Should Major TV Distributors Focus On Building Ad Revenues -- Or Ad Skipping?

by Wayne Friedman, Oct 8, 2012, 4:12 PM

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Let's face it. Today’s cable TV and satellite companies aren't really focused on advertising sales. The vast majority of their business revenues continues to come from monthly subscribers' fees.

For example, Cablevision Systems’ overall second quarter 2012 revenues were $1.7 billion. Advertising sales? $43 million.  Comcast Corp’s yearly revenue take from its cable systems group was $37 billion in 2011. Advertising sales registered $2 billion.

Dish Network? Well, it doesn't even break out advertising revenues. For its part, Dish has been experimenting with "addressable advertising" tests -- one with Allstate Insurance, recently.

But looking at Dish's most recent six month period, it doesn't have much to lose on this end. It lists $44.2 million as "equipment sales and other revenue".One might assume some small part of that comes from advertising sales.

Put this against total six month revenues of $6.6 billion, and what you get is a small share for "equipment sales and other revenue." What does this say? From a pure advertising revenue point of view -- revenue going directly to Dish -- this segment is not much of an issue.

But we know some TV networks and major TV station groups are concerned that Dish, a big TV distributor, is giving its consumers better tools to skip thirty-second and other length commercials. This is what Dish's AutoHop function is all about, a controversial part of its Hopper set-top device that some networks have filed lawsuits against.

Now Dish Network says one TV station group, Gannett Broadcasting, made AutoHop an issue in just-concluded retransmission/carriage negotiations. If Dish didn't disable its AutoHop function, Dish said, Gannett threatened to pull carriage of its local stations in 19 cities.

Not only that, but Dish said Gannett had demanded a massive penalty, which could have meant a 300% fee increase. Dish said, however, it would agree to  200%, which it said was still above market rates. Trouble is, according to one report, Gannett said all this isn't true -- that it never made this specific demand concerning Autohop in its negotiations.

IWas this some kind of new form of TV carriage negotiation? Why would Dish raise the issue over its already-controversial AutoHop?

We don't know. However, we can look at other TV distributors, many of which also have this type of AutoHop technology that can massively wipe out prime-time commercials for the four major broadcast networks at the touch of a button. But these companies have chosen instead not to enable this feature.

Why? One can only imagine they believe this might violate their TV network/station carriage agreements. Or worse -- that it might violate the spirit and/or deals they have with advertisers themselves, who still use 30-second TV commercials at a major part of their media plans.

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1 comment on "Should Major TV Distributors Focus On Building Ad Revenues -- Or Ad Skipping? ".

1. Paula Lynn from Who Else Unlimited
   

   commented on: October 8, 2012 at 5:46 p.m.
   Bottom line: Somebody is going to pay. Guess who ?

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