The Forging of the Fellowship Of The Digital Rings Accelerates

  • by , Op-Ed Contributor, February 10, 2009
Last week, Comcast, the largest cabler in the U.S. (24 million subscribers), dominant stakeholder of the pronouncement-prone Project Canoe, and majority partner in National Cable Communications (NCC), the nation's largest spot cable advertising representation firm, struck a deal with satcaster Dish (14 million homes) to represent its local advertising inventory on 10 regional sports networks that feed into seven top 10 U.S. markets.

Last summer, National Cable Communications, owned by the country's largest cable systems operators (Comcast, Time Warner, Cox, Charter) representing nearly 60+ million homes (40 million digital converts) - had been retained by satcaster DirecTV (18 million) to take over national spot sales for regional sports networks carried on DTV in nine markets as well as melding those DTV carried networks into cable interconnects in said markets.

Last January (2008), National Cable Communications had been retained by Telco Verizon to handle local inventory sales for its video service FiOS - presently, serving two million subscribers with telephony hegemon AT&T and its video platform, U-verse, passing one million. I've always thought that the Telco's IPTV plans to enter the video service realm would be construed most dangerous to the local cable operator - another entity competing for their "fair share" of local market TV advertising budgets. Presently, local cable operators glean approximately $5 billion of the $25 billion local TV ad expenditure even though TV viewers spend upwards of 55% of their time watching cable programming.



Mortal enemies all - just listen to the consumer acquisition campaigns - uniting in common cause to sell more commercial television inventory in an incredibly difficult, recessionary, increasingly fragmented market. In my opinion, this alliance of pay TV operators - now cable, Telco and satellite - through a single source sales representative provides a mechanism for them collectively to build a greater presence in the market to challenge the dominant TV station broadcasters; and portends extending the fellowship as follows:


  • AT&T's video service U-verse, which does not compete in the same markets as rival Telco Verizon, joins the association and benefits from its clout as well as infrastructure sales/ support cost savings.


  • AT&T's recent break with EchoStar and alignment with DirecTV leads to the satcaster's acquisition by AT&T - a persistent rumor when the Telco juggernaut partnered with EchoStar - and an eventual melding into the fellowship to benefit from its clout as well as infrastructure sales/ support cost savings


  • Satcaster EchoStar (14 million subscribers) and rival DirecTV (18 million subscribers) merge - or align their sales organizations - an additional persistent rumor, giving the satellite platforms more parity in terms of digital cable penetration.


  • in our present challenging environment Satcasters EchoStar and/or DirecTV seek financial assistance from outside financial entities and/or seek alignment for media commercial sales and trafficking operations.


  • EchoStar is able to trade digital radio satellite platform Sirius XM's debt equity for control of the company and utilizes some of its channel capacity to beam ad supported video programming into motor vehicles. Note: I understand that upwards of 15 million cars in the U.S. have this capacity and it will be more rigorously incorporated into automotive infrastructure in the future.

    For those of you not familiar with J.R.R. Tolkien's "Lord of the Rings" - my son, Zach is a fanatic - The Fellowship of the Ring was formed as a brotherhood between members of the various Free People of Middle-earth (phantasmagorical but analog). Its purpose was to take the One Ring to Mordor that it might be cast into the fires of Orodruin, the mountain in which it was forged, in order that it might be destroyed and Middle-earth be saved from tyranny or dominance by only one form of communications.

    The Fellowship consisted of nine pay TV distribution members: four Hobbits (Comcast, Time Warner, Cox, and Charter and allies, whose retinue equaled 60+ million souls), two Men (EchoStar and DirecTV representing 32 million humans), one Elf (Verizon's FiOS 2 million spirits), one Dwarf (AT&T's U-verse - 1,000,000 folks) and a wizard (to be determined, though technological in nature). In opposition stood Sauron and his minions including the Nazgul, Numenoreans, Uruk-Hai and Orcs - those representing the free TV broadcasting marketplace.

    Come June 2009, when the One Ring is "mandatedly" converted from analog into digital spectrum - until perhaps another delay is legitimized - the dominant free TV purveyors and their multichannel TV stations transmissions - upwards of 4 per TV station - could be challenged for the first time by a digital pay TV Fellowship that is supported by upwards of 100 million households - only 10% less than the broadcasters 114 million household reach. Correction: although broadcast signals are purported to reach nearly all TV households, given the present analog to digital conversion impediments upwards of 14 million non-pay TV U.S. households could be without the technological where-with-all to receive the new digital transmissions in which case their will be parity in whole numbers between those TV households that receive pay TV signals and those that watch broadcast TV. Most probably, altering ad revenue aggregation and TV viewing in favor of the Fellowship in years to come.

    The form in which wizardry will influence the impending conflict can only be surmised. To date, the Fellowship has already conjured up interactive advertising applications and measurement - though in limited deployment - that include advertising incantations (request for interaction, telescoping, long form, microsite), program soothsaying (TV Guide Interactive), addressable polymorphism (Invidi, Navic, OpenTV, Visible World), lifestyle divination (Acxiom, Allant, Experian), click stream numerology (Nielsen, Rentrak, TNS), ad auctioning transmutation (Google TV, Navic's Admira) and an obscure reference to a primitive form of water transportation that has yet to materialize but purports to be the stuff of legend. To date, our intelligence has revealed very little about the farsight of the digital terrestrialists. That is not entirely correct: in response to the ever-changing competitive environment and the fellowship's imminent threat to their ad revenue generating capability as well as their viewership, 63 TV broadcasters (comprised of TV stations groups across 22 markets including ABC, CBS, Fox, NBC, CW, ION and PBS) have unveiled a new free ad supported mobile video initiative, the Open Mobile Video Coalition (OMVC).




  • 1 comment about "The Forging of the Fellowship Of The Digital Rings Accelerates".
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    1. Mitch Oscar from HocusFocus, February 10, 2009 at 9:32 p.m.

      yes David Verklin is the ghost writer for all my posts.

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