Carriage disputes in Europe:analysing power conflicts inbroadcaster-to-distributormarketsTom EvensGhent UniversityEuropean...
Context Strategic context of TV broadcasting altered Technology shock: quid legacy business models? Regulatory: quid st...
Context (2) Erosion of ad-supported business model Television advertising markets shrinking (-16% in 2009) Impact of th...
Context (3) FTA networks seeking payments Market-based remunerations (negotiations) „Fee fights‟ ended up in blackouts...
 Least generous television retransmission terms Limited copyright protection Pay significant access fees Controversy: ...
Broadcaster DistributorProducers CarriersAdvertisers SubscribersSubscription marketAdvertising marketInfrastructure market...
Buyer-supplier relationship Analogy with brand manufacturers and retailers Control shelf space allocation (positioning)...
18/06/2013 12
BARGAININGPOWERPOLICYAND REGULATION- Media Regulation- Telecom Regulation- Competition Law- Copyright LawMARKET STRUCTURE-...
Conclusion Respective position in chain does not adequatelyexplain (relative) bargaining power “Content is King, distrib...
Further reading Evens, T. (2010). Value networks and changing business models forthe digital television industry. Journal...
Tom.Evens@UGent.behttp://www.mict.behttp://be.linkedin.com/in/tomevens
Carriage disputes in Europe: a framework for analysing power conflicts in broadcaster-to distributor markets
Carriage disputes in Europe: a framework for analysing power conflicts in broadcaster-to distributor markets
Carriage disputes in Europe: a framework for analysing power conflicts in broadcaster-to distributor markets
Carriage disputes in Europe: a framework for analysing power conflicts in broadcaster-to distributor markets
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Carriage disputes in Europe: a framework for analysing power conflicts in broadcaster-to distributor markets

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Presentation provides a better understanding of the underlying dynamics of carriage disputes between broadcasters and distributors. By drawing an analogy between retailers (buyers) and distributors on the one side, and brand manufacturers (suppliers) and broadcasters on other side, and by developing an analytical model by which means the bargaining position of a broadcaster and distributor respectively can be assessed, it becomes possible to capture all decisive elements that determine the bargaining position of negotiating firms during carriage agreements.

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  • Expandingroles, blurringroles
  • Jealous of comfortableprofitmargins of the operators, broadcastersthink operators earn money in a disproportionatemanner, comparinginvestments in content Subscriptionsquite consistent/steadilygrowing
  • http://www.wired.com/business/2009/12/free-tv-isnt-free-but-could-cost-more-due-to-foxs-demands/
  • In 2010, the-CEO Mark Thompson raised the issue of retransmissionfees“Sky’s free rideneedsto stop”Parts of the license fee is giventoSky, whichinvestsnothing in contentNews Corp/Fox vs. Sky
  • As a percentage ofrevenuesBroadcasters claim they carry the bulk of investments in quality content whereas distributors take a disproportional share of the pie, without significantly contributing to the financing and production of that content. Waterman and Han (2010) provide an empirical basis for such claims, arguing that distributors have been able to take far greater economic advantage of the digital transition than broadcasters. According to UK regulator Ofcom (2012), public service broadcasters (PSBs) in the UK spend 27% of their revenues on first-run originations compared to only 2% for pay-TV operators.
  • Multi-sided double-platform market => clash of platforms, platform envelopmentConvergenceBilateralbargaining power
  • Shows usunderlyingmechanisms ofchannelconflicts in buyer-suplierrelationships, andprovideuswithinitialinsightsintobargainingdisputesandrivalriesbetweenbroadcastersanddistributorsPackage + numbering
  • Whatwillbe look at: power relationships, but no power without control (of resources, of companies)What contextual factors determine bargaining power between broadcasters and distributors?Roles/activitiesnotenough, also look at resources they control
  • Usefulfor policyinterventionBased on input from 36 interviews with media managers in different countries
  • Carriage disputes in Europe: a framework for analysing power conflicts in broadcaster-to distributor markets

    1. 1. Carriage disputes in Europe:analysing power conflicts inbroadcaster-to-distributormarketsTom EvensGhent UniversityEuropean Media Management Association (EMMA)‘Digital Transformations and Transactions’Bournemouth, 13-14 June 2013
    2. 2. Context Strategic context of TV broadcasting altered Technology shock: quid legacy business models? Regulatory: quid structures, conduct & performance? New markets, entrants and services (OTT) Challenge existing power relationships Distributors as gatekeepers (platforms) Broadcasters bypassing distributors Power conflicts broadcasters and distributors
    3. 3. Context (2) Erosion of ad-supported business model Television advertising markets shrinking (-16% in 2009) Impact of the Internet (re-allocation of budgets) Audience fragmentation, affects ad prices Time shifted viewing + ad-skipping Alternative and more stable income source Diversification of revenues Subscriptions are growing
    4. 4. Context (3) FTA networks seeking payments Market-based remunerations (negotiations) „Fee fights‟ ended up in blackouts Channel pulling signal from platform Operator unwilling to carry a channel (cut off) Retransmission fees could save FTA Compensate decline in advertising income Implications for the viewers Investment in original, domestic content Higher subscription prices (cable, sat, IPTV)
    5. 5.  Least generous television retransmission terms Limited copyright protection Pay significant access fees Controversy: Sky lowered access fees (rate-card) BBC: reduction from £9.9m to £4.4m by 2014 BBC: „Sky should pay for privilege of carrying PSB‟ Instead of paying £16.5m (in 2009) PSBs should receive £55-80m per year Impact on PSBs revenues: £190-220m (DCMS) Likely impact on expenditure on original UK content Likely impact on subscription prices: + £17/yearUK market
    6. 6. Broadcaster DistributorProducers CarriersAdvertisers SubscribersSubscription marketAdvertising marketInfrastructure marketProgramming marketBroadcaster-distributor market1243
    7. 7. Buyer-supplier relationship Analogy with brand manufacturers and retailers Control shelf space allocation (positioning) Have pricing power (promotion) Promote affiliated brands (white labels) Literature suggests manufacturer-retailers are inmost cases skewed in favour of retailers Gatekeeping position pressures manufacturers to lowerwholesale prices But: suppliers also have bargaining power! Market failure creates CA and power asymmetries
    8. 8. 18/06/2013 12
    9. 9. BARGAININGPOWERPOLICYAND REGULATION- Media Regulation- Telecom Regulation- Competition Law- Copyright LawMARKET STRUCTURE- Industry Concentration- Number of Buyers/Sellers- Entry and Exit Barriers- Technological ChangeFIRM STRUCTURE- Relative Size- Conglomerateness- Vertical Integration- Financial ResiliencePRODUCT- Asset Specificity- Product Differentiation- Switching Costs- Brand EquityINDIVIDUALS- Bargaining Skills- Relative Familiarity- Reputation for Fairness- History of Conflicts
    10. 10. Conclusion Respective position in chain does not adequatelyexplain (relative) bargaining power “Content is King, distribution is King Kong” Power asymmetries but bilateral bargaining power Allocation of power is context-specific and variesbetween different settings (market, regulatory) Different markets = different power configurations Need more country studies: call for cooperation Power is multi-dimensional concept Assess specific power attributes
    11. 11. Further reading Evens, T. (2010). Value networks and changing business models forthe digital television industry. Journal of Media Business Studies,7(4), 41-58. Evens, T. (2013). The political economy of retransmission paymentsand cable rights fees: implications for private television companies.In K. Donders; C. Pauwels & J. Loisen (Eds.), Private Television inWestern Europe: Content, Markets, Policies (pp. 182-196).Basingstoke: Palgrave MacMillan. Evens, T. & Donders, K. (2013). Broadcast market structures andretransmission payments: a European perspective. Media, Culture &Society, 35(4), 415-432.
    12. 12. Tom.Evens@UGent.behttp://www.mict.behttp://be.linkedin.com/in/tomevens

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