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16 December 2007

Messing around with TV

Over the last few weeks, I've finally taken the plunge into HDTV. The geek in me won't go about it the normal way, so I've been looking at more than just TV's. As much as I like TiVo I couldn't justify laying out cash for yet another monthly subscription, so I decided to find out what TiVo alternatives were available. In the end I went with a neat little product called HDHomeRun from Livermore company Silicondust. It has two digital tuners that pick up free digital feeds from either cable or over-the-air. Those feeds are sent into your home network and can be streamed or recorded by any computer on the network. Not every channel comes through free and unencrypted. Most of the major cable networks are encrypted and require a cable box. YMMV but it's worked well so far for me.

Apparently the Giants have also been messing around with TV. Last week the Giants bought a sizable stake in FSN Bay Area, which will put them in excellent financial shape for the next 25 years. The details:

  • The team bought a 30% stake, which comes out both the Comcast and FOX stakes. Comcast now owns 45%, while FOX has 25%.
  • Giants games will continue to be broadcast on the channel, which will officially benamed Comcast SportsNet before the season starts.
  • CSN will show at least 130 Giants games now that the Giants' deal with KNTV has a reduced schedule compared to KTVU.
  • Existing agreements with the A's, Warriors, and Sharks will be unchanged (those run through the end of the decade).
  • CSN will produce a nightly local sports newscast. It already produces Sportsnite for the existing CSN West channel, which is geared towards the Central Valley currently. It's not clear whether the new CSN channel will have a specific Bay Area focus or if it will be merged with CSN West (which is partly owned by the Maloof brothers).
The Giants picked a good time to work this deal out. It gets them a nice new stream of revenue, which along with the $100 million stake in the channel, will raise the team's value significantly. It should be easier to work with sponsors who will now know that the Giants have a 25-year run of stability behind it. And while it hasn't been mentioned yet, should Peter Magowan and his group decide to divest themselves of the team, they could get upwards of $600 million for the franchise.

What about the A's?
If you think the A's have been left out in the cold, they aren't. Right now the broadcasting world is in a major state of flux, with the digital conversion coming in February 2009 and AT&T starting to offer rival services that rival Comcast's cable TV, the rules are quickly going to change.

Let's say the A's wanted to start their own cable sports network. There a couple rules they'd have to follow in order to get started:

  • If you want to be carried by Comcast, you must give them a taste. Like Tony Soprano dealing with his capos, Comcast wants their envelope. That's means Comcast wants a piece of whatever new channel you're launching. They'll help you get production going. If you want to go it alone, good luck getting any help from them. Note: When scanning for my local free channels, several networks I didn't expect to find were available: Vs., TVOne, and Comcast SportsNet West. All three are partly or wholly owned by Comcast. If FSNBA becomes CSN West, CSNW won't be free for long.
  • Don't ask to be on expanded basic. Comcast is pushing all new sports networks to their "digital sports tier." A legacy network such as FSNBA or ESPN/ESPN2 will stay on expanded basic, but everything else is meant for the sports tier. That goes for national single-sport networks such as NFL Network and NBATV, as well as new regional sports networks. Part of the reasoning is that Comcast doesn't want to pass along the often high subscriber fees to regular customers who may not be interested in additional sports networks (they also frequently complain about rising cable bills). Another is that by relegating a RSN to a digital channel, it takes up far less bandwidth than an analog basic channel.
  • The satellite companies won't offer any favors either. DirecTV and Dish are feeling the pinch as they have to carry hundreds more channels simultaneously than the typical regional cable operator. They'll carry your channel as long as you don't ask for overly exhorbitant fees.
As you can see, right now isn't exactly the best time for the A's to start getting entrepreneurial. At least not in TV land. However, change is afoot.

The Digital TV Transition
On February 17, 2009, all US broadcasters are supposed to switch over from analog to completely digital transmissions. Many consumers won't really notice as they may already have their TV served up to them by some kind of set top box (cable or satellite). That old "cable-ready" TV you may have put in the garage? Or that trusty 4" portable deal you bought several years ago to bring to sporting events? Those will be useless.

Over-the-air broadcasts will be digital, and to help the government is helping by subsidizing $1 billion in new digital set top boxes for viewers who only get over-the-air TV. Digital broadcasts are more bandwidth-efficient than analog, so the government is reclaiming some of that bandwidth for other uses. You may have heard recently about the 700 MHz wireless spectrum auction, scheduled for this coming January. Verizon, Google, and Cox are among several bidders for certain pieces of spectrum, which could carry voice and data faster and more reliably than existing networks. The 700 MHz spectrum has been used by OTA channels 52-69.

For cable, the process may be a little slower as some cable providers are preparing to keep at least a few analog stations (the regular broadcast networks) alive for a little longer depending on customer response. Cable operators are mandated to carry both analog and digital signals for the time being, an extension of "must-carry" rules. As the old analog channels are replaced completely by digital (including HDTV), bandwidth will be freed up. Some of that bandwidth is slated for video-on-demand services and more HD channels, some will be used for higher-speed internet access. (AT&T's U-verse service is IP-based and is far different from what Comcast or Verizon provide.)

Within all of that freed bandwidth should be additional space for a combo SD/HD regional sports network, should the A's decide to launch one.

Still need a partner
Even with all of that, an A's-based regional sports network won't be viable unless there's additional programming. To get that, they'll need to look south to San Jose, and the Sharks. The A's and Sharks are in similar positions relative to the local TV market. They perform worse than other teams that broadcast during the same season (A's vs. Giants, Sharks vs. Warriors). Both will be catering heavily to a Silicon Valley corporate base. Both have limited radio deals and are disadvantaged in the local media market compared to the other Bay Area teams. Chronologically they are the youngest franchises in the Bay Area. And their seasons are compatible, with the A's regular season ending when the Sharks' season starts (and vice-versa). Quakes 4.0 will be an integral piece, and their summer schedule isn't so heavy as to cause frequent conflicts.

The teams can't stop there. There are tons of other teams in the area and no one needs to look under rocks to find them. Did you know that CSN West and the St. Mary's men's basketball team have been expanding their broadcasting deal the last three years? That there are dozens of great high school football rivalries that don't get the regional recognition they deserve because of meager coverage?

The A's recently re-upped with KICU for 3 years. The deal probably isn't much to sneeze at, but that's fine because the market will truly open up at the turn of the decade. Once it does, the A's need to be poised to strike. There'll be a window of opportunity for their own media independence, but that window won't be open forever.

7 comments:

Schub said...

I would think that the San Jose Quakes could also potentially tie-in nicely with a new regional sports network. So, in one sense, A's ownership investing in the Quakes, in addition to its stand-alone benefits, may also come back to benefit the baseball club if it helps get a lucrative new RSN off the ground. A's, Sharks, and Quakes would make a great combination.

Marine Layer said...

How could I forget the Quakes? That's what happens when I go off on tangents.

anthony dominguez said...

R.M.,
And the mystery remains...WHERE IN THE HELL ARE THE GIANTS GETTING ALL THIS MONEY!? All these years the San Jose partisans were told that the Giants couldn't give up Santa Clara County/Silicon Valley because of their heavy debt load; "Whaa, we have to pay $20 million annually because we privately financed our ballpark, Whaaa!" Give us all a break, these guys aren't poor at all. One thing you didn't mention R.M. (Per the Merc's Mr. Ryan) is that the Giants will now make money off of A's telecasts (same goes for Warriors, Sharks, Pac 10). The higher the A's TV ratings are, the more money the Giants make! Now, it's in the Giants best interest for the A's to be a top-notch product. Hey, is it just me, or do the Giants now enjoy a similar TV arrangement as the Baltimore Orioles (for allowing the Expos to relocate to DC)? Hmmmm...makes you wonder.

As for a new sports network, would the Giants/CSN really want to give up both the A's and Sharks, even if their current TV ratings are abysmal? I'm pretty sure the A's would stick with Giants/CSN if some issues from the past were revisited ;o)

Marine Layer said...

I'm sure the Giants see it is fair. After it is their profits that go straight into the revenue sharing check the A's receive every season. Besides, if they aren't paying down their debt early why not take that profit and funnel it into a stake in a regional sports network? It's good business and has nothing to do with preserving territorial rights. I'm not going to begrudge them this. Territorial rights are the domain of the lodge and it's free to enforce it how it likes.

Yes, they have an arrangement similar to that of the other orange-and-black team.

After 2010 it may or may not be in CSN?'s best interest to keep the A's/Sharks. Either team could bump up their asking price for broadcast rights and make it difficult to keep them. If the A's/Quakes/Sharks decide to partner with Comcast on the channel, Comcast isn't going to protest.

anthony dominguez said...

OOOH, it must be that melancholy "the A's should be in downtown San Jose" time of the month again for me. If you're reading this Mr. Wolff, go back to Peter Magowan and state that the A's will stick with Giants/CSN? after 2010 IF the Green & Gold are allowed to move to San Jose proper..."CMON! what's another 11 miles south!" Even if the Giants can't give up (per the "lodge") all of Santa Clara County, surely they would allow Diridon/Arena to be liberated...kind of like the old West Berlin in the middle of East Germany. Anyhow, enough downtown San Jose dreamin for one night...see you all at Pac Commons!!

Anonymous said...

more likely they move to sactown

connie mack said...

Thanks for mentioning this.
What about Radio, It seems like a natural that all the East Bay Sports Clubs could easily fill a station.