Verizon FIOS wants to change the way it compensates cable networks, paying by the number of viewers rather than the number of available households. Should that model catch on, it could prove disastrous for the burgeoning conference television networks.
Verizon would like to offer broad distribution of a “significant number of channels,” including independent networks and smaller outlets. But each channel would be paid solely according to how many subscribers tuned in each month for a “unique view,” or a minimum of five minutes, Mr. Denson said. Viewership would be measured by Verizon’s set-top box data, not Nielsen ratings.
Conference TV networks are the precise type of network cable providers get irritated about. The Big Ten Network leverages games to get placed in as many cable households as possible. It derives revenue from the subscriber fees. It is a de facto Big Ten tax. Everyone pays for it. Very few people actually watch it.
Cable households were the not-so-veiled reason behind the Big Ten adding Maryland and Rutgers. Millions more additional households in the populous I-95 corridor were added to the conference “footprint.” This also could let News Corp package BTN (49 percent stake) with YES (an 80 percent stake) and FOX News to get it onto the basic tier on those markets. For the B1G that could mean an extra $100 million per year in revenue, from subscriber fees.
The SEC, launching its own network in 2014, expanded based on a similar model, adding Missouri and Texas. Households are why Virginia and North Carolina will be the next battlegrounds for major conference expansion.
Should the environment shift to the “unique viewer” model, these conference networks would be sunk. That should not happen in the short-term. News Corp and others, undoubtedly, will try to block it. But there’s no telling what the future may bring. We’ve already reached the technological point where there’s no pressing reason to subscribe unless you watch sports. Expecting the cable provider model to remain static 10-15 years down the road (and realigning conferences accordingly) may be a tad short-sighted.
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