News

For The Record

12/13/2010 12:01 AM Eastern

Smit: Comcast Won’t Impose Usage Charges

NEW YORK — Comcast Cable Communications president
Neil Smit said the nation’s largest cable operator
won’t push for hefty charges for heavy users
of its broadband service, despite recent Federal
Communications
Commission moves that would appear to open the door for
price increases.

Smit, speaking at the UBS Global Media & Communications conference
here last Tuesday (Dec. 7), said Comcast has set a monthly usage cap of
about 250 gigabytes (average monthly Internet usage is between 2 and 4
gigabytes) after which it would work with customers to curb their bandwidth
consumption.

“We don’t have plans for usage-based pricing now,” Smit said.

At the conference the Comcast executive also demonstrated a new iPad application
— called Play Now — that will enable customers to view VOD movies
and programming on their iPad remotes. That app is expected to be available
in a few weeks.

Smit added that Comcast also is bucking the trend on offering smaller,
lower-cost video packages. Time Warner Cable unveiled TV Essentials, a
$39.99 per month package last month.

Smit said Comcast has been offering a digital economy package for $39.99
per month ($29.99 if part of a bundle) with about 75 channels (25 in HD) for
several months, primarily as a retention tool. Later, Smit said Comcast also
has been offering, for quite a while, a higher-end package similar to Time
Warner Cable’s Signature Home offering, for about $179 per month. Comcast
continues to evaluate that offering.

— Mike Farrell
News

Corp. COO: Fox News Seeks Higher Fees

NEW YORK — News Corp. is looking to increase subscriber
fees for Fox News Channel in a new round
of negotiations with distributors.

Chase Carey, chief operating officer of News
Corp., said Fox News receives only a small fraction
of the monthly per-subscriber license fees that
ESPN gets.

 “That channel in the cable world is right there
with ESPN as important a channel as exists out
there,” he said.

ESPN is the highest-priced national cable channel
at more than $4 per subscriber per month. After its launch deals began
expiring in 2006, Fox News Channel, now the longtime top-rated player in the
cable news arena, was able to increase its fee to between 75 cents and $1.
Now, some of those deals are expiring, opening the door to a new round of
negotiations.

Carey said that other News Corp. cable channels also have opportunities to
increase their sub fees, especially when compared to their more established
competitors.

News Corp. has also been seeking increased fees for retransmission of
its Fox broadcast channel. Those efforts have largely been successful so far,
Carey said.

Carey declined to disclose the terms of deals closed recently with Cablevision
Systems and Time Warner Cable, both of which became very public as
deadlines came and went. “We were looking to what we thought was fair and
we stuck to our guns. It takes two to make a deal … we achieved what we set
out to achieve.”

— Jon Lafayette, Broadcasting & Cable

‘Connected Home’ to Drive DirecTV Growth

NEW YORK — DirecTV’s initiative to hook up its customers’
set-top boxes to the Internet — dubbed the
“Connected Home” — could help close the gap in
pay-per-view revenue between the satellite-TV giant
and cable operators, chief financial officer Patrick
Doyle said.

Speaking at the UBS Global Media & Entertainment
conference here, Doyle said the goal is to
have about 40% of DirecTV’s set-top boxes connected
to the Internet by the end of 2013. That
connection, coupled with the satellite giant’s DirecTV
Cinema initiative, could give customers access to as many as 6,000
additional movie titles.

At the UBS conference, Doyle said DirecTV has lagged in the pay-per-view
category — he estimated that its per-subscriber PPV revenue is $2 to $3 less
per month compared to cable operators - mainly because DirecTV has fewer
movie choices.

Doyle estimated that it costs between $65 and $70 to connect a customer
to the Internet — DirecTV is offering free installation to customers who buy
whole-home digital video recorders or upgrade to HD-DVR service — but the
payback is expected to be quick with a boost in average monthly revenue per
unit and lower churn.

Doyle added that connected homes also could help drive premium channel
penetration, which was surprisingly strong for DirecTV, by enabling customers
greater access to video-on-demand choices.

“That tends to energize paid premium revenue,” Doyle said.

— Mike Farrell

Ad Growth Continues At Viacom

NEW YORK — Coming off strong third-quarter domestic
growth, Viacom CEO Philippe Dauman said ad
sales, up 8% in the period, should rise even more
in the fourth quarter.

Dauman, speaking here at the UBS Global Media
& Communications Conference, wouldn’t say how much sales would rise, but
added it would be an improvement over the previous quarter. Ad revenue also
rose 4% in the second quarter and 1% in the first quarter.

Dauman said strong ratings are helping to drive results.

He added Viacom is gearing up for the next upfront ad presentations, adding
that the media giant is gaining share in sectors that haven’t been strong
for it in the past — like automotive and financial services. Traditionally strong
areas for Viacom networks — technology, media, toys and games — are all
performing well, which fueled his optimism.

“I’m looking forward to the next upfront,” Dauman said.

Dauman said that in addition to ad sales, affiliate-fee revenue is expected
to rise in the high single or low double digits for the foreseeable future. Viacom
recently extended its carriage agreements with several distributors.

“Because of the brands we represent, we are in a very strong position,”
Dauman said. “We’ve successfully negotiated extensions of our affiliate deals
over the last two to two-and-a-half years at a very difficult time in the economy,
and we have been very successful in maintaining the double-digit rates
of increase, because we provide great value.”

— Mike Farrell

Maffei: Traditional Pay TV Model Will Survive

NEW YORK — Liberty Media CEO Greg Maffei said
traditional pay TV companies will survive the latest
threat to their business models — over-the-top
video — mainly because they have weathered similar
storms before.

“This is just one more transition,” Maffei said,
adding that cable, satellite and telco video business
models still have a “lot of life.”

Maffei pointed to its Liberty Starz unit, which,
under the helm of CEO Chris Albrecht, has played
the role of a creator of new content and distributor
of other companies’ programming. Starz has concentrated
more on original programming under Albrecht, and Maffei said that
is continuing, adding the premium network has had several “fruitful discussions”
with international players to develop new programming.

Maffei said a planned spin of the Liberty Starz unit will likely be delayed because
of pending litigation. A handful of bondholders have opposed the spin
and a trial date has been set for February. While Liberty is confi dent the spin
will ultimately take place, that probably won’t happen until the May or June
time frame, Maffei said.

Part of Liberty Media’s ongoing strategy is to simplify its structure and turn
its tracking stocks into asset-based securities, but the Liberty Starz split has
also fueled speculation that the company could be used as an acquisitions
vehicle.

Maffei said that while Liberty Starz will be opportunistic, there are other
ways to increase the unit’s value outside of an acquisitions binge. He pointed
to partnerships with MSOs and off-balance-sheet vehicles to fi nance original
programming initiatives as examples.

“In many cases, it’s easier to buy your own stock,” Maffei said.

— Mike Farrell

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