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The Thing about ‘Linear IP Video’

Language gets weird. Even what seems obvious can quickly muddle. I’m reminded of a panel about over-the-top video, where a representative of that community (OK, it was Roku) made this polite, explanatory remark about the types of video the device can stream: “We call them ‘channels.’ ”

The audience was nearly 100% cable people. I couldn’t resist this retort: “We do too!”

No Home Left Behind

As a former Navy Seal, Comcast Cable president Neil Smit could likely snap a man’s arm like a bread stick.

So I listened intently when I sat down with Smit several weeks ago during a visit to Comcast, and he mentioned one word over and over like a mantra: innovate.

He was trying to explain to a few editors and reporters how the pace of innovation is his singular focus at the company these days, and how the results speak for themselves. Comcast has unveiled new navigation guides, faster speeds and a growing list of new services to allow voice, video and data over new platforms - all in the past few quarters.

Todd Spangler puts the innovations of Comcast - and the industry writ large - under a spotlight in this week’s Cover Story, noting a new momentum in the cable industry’s efforts to keep up with consumers’ mercurial digital demands.

Recalling Smit’s words later at the Cable Show in Chicago, I was blown away by CEO Brian Roberts’ demo of the Webconnected, personalized “Xcalibur” TV guide, and left speechless when, a few minutes later, he downloaded 23 episodes of 30 Rock in less than two minutes, and then staged a demonstration of 100 Mbps DOCSIS service - upstream and downstream.

But I was reminded in a phone call back home to my father that same day that for all the innovative, eye-popping new services unveiled by cable operators, there’s a vast swath of U.S. consumers in rural areas that will never experience anything close to this anytime soon.

My father lives in rural Louisiana, just outside the reasonable reach of a big cable operator, with a dial-up service that forces him to wait several minutes even for a small photo - and that’s when the service is running.

He’s one of about 28% of rural U.S. residents that still lack access to the kind of broadband that most Americans take for granted, according to the FCC’s rural broadband update released last week.

It’s not acceptable, and the FCC - more so than cable operators - needs to do more, faster, to reduce barriers to broadband deployment.

For example, cable operators, through the NCTA, rightly argue that the Universal Service Fund, meant to subsidize phone service where none was available, no longer reflects the marketplace and needs major overhaul. NCTA claims the FCC is providing billions of dollars in subsidies to phone companies where they have unsubsidized competitors.

And while cable operators respectfully disagree with the FCC’s conclusion that the rate of broadband deployment is too slow, citing the billions spent on broadband buildout, they can’t deny that much more remains to be done in rural areas.

Under the National Broadband Plan, the FCC plans to migrate the USF from phone to broadband, lower pole-attachment fees and seek more market-driven solutions for rural deployment. The FCC is also proposing reforms to its low-income programs, which will benefit those in rural areas.

But if cable operators are ever to achieve the lofty goals - and speeds - set by the FCC, particularly in areas that are geographically undesirable or unprofi table, they’ll need more, and better-targeted, help from government. The sooner the better.

Never Forget

I remember the sheets of paper the most.

From the roof of my Brooklyn Heights apartment building, the scene was certainly surreal: Entire vertical columns made up of millions of sheets of paper rising a half-mile high from lower Manhattan and raining down across the East River into my neighborhood streets.

The heat - which, I was told later, was generated by the collapse of the World Trade Center buildings on Sept. 11, 2001 - had sent office papers flying. I watched as the buildings fell a little over a mile from where I stood, and later watched as fire trucks and ambulances from Brooklyn were called in to help with the devastation.

I had spent much of my career up to that point walking through the World Trade Center buildings. Each morning at 7:30 a.m. for nearly 10 years, I bought a bagel and coffee from the same lady at the same coffee shop in 2 WTC on my way to work as a reporter at The Wall Street Journal. Liberty chairman John Malone and I shot the breeze on a concrete bench in between WTC 1 and WTC 2 one morning in 2000.

Sept. 11 was, as Discovery Communications CEO David Zaslav said before a screening of The Rising: Rebuilding Ground Zero last month, personal for everyone, even if you were not personally affected by its events. We all remember where we were when it happened. All Americans were affected.

As upsetting as those real-life images were for me, I was touched most by what I saw on TV. The first responders who sacrificed their lives. The stories of survivors and families. The spontaneous heroes.

Looking back is hard sometimes. I haven’t had much of an appetite for any video from 9/11 since the days immediately after. Too painful. But in the hands of skilled filmmakers, shows such as The Rising, National Geographic Channel’s George W. Bush: The 9/11 Interview and Showtime’s The Love We Make documentary with Paul McCartney, make it easier.

Multichannel News’s Aug. 22 cover story highlights cable’s efforts to commemorate the victims of the attacks on 9/11, and the lives of the people who are irrevocably tied to that day. What more appropriate screen to reconnect to our collective loss? Images of that day were viewed for the first time on TV - not an iPad, or a BlackBerry or a cell phone. Tune in.

Gone Fishin' (for Subs)

Norwalk Islands, Conn. - In a driving rain, my kidneys are getting pounded with each slam of the 24-foot Skeeter boat on the waves as we make our way across the Long Island Sound, one of the richest saltwater fishing grounds in the United States.

Bouncing alongside me is Gavin Harvey, the CEO of Sportsman Channel, who decided the salt water and fresh air would be more conducive to discussing the challenges of running an outdoor network. Casting but no blasting.

We’ve come for striped bass, the favored gamefish of the Northeast, and for bluefish, the toothy fighter found throughout these waters.

Capt. Blake Smith has spotted birds diving in the distance after a fishless first hour, a sign that baitfish are moving to the top from bigger fish below. After a few seconds, they move on. And so do we.

We are headed to a spot across the sound where he saw the rare species we’re all dying to see, let alone catch: false albacore.

Little tunny, or albies, as they’re called, are ferocious gamefish that can churn the waters in a feeding frenzy and strip off a line before an angler has had a chance to respond.

As the boat jumps like a porpoise through the water, Harvey, who could pass for a taller Alan Alda with less hair, begins to unspool stories from his first year at the network.

He was named CEO in July 2010, with a mission to expand the sub base of the eight-year-old network, which is dedicated to hunting, shooting and fishing. Sportsman Channel, which reaches 27 million homes, is owned by Leo Hindery’s private-equity firm, InterMedia Outdoor Holdings, which operates a stable of consumer hunting and fishing magazines and original TV programs.

The search for subs - and ad dollars - isn’t easy these days, especially for an independent network in the outdoor category. Big boats, for example, a high-end advertising category, aren’t exactly flying out of the showroom in this economy. And bigger, better-capitalized competitors, such as Outdoor Channel, are competing for the exact scarce space on basic-digital lineups.

We ease up to one in a chain of tree-covered islands off Norwalk, over underwater boulders and shallow reefs. We throw poppers, white plastic jigs and flies. Nothing.

The captain slows the boat again, but only for a moment - the birds in the distance aren’t “crashing” the water the way he would like.

Harvey has immersed himself in the business with field trips like this, even taking up the difficult sport of bowhunting for deer, which requires the stealth of a ninja. “It’s intense,” he said. And he has taken the search for subs personally, tracking leads and talking personally with hundreds of distribution executives at all the cable, satellite and telco companies “at system, region, division and corporate levels.” The network was recently moved from a sports tier to the basic digital package in Chicago, a big win he hopes to repeat around the country.

Much of the work of the Sportsman Channel is evangelism, spreading the gospel of facts surrounding the rod and gun crowd to dispel myths and make a case that the audience is more widespread than it appears.

America’s 80 million hunters and anglers contribute some $76 billion into the economy, according to the Congressional Sportsman Foundation. Quick: Guess what American anglers spend $1.1 billion a year on? Not equipment. ($5.3 billion.) Not food ($4.3 billion). Give up? Bait.

“I want people to know,” Harvey told me later, “that (1) hunting, shooting and fishing is not a hobby for American sportsmen, it is life; (2) that this category is not a niche, it is huge and there are more than 80 million of us; and (3) that Sportsman Channel is the leader in outdoor TV for the American sportsman.” While Nos. 1 and 2 are certainly true, I’m thinking Roger Werner, CEO of the publicly held, Nielsen-rated Outdoor Network, might disagree with No. 3.

Indeed, these days, even as single-sport networks struggle to get carriage, mainstream networks are starting to fish for subscribers in the rod-and-gun space: on Animal Planet (River Monsters); History (Swamp People, Top Shot); and Discovery Channel (Sons of Guns).

As we cast, Harvey explains how the challenge gets complicated. The investment of weeks of phone calls and meetings lobbying a cable operator, for example, can go out the window if the company is restructured or the point person leaves, which has happened in both Time Warner Cable and Comcast markets. “You have to start all over,” he said.

We continue to cast, but no bites on the other side of the island. The captain scans the horizon again. “There’s bait everywhere - silversides, bay anchovies and menhaden,” he said, to no one in particular. As we move to yet another spot, I think to myself that finding new subs is a lot like fishing.

Harvey, who helped transform the Outdoor Life Network into more of a sports service (under Comcast, OLN was renamed Versus in 2006), said he has big ideas for promotion (across screens and Intermedia’s magazines) and production. The network has tweaked existing shows, such as American Flyfisher, and is preparing a new slate of programs for 2012, including Dropped: Project Alaska, which follows two brothers who are dropped on a river in a remote part of Alaska to “pit their skills as hunters, woodsmen and anglers against an unforgiving landscape.”

As we reach the shore across the sound, gulls are divebombing the water in droves. Suddenly, my spinning reel starts to sing. A bluefish. Harvey’s line starts to strip, too. We’re in the middle of a bluefish feeding frenzy that lasts for a solid hour.

If only winning more subs was this easy.

Fear Is Good

“Just because you’re paranoid,” as the saying goes, “doesn’t mean they’re not out to get you.

“That’s a good mantra for the cable industry these days. Fear can be a powerful motivator.

I’ve never seen it dance around the insides of cable executives like it has in the last few weeks.

Few predictions of an industry’s utter collapse have been so detailed - or so flawed - as Henry Blodget’s assumptions about the death of TV as we know it.

In the recent piece published on website Business Insider, comparing TV to newspapers, he describes a world in which no one watches ads, over-the-top players supplant cable operators and networks cease to exist. Everything is on-demand, since no one watches linear TV anymore. Or at least that’s the way it is in his house.

The column, while persuasively written, was clickbait.

And yet it caused quite a stir within TV circles, in part because he cleverly zeroed in on the fears of many network owners and cable operators these days. The same is true of the rumors of an Apple TV set - if it even exists (see MCN’s June 11 cover story). And news of Aereo, a new mobile broadcast-TV service. And tidbits of all the new over-the-top players said to be nipping at the traditional TV business model.

All this fear and loathing is a good thing for cable. Ultimately, it spurs the collective pursuit of innovation.

TV consumption habits are changing. And if the traditional TV players aren’t paranoid, they won’t survive, because the pace of technological innovation is a threat in itself.

But the vision of Blodget’s world is far from inevitable. In the days following the post, several analysts practically stood in line to point out the gaping holes in his theory. Blodget claims, “We almost never watch television shows when they are broadcast anymore,” for example, but more than 80% of TV viewing still occurs on a live basis, according to Nielsen.

I won’t go through it point by point. (Brian Wieser at Pivotal Research Group does a much better job than I could.) Suffice it to say that traditional TV content still dominates consumption, compared to other platforms, and ad-supported content is still the dominant form of entertainment.

That could change, but it’s not likely soon. New over-the-top players won’t ever supplant cable operators for the simple reason that they can’t offer the biggest content providers (read: networks) the same massive audience.

And cable networks aren’t about to risk the fat affiliate fees they get from cable operators by flirting with OTT players. The risk/reward ratio doesn’t work. And anyone waiting on a la carte offerings streamed straight to your home without ads? Forget about it, unless there’s a change in the law that allows programmers to package channels.

David Zaslav, CEO of Discovery Communications, probably gave the healthiest view of a CEO at the event: Operators and programmers, he said, “need to be paranoid.”

Alive and Kicking

With all the pontificating over the death of print, I sometimes feel that reports of our demise are exaggerated.With today’s issue, I hope you’ll agree we’ve never delivered a more vibrant print product about a purely digital world.

At almost 31-years-old, the magazine just got a facelift, all in an effort to make it easier for you to navigate, read and enjoy.

I know many readers have gone digitally native, consuming Multichannel News online or via mobile or our e-newsletters. Thank you. But the printed magazine bears a longer, lingering look. Think of it as the original browser.

Online is certainly the destination for breaking news, and the place for the freshest analysis.

But despite its rep as a relic, if you ask me, I think the magazine delivers a richer experience -though deeper analysis, intelligent infographics and unique viewpoints. Not to mention the random access to articles — and the tactile experience — of turning the page.

With these latest upgrades, we’ve triaged the news with our “Top 10 Stories” list, moved the hottest news and analysis upfront, employed bigger and bolder graphics, and created a “takeaway box” to give readers an instant snapshot of a story’s significance.

I spend most of my time in a digital, up-to-the-second world of multiple platforms. If we’re not delivering content on screens, we’re writing about what goes on behind them and on them.

I like to think of print as still the best platform.

Police Force

The Internet needs a good beat cop.

And most good beat cops rarely pull their weapon. This month, in a major ruling affecting who governs the Internet, the U.S. Court of Appeals said that the FCC lacked authority to stop Comcast from blocking traffic to a customer. In doing so, the court took away the FCC’s gun and gave it flashlight. Comcast had argued that the FCC had not established the authority to crack down on its management of what the company saw as a bandwidth-hogging, peer-to-peer file sharing via BitTorrrent. The court agreed.

Theoretically, cable operators can do whatever they want to do now to manage their networks. If companies are allowed to restrict content sent over the Internet, free-speech advocates argue, it would “undermine the open architecture that has transformed the Web into a democratic force in society,” says the Free Press, a non-profit group. Comcast or other large media companies could allow its movies to download more quickly than a rival’s movie service.

The ruling seems to undermine “net neutrality,” which means that all service providers and sites should be subject to the same rules online.

But the FCC said its Internet authority is still intact - somewhere - and there’s reason to believe it will act quickly to prove that, if tested.

NCTA president Kyle McSlarrow agrees, at least in principle. He said that in the real world, he doesn’t see that having much of an effect: “We made commitments that we support the FCC’s Internet policy statement.” Cable operators, McSlarrow said, are unlikely to do anything that will harm the Internet experience for customers. Good intentions, no doubt, but that could be said for any competitive ISP.

Rosemary Harold, media adviser to FCC commissioner Robert McDowell, argues the marketplace has its own built-in police - users who will scream at the first sign of tampering.

Perhaps the most discussed alternative - short of Congress passing a new law - is reclassifying broadband as a Title II telecommunications service, which is subject to stricter common-carrier access mandates.

Cable operators argue that strict nondiscrimination principles would be a disincentive to investment.

That may be true, but so is regulatory uncertainty. Right now, the cop on the beat just needs to know the true limits of his authority.

A Matter of Trust

When I saw Sanford Bernstein’s Craig Moffett at an FCC panel at The Cable Show, he was scrunched down in his seat, and joked he could use a baseball cap and big sunglasses - inside the room.

FCC general counsel Austin Schlick was onstage deciphering the chairman’s recent decision to reclassify broadband under more stringent Title II common-carrier restrictions. The change came as a result of a court decision that said the FCC had limited authority over broadband. Just days earlier, the Wall Street analyst had downgraded cable stocks over that very change, and sure enough, he was effectively called out on the carpet.

“If anyone in this room believes you’re going to a world of regulatory certainty under the current regime to a world of regulatory uncertainty under the approach I’ve been discussing … I think you’re wrong,” Schlick said emphatically.

Ouch. Moffett, who calls ‘em like he sees ‘em and at times speaks the popular but silent opinions, wasn’t surprised or repentant. There is a very real and valid concern on the part of cable operators that even if Chairman Genachowski has vowed that rate regulation and unbundling are off the table he can’t control what the next administration does.

The timbre of these talks is a world away from the days of former chairman Kevin Martin, which were marked by high anxiety from cable operators fearful of his wrath. This chairman has gotten high marks for his seeming authentic concern for the unintended consequences of over-regulation.

Indeed, the agency’s most powerful tool is one that allows it not to act on the stricter parts of the Title II regulations (known in D.C. jargon as forbearance).

When I spoke with NCTA president Kyle McSlarrow after the panel, he spoke in empathetic terms of Genachowski and said the industry could warm to the idea of forbearance. But, he noted, “We have to lock this down.” He, like everyone in the cable industry, and on Wall Street, and in life, for that matter, wants certainty.

Now the chairman declared that rate regulation and forced unbundling of services are off the table, and said the FCC has never reversed forbearance. That’s the most certainty cable operators can expect to get.

There is an old saying that to make a man trustworthy, you have to trust him.

Can the cable industry trust the new chairman?

Another Transition

As we reach the halfway mark on the calendar, many retailers, distributors and suppliers are looking to fall merchandising plans and holiday sales.

Three longtime A/V specialty chains that made major contributions to the industry — Flanner’s Home Entertainment, Ken Crane’s and MyerEmco — have closed and won’t be around to explain, sell, install and deliver 2010’s products.

Combined they represent a staggering 236 years in U.S. retailing: Flanner’s opened in 1891, Ken Crane’s had a 62-year run, and MyerEmco served the Washington D.C. market for the past 55 years.

The CE industry is always in constant transition, and consumers have been trained to buy based on price. But what are today’s reasons? The departed retailers all must have made a bad decision or two along the way. (Who hasn’t?) But they couldn’t overcome the worst economy since the 1930s, as well as a fundamental change in the CE business where the margin for error is smaller than ever.

What does this say about the CE industry? Technology is not going away. Just the opposite … it will thrive since consumers love the industry’s products.

National retailers will thrive, which is why our June 7 issue focused on Walmart and how the largest retailer in the world is planning to compete in CE. Walmart will keep its core customers and maybe take a few more with its improvements.

But no matter how CE evolves technologically, it always gets more complicated for the average consumer to understand. For instance, Best Buy has identified a plethora of “average consumer” groups to serve.

With an industry that will offer more products that have to connect with each other, consumers need someone to guide them up on a vast learning curve where profits usually follow for everyone.

Social networking is great and manufacturers should communicate with consumers directly. But retailers, whether online or in stores, are still a critical link from vendors to consumers to explain all the technologies and brands available, and put the right product at the right price in their hands.

Of course, regardless of the usual gloom and doom after such news, regional and independent retailers aren’t going away. The expansion of hhgregg has been chronicled here, along with Sixth Avenue Electronics and P.C. Richard & Son. Days after the news about Ken Crane’s, Ultimate Electronics said it plans to expand into California, which follows its moves into the Northeast. And there are countless more CE retailers out there that are expanding or considering a move.

What these entrepreneurs need from the manufacturers selling their products are long-term support and partnerships. If vendors don’t, they do so at their own peril and at the peril of the entire industry.

Over The Top

The average consumers must be completely befuddled - if they care at all - about all the media giants muscling their way into TV these days.

Last week, Apple took the wraps off a sleek, tiny set-top, priced at $99, that allows streaming rentals of shows from News Corp.’s Fox; The Walt Disney Co.’s ABC, ABC Family and Disney Channel; and BBC America. The new Apple TV, set to ship this fall, can show rentals of some 7,000 movies for between 99 cents and $4.99, as well as offer access to Netflix’s streaming-video service.

Earlier reports noted that Amazon is mulling a new subscription service for TV content, viewable on a Web browser, or through Internet-connected TVs, and Microsoft Corp.’s Xbox 360 video-game console.

Netflix, not content with its vast library, recently struck a deal with premium movie channel Epix worth almost $1 billion, and makes Netflix the exclusive Web-only distributor of films from Viacom’s Paramount Pictures, Metro-Goldwyn- Mayer Studios and Lions Gate Entertainment, including new releases made available 90 days after their premium pay TV and on-demand debuts.

And before them, there were TiVo, Sezmi, Roku, Boxee, Xbox 360 and others.

But these players will never “take over TV,” at least not in the practical way their press releases imply. They will never duplicate the sheer volume of choice that cable, satellite and phone companies offer. These “over-the-top” competitors will always grab a small percentage of the population. They will always have a willing customer base either dissatisfied with cable operators or just looking for a few good movies occasionally.

Cable operators are racing to catch up with the latest efforts for multi-screen viewing, or “TV Everywhere,” which will open access for paying customers to other platforms.

All the big cable operators say it’s coming. Time Warner Cable, for its part, has launched an effort to put TV content on iPads and other devices. It even has a video on YouTube touting its iPad based TV remote control.

Other pay TV operators promise they’ll deliver TV shows and programming on whatever platforms customers want. Witness the “ESPN Everywhere” provisions of the Time Warner Cable deal last week - but they’ll need to move even faster.

As Todd Spangler points out in this week’s cover story, cable operators aren’t alarmed despite the size and financial heft of the TV newcomers. But they should be concerned.

These new players may not supplant today’s dominant distribution via cable, satellite and phone companies. But they will eat away at profits from the big distributors like so many termites. Already these services are nibbling away at VOD profits, offering consumers a richer experience in navigation and depth of choice.

Cable operators have been slow out the gate to deliver “TV Everywhere” services, even as others offer various forms all around.

Customers are waiting, and willing to pay anyone that can truly deliver on the promise of TV Everywhere.

The question now for TV distributors isn’t where, but when?

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