Commentary

The Continual Forging Of The Fellowship Of The Digital Rings

National Cable Communications (NCC), the nation's largest spot cable advertising representation firm -- and owned by the country's largest cable systems operators -- has been retained by satcaster DirecTV 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. Mortal enemies -- just listen to the consumer acquisition campaigns -- uniting in common cause to sell more commercial inventory in a difficult, increasingly fragmented market. Sound familiar.

Last January, I was equally surprised to learn that NCC had been retained by telco Verizon to handle local inventory sales for its video service FiOS. 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 only $4.5+ billion of the $25 billion local TV ad expenditure, even though TV viewers spend upwards of 55% of their time watching cable programming. So perhaps, 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:

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  • 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
  • Satcaster EchoStar (13+ million subscribers) melds into the alliance after its acquisition by AT&T -- a persistent rumor
  • Satcaster EchoStar (13+ million subscribers) and rival DirecTV (17+ million subscribers) merge -- another persistent rumor; or align their sales organizations -- an additional persistent rumor, giving the satellite platforms nearly equal penetration to digital cable.

    For those of you not familiar with J.R.R. Tolkien's "Lord of the Rings," 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 31 million humans), one Elf (Verizon's FiOS 1,600,000 spirits), one Dwarf (AT&T's U-verse -- based purely on subscription penetration of nearly 600,000 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 February 2009, when the One Ring is converted from analog into digital spectrum, 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. Possibly, 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, 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.

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    About the Author

    , Programmatic TV Strategist, USIM