CEA exec’s odd reasoning


People watching TVAfter the Senate Communications Subcommittee hearing on the State of Video, an executive with the Consumer Electronics Association came out with a statement attacking broadcasters for thwarting consumers. But it would appear his reasoning is full of holes.

CEA’s Michael Petricone said, ““Yesterday’s hearing reinforces the need for Congress to safeguard Americans’ ability to enjoy choice in new video services and technologies. We were disappointed by the National Association of Broadcasters’ (NAB) repeated and spurious attacks on new technologies like Aereo and the DISH Hopper as being somehow illegal. 

“In fact, the millions of Americans who wish to fast forward through commercials or watch free over-the-air broadcasts on their computers are not wrongdoers; they are simply viewers who wish to watch TV more conveniently and easily.

“We encourage broadcasters to move aggressively to meet consumer needs and embrace new TV technologies, rather than litigate or threaten to pull programming off-the-air.

“More, we share the concerns of Senator Warner, who noted that broadcasters have use of free public spectrum and suggested that if they choose to pull high-value content from the airwaves, the spectrum should be repurposed for a higher public good.

“At the same time, we are heartened by NAB’s stated commitment to ‘roll up their sleeves’ and conclude broadcast spectrum incentive auctions in a timely manner. We look forward to working closely with the broadcasters and the Federal Communications Commission to complete the auctions as expeditiously as possible.”

RBR-TVBR observation: Let’s take this apart.

There is a seed of truth in Petricone’s statement – particularly he noted that consumers want to watch free over-the-air broadcasts.

While it’s true that broadcasters provide programming for free to anybody with the means to receive it over the air, it is equally true that it is anything but free to produce this programming.

The bargain between broadcasters and consumers is this: broadcasters will provide free programming, but consumers have to agree to sit through some paid advertising messages.

Ever increasing competition from cable-only programming sources, which sell advertising and also receive retransmission fees from MVPDs have over time forced broadcasters to incorporate retransmission income into the business model – but broadcast still makes the bulk of its income via advertising.

Now MVPDs such as DISH would like to enable consumers to duck out of their part of the bargain in the form of skipping the ads; and Aereo would like to charge for broadcast content as if it created it simply by finding a new way to deliver it into people’s homes.

If that’s the way it has to be, then fine – as long as those MVPDs agree to the increased retransmission fees that broadcasters will have to charge to make up for the lost advertising income they are suffering because of these irresponsible actions from companies like DISH and Aereo.

The money to produce the programming so many Americans watch every day has to come from somewhere – we strongly suggest ditching disruptive devices like Hopper and disruptive business models lilke Aereo’s and let broadcasters do their best to defray their expenses the good old-fashioned way: though effective advertising sales.