Maybe InHD channels aren't coming soon

[rad]

According to the guy we love to hate: http://www.tvpredictions.com/directvfoul063005.html

Washington, D.C.. (June 29, 2005) -- DIRECTV is accusing a cable consortium of setting an illegal pricing structure for two High-Definition TV channels, The Wall Street Journal reported today.

The satcaster is expected to file a complaint with the Federal Communications Commission today.

DIRECTV says the consortium, which includes Comcast, Time Warner and Cox, is charging it more for high-def channels, INHD and INHD 2, than it charges cable operators. According to WSJ, the satcaster says the action is negatively affecting its business.

DIRECTV currently does not carry the two HDTV channels, which are on many cable systems.
...


At least they're thinking about adding them.

 

[Bear]

From the WSJ:

TELECOMMUNICATIONS




DirecTV to File
Complaint Over Fees

By JOE FLINT
Staff Reporter of THE WALL STREET JOURNAL
June 29, 2005; Page A3

Satellite broadcaster DirecTV is accusing a programming consortium owned by three cable giants of setting up an illegal pricing structure aimed at hurting its business.

The accusations -- marking the latest salvo in the battle between cable and satellite companies -- target In Demand, a pay-per-view and video-on-demand programming service owned by Comcast Corp., Time Warner Inc. and Cox Communications Inc. Specifically, they concern In Demand's two high-definition channels, INHD and INHD2, which offer cable subscribers programming such as movies and sports in the nascent but growing high-definition digital format.

DirecTV, which is controlled by Rupert Murdoch's News Corp. and has 14.5 million subscribers, doesn't carry the two channels, claiming In Demand's pricing for INHD favors cable over satellite. DirecTV says this puts the partnership in violation of a Federal Communications Commission regulation known as the program-access rule that prohibits cable companies that own content from depriving satellite competitors access to that same content.

In Demand charges cable and satellite operators a fee for the two channels based on how many digital subscribers they have. DirecTV claims that because all satellite TV is by nature delivered by digital signals, In Demand treats all of its customers as potential high-definition customers. DirecTV says its customers require additional equipment to receive high-definition programming, so it should be charged according to how many subscribers have high-definition equipment.

"By structuring its pricing in this way, In Demand would charge DirecTV 4½ times the price it charges Comcast, and at least 3 times what it charges Time Warner for their INHD subscribers," DirecTV's complaint says. The approach, the company said, appears to be "facially neutral pricing" but is discriminatory in practice. The complaint is expected to be filed today with the FCC.

In Demand dismissed DirecTV's charges. "We have had numerous discussions with DirecTV about carriage of our high-definition networks INHD and INHD2, and we believe that the allegations in the company's complaint are completely without merit," the company said, adding that it is "confident that the FCC will find in our favor."

The spat between DirecTV and In Demand is the latest sign of the growing tensions between the rival distribution services. Since Mr. Murdoch took control of DirecTV 18 months ago and began to aggressively ramp up its marketing and woo cable customers, the satellite broadcaster has been increasingly confrontational.

The battle over program access so far has primarily been in sports. DirecTV points to Philadelphia, where Comcast owns a sports channel that it won't make available to satellite broadcasters. While the FCC requires cable operators that own programming to sell it to everybody, the rule applies only to channels that are transmitted via satellite. In the case of the Philadelphia channel, its signal is sent terrestrially.

In Demand's fee structure, DirecTV contends, doesn't follow standard industry practice. As an example, the satellite broadcaster said in its complaint that Walt Disney Co.'s ESPN HD, a high-definition version of the cable sports channel, charges distributors a rate based on the number of their subscribers who actually receive the channel and not the number of potential subscribers the channel could have. Time Warner's HBO, DirecTV added, also charges distributors for the amount of people that actually buy the service, not those who could buy it but choose not to subscribe.

 

[Bear]

Given DirecTV's aggressive pursuit, I would expect this to mean that we will see InHD1/2 on D* if they can get the FCC to go along with their point of view.

 

[sltmag]

I do think this means that D* wants them, but not for the price the cable co's are offering. Even iif D* loses its case with the FCC, I think we may get the channel. This just seems to be business.

 

[cr0mag]

Just remember who owns what... This could set a precedent. What if ole' Rupert decided that FNC, FX and FoxMC suddenly cost 4 times as much? I can think of MANY cable co.'s that would want to fight that.

They will get InHD... I'd bet on it.

 

[CWS_kahuna]

I am guessing this would certainly slow down the process of us (possibly) getting these channels. I was so hoping these would be 2 of the channels (whatever they may all be) we will be getting added right away with Mpeg-4.

Don't these kinds of cases take forever to be resolved?

Is this just being spilled out now so that we will be like "well at least they are trying to get more HD". D* could have filed this forever ago.

 

[charper1]

Cromag on it again!

The pricing set by the cable group that owns InHD is bucking industry standard in a pure attempt to delay the inevitable addition of their product to satellite out of 1000% pure fear. Their "Only Cable Can" has failed yet again and this is retaliation for the fact they couldn't get their hands on the NFL Sunday Ticket. Cable is the king of crap service, bait & switch and rate hikes. They are also the kings of self promos that lure subscribers in with bundled packages that hide true costs and earn them an KILLING in rental fees that ultimately cost more than purchased gear. Once the promos are over, customers are right back where they started, with higher subscription prices, outages that just as frequent and LONGER LASTING than the rare "rain fade". They will be griping and looking to jump again and yet again. We shall now call them FROGS. LOL!

 

[Scott Greczkowski]

VOOM also went through the same thing with INHD.

But what do you expect they are owned by the cable companies.

 

[Neutron]

Well, remember that content has to be available to both cable and satellite, and that it has to be sold at fair market price.

 

[Sean Mota]

Don't expect that to be resolved anytime soon. The only way for D* to get them is to for Rupert to come up with his own HD channels and then play hardball with the cable companies. That is standard practice. Voom only file the complain about less than a year ago but we were told that VOOM wanted them since the beginning and CABLE companies (including Cablevision) said NO. This is one positive point that CABLE companies to lure subscribers. I want to be optimistic but I know the long history of how VOOM wanted the channels and CABLE said absolutely NOT (in a very informal way).

 

[CWS_kahuna]

Well I know of one person that will remain happy for a while is good ole Mark Cuban.

 

[Walter L.]

Interesting that inHD is making it hard on D* for having too many subscribers while on VOOM they did it because it had too few. Here is the article on the VOOM complaint:

VOOM Cries Foul Over INHD and INHD2

Byline: MICHAEL BASCOMBE

Rainbow's DBS provider VOOM wants its INHD, and it doesn't think In Demand is playing fair. So, it's taken its case to the FCC, filing a program access complaint Fri against In Demand, whose shareholders include Comcast, Cox and Time Warner Cable. The complaint, first reported by Satellite Business News, claims In Demand has refused to negotiate a "commercially reasonable agreement" with VOOM for the carriage of INHD and INHD2. "We are confident that our pricing policies are consistent with the FCC and all other rules," In Demand said in a statement Mon. "The allegations contained in Rainbow's complaint are completely without merit. We will defend the complaint vigorously at the FCC and have every confidence that the FCC will find our policies consistent with all FCC rules and regulations." VOOM claims that in Sept '03 In Demand offered a fee based upon a minimum number of subs that would have worked out to $3.84/sub based upon the DBS provider's current subscription numbers. At a Sept '04 meeting, In Demand informed VOOM that it had ignored the company's counterproposal because it did not contain minimum subscriber guarantees, the complaint said. "ID made plain that its offer was on a 'take it or leave it' basis," VOOM told the FCC. VOOM doesn't believe In Demand has made minimum sub guarantees of any other operator. Worth noting that during these initial negotiations, VOOM projected its sub count would be at 300K by year-end. As of 2Q '04, it had netted 25K. Dark Side: We couldn't help but remember back to a Media Institute lunch a few years back that Rainbow DBS head Chuck Dolan spoke at, where he declared program access rules were bad for cable. "At Cablevision we spend tens, if not hundreds, of millions developing original programming for our customers. Yet, under current regulations we are forced to share much of that programming directly with our competitors.

 

[mike123abc]

The other problem DIRECTV faces (and Echostar) is that soon the subscriber boxes will do both HD and STD by default. The price of building set top boxes that decode MPEG2/4 and downconvert HD to standard definition for a basic subscriber box is getting low enough that soon the default box for new subs will do it. Soon the argument that they can separate out the HD customers by equipment will fade away.

I suspect that by the end of 2006 the standard offering for bother E/D* will be a boxes that all do HD and MPEG-4, the only options will probably be OTA HD, and PVR.

 

[LonghornXP]

Some key Fox owned channels will soon be coming up for contracts on an those cable companies very soon which means InDemand will indeed be forced to cave in if they want to avoid losing many many many more customers than D* would lose over InHD. I expect to see InHD 1 & 2 along with many other HD channels that will be coming. Trust me the cable companies have much much more to lose than D* does by this. InDemand just happens to be buying thier time holding it from satellite until their contracts come up at which time they don't want to be pissing off Murdock.

 

[LonghornXP]

The other problem DIRECTV faces (and Echostar) is that soon the subscriber boxes will do both HD and STD by default. The price of building set top boxes that decode MPEG2/4 and downconvert HD to standard definition for a basic subscriber box is getting low enough that soon the default box for new subs will do it. Soon the argument that they can separate out the HD customers by equipment will fade away.

I suspect that by the end of 2006 the standard offering for bother E/D* will be a boxes that all do HD and MPEG-4, the only options will probably be OTA HD, and PVR.

At which time pricing would be based on how many customers order the HD Package and even with that said the usual way for pricing is that the more customers you have getting your channels the cheaper you would pay per subscriber. It amazes me how InDemand can have three times higher prices when counting 12.4 million customers while Comcast pays 67cents per sub with far fewer subs. That just isn't the way most companies work. I can surely say that the two InHDs aren't worth the same price as the ESPN suite of channels which are about the same price as InDemand is trying to charge D*. At least ESPN has an excuse for higher prices (sports contracts in volume) while InHD doesn't have much at all but a few sporting events which isn't anything money wise compared to ESPN. It most likely costs CBS more money for just the NFL than it costs InHD in a year with both channels.

 

[slacker9876]

subscriber boxes will do both HD and STD ...

Icky! I'll pass on the last one Sorry, I couldn't help it!

 

[fredfa]

re Sean Mota:
Don't expect that to be resolved anytime soon. The only way for D* to get them is to for Rupert to come up with his own HD channels and then play hardball with the cable companies. That is standard practice. Voom only file the complain about less than a year ago but we were told that VOOM wanted them since the beginning and CABLE companies (including Cablevision) said NO. This is one positive point that CABLE companies to lure subscribers. I want to be optimistic but I know the long history of how VOOM wanted the channels and CABLE said absolutely NOT (in a very informal way).

If, in fact the InHD folks dissuaded VOOM in that way then there is a major And if DirecTV can convince the FCC that there has been such a predatory pricing policy going on (and who would ever believe the cable owners of InHD would do anything to keep their HD channels to themselves while they furiously try to catch up to satellite's digital capability?) the cable companies could be in deep trouble.
VOOM might even be able to get some damages.
And the FCC might be annoyed enough to get rid of its silly terrestrial rule allows some RSNs to stay off satellite.
It seems to me that, if the DirecTV complaint has any validity, TW, Cox, and Comcast will have some major problems.

 

[fredfa]

DirecTV supplies some numbers…..

DirecTV Petitions FCC vs. In Demand

By R. Thomas Umstead Multichannel.com

DirecTV Inc. has filed a program-access complaint with the Federal Communications Commission against In Demand, accusing the content purveyor of charging the satellite provider more for its two INHD high-definition channels than it does cable operators.

The compliant claimed that In Demand -- which is owned by Time Warner Inc., Comcast Corp. and Cox Communications Inc. -- is forcing the satellite company to pay a fee for all 14.5 million of its digital subscribers as part of the rate card for INHD and INHD2.

The company offers the same deal to cable operators, but since less than one-half of most cable systems' subscribers are digital, DirecTV said it pays three or four times what MSOs pay for the exact same service. DirecTV does not carry the services.

DirecTV is asking the FCC to require In Demand to offer INHD at rates, terms and conditions per HD subscriber comparable to those that it offers to cable operators.

According to the complaint, under current rates, DirecTV would have to pay In Demand 11 cents for each of its 14.45 million subscribers, or $1.59 million per month. The DBS carrier added that this means its monthly fee for subscribers who are HD subscribers would be $3.

Conversely, DirecTV's complaint placed Comcast's In Demand monthly fee at $973,500, based upon 11 cents for each of 8.85 million digital subscribers. The nation's largest MSO, according to the complaint, pays In Demand 67 cents for each of its HD subscribers.

As for Time Warner Cable, DirecTV's document pegged its monthly fee to In Demand for the HD services at $539,000, calculated on an 11-cent basis for 4.9 million digital subscribers. The complaint put Time Warner Cable's per-HD-subscriber monthly fee at 94 cents.

As such, DirecTV's complaint claimed that In Demand's rate card for INHD and INHD2 would cost it least three times and as much as 4.5 times the per-HD-subscriber fee paid by Comcast and Time Warner.

Other HD services, such as ESPN HD and Home Box Office HD, charge only for those subscribers who receive the service, and not for potential subscribers, according to the complaint.

"It is a deliberate strategy by In Demand to favor its cable owners over its satellite competitors and achieve its goal of keeping INHD only on cable, as its advertising tag line suggests," DirecTV executive vice president of business and legal affairs Dan Fawcett said in a prepared statement.

He added that if left unchecked, In Demand's pricing structure could become a model for "every cable-affiliated high-definition programmer seeking to deny DBS operators like DirecTV access to valuable high-definition content."

An In Demand spokesman would only say that the company "has had numerous discussions with DirecTV about carriage of our high-definition networks, INHD and INHD2, and we believe the allegations in the company's complaint are completely without merit."

He continued, "We have always been, and remain, willing to negotiate carriage with any distributor. Our pricing policies are in full compliance with FCC rules and regulations, and we're confident that the FCC will find in our favor."

The complaint does not cover In Demand's NASCAR In Car multicamera pay-per-view package, which is currently only distributed via cable operators. DirecTV talked with In Demand about carrying the package but ultimately decided not to offer it.

 

[LonghornXP]

I think InDemand will lose this because of two very simple factors. They were unfair with both Voom and DirecTV. Secondly the biggest killer for InDemand is their tag line that says only on cable and that alone will show intent that they don't want satellite companies to have their channels. If you add those two things together you have a problem. I think its going to end up that InDemand will have to allow D* to pay them the fee based on the number of HD customers D* has not total customers. InDemand will do this because if they don't they might endup having to charge the cable companies the fee to all of their customers (in Comcast that would be 20+ million customers) and if this occurs Comcast might not even carry the channel. Either way I don't see this occuring and once InDemand feels that they will lose the case (less than 6 months) they will cave in to avoid getting screwed. Also don't forget that we would be stupid if we didn't think that Murdock didn't have some weight to pull at the FCC.

 

[vurbano]

Don't expect that to be resolved anytime soon. The only way for D* to get them is to for Rupert to come up with his own HD channels and then play hardball with the cable companies. That is standard practice. Voom only file the complain about less than a year ago but we were told that VOOM wanted them since the beginning and CABLE companies (including Cablevision) said NO. This is one positive point that CABLE companies to lure subscribers. I want to be optimistic but I know the long history of how VOOM wanted the channels and CABLE said absolutely NOT (in a very informal way).

Correction, Rupert has to come up with his own HD channels with content thats worth a damn. And all of the content worth watching is already on the major channels. I often scratch my head at this Fox expansion talk.