward, you can expect to see not only dollars shifting, but some smaller and less popular networks really put under duress."
Disney will be seeking cash for carriage of its ABC stations, Iger said. “We think it’s time to recognize the value they provide to distributors and their importance to local communities,” he said. “We believe it’s appropriate for us to seek cash … and we believe the same would be the case with our affiliates.”