NEW YORK/LONDON (Reuters) — Rupert Murdoch’s Twenty-First Century Fox Inc. has struck a preliminary deal to buy the 61 percent of British pay-TV firm Sky PLC it does not already own for around $14 billion, five years after a political scandal wrecked a previous bid.
The proposed offer of £10.75 a share in cash, which is backed by Sky’s independent directors, would strengthen the position of James Murdoch — who is both chief executive of Fox and chairman of Sky — in his 85-year-old father’s media empire.
People familiar with the matter said Fox had pounced after Britain’s vote to leave the European Union in June sent the pound down about 14 percent against the U.S. dollar and Sky’s share price tumbling.
Owning Sky would give Fox, whose cable networks include Fox News and FX, control of a pay-TV network spanning 22 million households in Britain, Ireland, Austria, Germany and Italy.
It would also be the latest deal to marry distribution with content after AT&T Inc. announced an $85 billion bid to buy Time Warner Inc. earlier this year. While Sky does produce some of its own content, including in news and sport, the deal would give Fox full ownership of a wider distribution platform in Europe.
“Fox has always seen its 39 percent stake in Sky as an unnatural state of being and has long been trying to buy full control,” a person familiar with the deal said. Read the rest of this entry »
Back in September, there was plentiful speculation about HBO’s rumored streaming-only service. Now that the service is here, how did the speculation stack up to the reality? Here’s a trip back to some of those early predictions.
Speaking at an investment conference earlier this week, Time Warner CEO Jeff Bewkes said that the company is “seriously considering what is the best way to deal with online distribution.” For the many who have been pushing HBO to package HBO GO as a separate entity for awhile now, this is no small statement. And with Netflix marching ever forward to corner the streaming market, this could be a crucial moment for HBO.
Yet offering HBO GO without a subscription to HBO presents a number of difficult questions. While it’s undoubtedly a tantalizing possibility, there are as many challenges inherent in this scenario as there are benefits.
Pro: Easier for “Cord Cutters” and Millennials to Watch Their Favorite Shows
Offering HBO GO sans HBO already gels with the way a large number of millennials watch television. According to newfound data, this is a demographic that ingests three times more TV online than their older counterparts.
These millennials are often lumped in as part of a larger group that’s been dubbed “cord cutters,” aka people who’ve dumped cable entirely to watch television through the Internet. And they’re a group that’s growing. A study that came out in June found that 2.9 percent of pay-TV consumers in this country are planning on canceling their cable service and joining the ranks of the cord cutters in the next year. This doesn’t sound like much until you take into account that this number is up from 2.7 percent last year, which was up from 2.2 percent the year before that, indicating American cord cutters are rising steadily.
Together, as millennials and cord cutters reject cable, they are changing the face of American television. HBO GO becoming its own service would be a huge victory for them, and for the shifting trends they represent.
Con: Harder for HBO to Create Content
However, offering HBO GO separately from HBO could come at a price. Because for now, HBO, and all the content they provide, are still very much entrenched in a classic model of distribution.
When viewers first started to clamor for standalone HBO GO accounts several years ago, Ryan Lawler at TechCrunch observed, “HBO currently has about 29 million subscribers and reportedly receives around $7 or $8 per subscriber per month. So HBO could, theoretically, get more per subscriber than it’s currently making. But that doesn’t include the cost of infrastructure needed to support delivery of all those streams, including all the CDN delivery and other costs that would come with rolling out a broader online-only service.”
He continues, “More importantly, it wouldn’t include the cost of sales, marketing, and support—and this is where HBO would really get screwed. Going direct to online customers by pitching HBO GO over-the-top would mean losing the support of its cable, satellite, and IPTV distributors. And since the Comcasts and the Time Warner Cables of the world are the top marketing channel for premium networks like HBO, it would be nearly impossible for HBO to make up for the loss of the cable provider’s marketing team or promotions.”
What does this ultimately mean for you, the consumer? In short, it means that if HBO suffers, their output also suffers.
So far, HBO is doing just fine in their fight against Netflix. Of course, they’re not able to provide the same wide array of movies and TV shows from other networks, but they’re as prestigious as ever, and they have several huge hits on their hands. In fact, Game of Thrones just surpassed The Sopranos to become their highest rated show ever. Read the rest of this entry »
Note: Jonathan Wilner is a pro-bundler, he defends the practice. In this article for WIRED, he speaks for the cable companies, not the consumers. Founder of the broadband pay TV platform Unlimited Football, and former VP of technology at Foxsports.com, Wilner represents the sellers of bundled programming, not the interests of individual customers. His opinions should be viewed with that in mind. My comments are in italics.
Wilner writes: These days, barely a week passes in the U.S. entertainment industry without litigation, legislation, or argumentation over bundling–the practice of offering a “package” of channels instead of the option to buy a la carte. I, for one, say enough with bundle bashing. Bundling is hardly unique to the entertainment industry, nor is it solely an American phenomenon. There’s a reason for this: Bundling benefits consumers and vendors in more ways than one.
Bundles exist and are popular with consumers across a range of goods and services: Computer software, automobile trim and option packages, restaurant meals, gym memberships, even amusement park tickets…
I have to interrupt Wilner for a moment, to point out the obvious. These are bad examples. With the exception gym memberships (bundle-only) none of these examples put consumers in the position of “buy a bundle, or no deal”. Amusement parks, computer software, restaurant meals, sure, those things are offered in package form, but are also available individually. Clearly you can buy one restaurant meal, you can buy one software program, one amusement park ticket, one pair of custom headlights for your car. Hell, if you wanted, you could buy one headlight. Ala carte.
Cable companies don’t “offer” programming in bundled form–that’s your only choice. Take it or leave it. (and they arrange the bundles, not you) You “get” to choose among bundled packages. In order to get programming from a cable TV provider, accepting a bundle is they only way to get it . Why does Wilner offer such poor examples?
Imagine if you wanted to buy an airline ticket, and your only option was to buy a vacation package that included dozens of airline tickets? Or if you wanted to one out, but had to buy a booklet of 25 meal tickets? That’s the current arrangement with cable companies.
And despite all the furor over television bundling, non-TV programming often is bundled too: NBA League Pass, Netflix, Hulu, even Sirius radio subscriptions require consumers to pay a flat rate for a package that may include programs they don’t want.
In other words, “hey, these other providers do it.” So what? It’s still an anti-consumer practice.
While anti-bundling advocates purport that a la carte programming would reduce costs to consumers, it simply isn’t true. In a series of posts from his blog Stratēchery, Ben Thompson provides compelling evidence to show that if ESPN was offered on an a la carte basis, it could maintain its current profitability only if individual subscribers paid about $100 a month for it.