Viacom, the giant media company that produces channels including Comedy Central, Nickelodeon and MTV, has been dropped from the TV menu of one of the nation’s smaller cable companies.
Suddenlink Communications, based in St. Louis, says Viacom’s stations cost too much, and that it can’t pass that cost on to its cable customers.
Industry watchers say this is evidence of a growing trend. Smaller cable providers are opting out of expensive carriage deals with major content providers and risking the ire of customers deprived of popular channels. Some small cable companies are getting out of the TV business altogether and offering only broadband internet and phone services.
Suddenlink serves approximately 1.2 million customers in North Carolina, Arizona, Texas, Louisiana and other Southern states. Company spokesman Pete Abel says Viacom was demanding nearly 50 percent more in carriage fees in their renewal contract this fall. Abel says Suddenlink came back with a counterproposal: The company would "un-bundle" Viacom’s channels “which our customers could then pick, choose and pay for, at their discretion."
"So far, neither Viacom nor any of the companies we have made that suggestion to have agreed to do that,” Abel says.
Viacom sent a written statement to Marketplace:
“After five months of negotiations, Suddenlink abruptly stopped negotiating with Viacom one week ago.”
Viacom says it accepted Suddenlink’s final contract proposal for one year, but Suddenlink walked away from that offer.
Whoever is to blame for the blackout of Viacom channels on Suddenlink, the phenomenon of small cable companies changing or dropping programming represents a paradigm shift in the industry, says entertainment equity analyst Tuna Amobi at S&P Capital IQ.
“We’ve always said that something has to give, given the escalation in programming costs, which is translating into cable bills outpacing inflation by orders of magnitude,” Amobi said.
Amobi predicts more consumers will "cut the cord" in the future.
Last year, the pay-TV industry lost customers for the first time ever, shedding 167,000 subscribers, according to research by MoffettNathanson cited in the Wall Street Journal. Media analysts say this trend is partly driven by the big media companies themselves—whether content providers like Viacom, or cable service providers like Comcast—which insist on bundling big packages of preselected channels to consumers, and then increasing bills to cover the cost.
“Across the entire U.S., the advent of over-the-top services like Hulu, Netflix and Amazon is where the paradigm shift of cord-cutting is occurring,” said Amobi. “This trend is going to continue and ultimately exert even more pressure, in terms of consumers dropping the high-priced cable bundles in favor of cheaper alternatives.”
The first diagnosed case of Ebola in the United States reveals a truth people in developing countries know all too well: There is little incentive for drug manufacturers to develop vaccines and drugs for diseases that affect the poor.
The simple reality is that drug manufacturers want to make money. To that end, Columbia economist Frank Lichtenberg says companies want to know two things: the number of potential customers and their ability to pay.
“If there are a million consumers and each of them would be willing to pay $1,000 for a drug, that translates into a billion-dollar potential market,” he says.
That is in no way the Ebola market.
“The total number of cases of Ebola in the world between 1976 and 2013 were less than 2,000,” says Dr. Sue Desmond-Hellmann, the CEO of the Bill and Melinda Gates Foundation, which last month committed $50 million to address Ebola.
What the Ebola outbreak reminds us all is that millions of lives are potentially at risk and there are few incentives for private industry to treat or prevent diseases like Ebola and malaria. That has left funding vaccines and medicines to philanthropies, federal governments and entities like the World Health Organization.
Desmond-Hellmann says the spread of Ebola forces people to ask whether that system is adequate.
“This epidemic is showing us how important it is for the world to have at the ready a response for such an epidemic,” she says.
The U.S. government has invested millions on Ebola over several decades, but it could take years—and quite a bit more money—to develop effective therapies.
So how do you get more money into research and development for these diseases and other public health concerns? USC health economist Joel Hay shares one idea that's being kicked around: “If you just had a tax on every pharmaceutical product sold, that money could be used for some more of these socially desirable goals,” he says.
The thing to remember is that this is a tricky market to regulate. And it’s trickier still for our government, which has a duty to keep people safe, but must find the right incentives to keep the drug industry in the game.
Reddit is a digital bulletin board of sorts, the self-proclaimed “front page of the internet,” where gazillions of users post, share and read about almost any topic area, or "subreddit," that you can conceive of and many that you honestly couldn't (or perhaps shouldn't).
“The content is 95 percent of the time relevant and interesting, which is really cool,” says user Colin Grussing, of his favorite subreddits, which mostly include entrepreneurship. “I don’t know if there’s any other site on the Internet that does that so well.”
Reddit has just announced that it raised $50 million from a series of investors, including top tech venture capitalists and stars like Jared Leto and Snoop Dogg.
The company will use the money to:
"... hire more staff for product development, expand our community management team, build out better moderation and community tools, work more closely with third party developers to expand our mobile offerings (try our new AMA app), improve our self-serve ad product, build out redditgifts marketplace, pay for our growing technical infrastructure, and all the many other things it takes to support a huge and growing global internet community.”
“I grew up with a computer, and many of my friends were people I met online,” says Sam Altman, the president of Y Combinator and the lead investor in this round of funding. “I think one of the most fundamental societal transitions in the last 20 years is this idea that people connect to some of the closest people in their lives and have some of these important parts of their personalities get developed in online communities.”
But he also thinks Reddit’s passionate, highly engaged users will make the site a good long-term investment.
Like other large community sites, he says Reddit could make money in three ways.
“One, obviously, is with ads,” he explains. “Two is with charging users for premium features, and three is some version of commerce. That’s more in the experimentation phase, but where you let people basically spend money on the site and take part of that transaction.”
Altman and his fellow investors want to give 10 percent of their shares back to the community, because users have helped build the site, and, as he says, people treat a car they own better than a rental.
It’s a relatively simple idea, but one that’s very difficult to execute legally, says Lance Kimmel, a securities lawyer.
“I think Reddit really has their work cut out for themselves,” he says. “This stuff is really, really complicated.”
The Securities and Exchange Commission has shut down other companies' attempts to do something similar, says Kimmel.
In announcing the idea, Reddit admitted that it has been interested in a similar move in the past, but hasn't found the right legal avenue.
Its CEO recently floated the idea of giving users a cryptocurrency backed by shares, though Kimmel is skeptical about the legality of that approach as well.
Cable subscribers aren't the only ones cutting cords. Increasingly, smaller broadband providers have been getting out of the TV business altogether, the Wall Street Journal reported Tuesday, or scaling back their offerings. The latest is Suddenlink, a smaller cable provider that just dropped Viacom's suite of channels, including MTV, VH1 and CMT.
A representative for small cable companies told the Journal that change in the cable TV market is going to "come from the bottom." Are small broadband providers key to upending the cable business model? Here's what you need to know:
Who are these companies?
Just about all metropolitan areas in the U.S. are claimed by just a few large broadband providers like Comcast, Cox and Time Warner, but about 14 percent of pay TV subscribers are served by a cable company with a million or fewer customers.
These companies — like USA Communications, a co-op in Shellsburg, Iowa — typically serve rural or small-town customers. Many eschew eye-catching new subscriber discounts used by larger companies in favor of straightforward price lists by community. These subscriber bases are small, sometimes only a few thousand customers.
About 915 smaller cable companies are represented by the National Cable Television Cooperative, which told the Journal that companies serving a total of 53,000 subscribers have gone out of business or dropped their TV offerings in favor of broadband. One provider in Missouri said only a fifth of its customers pay for TV anymore.
How do networks fit into this?
TV networks charge "carriage fees" to cable providers for the right to run their channels. Providers pay a fee per subscriber, often for a bundle of channels. Historically, cable companies have complained about rising fees and being made to carry channels their customers don't want.
The fees themselves are closely guarded secrets, but some estimates put them as high as $6 per subscriber for ESPN. The rising costs and ballooning bundles can put a strain on smaller providers, like Cedar Falls Utilities, who spoke out against the carriage system earlier this year.
Between high costs and low subscriber interest, it's easy to see why some smaller providers might be eyeing a broadband-only business model.
How are small providers making up for the lost programming?
These small companies are making up for programming by pushing à la carte streaming services. Earlier this year, Netflix inked deals with three small cable companies to put their services directly into set-top boxes, for example. One company, RTC Telephone in Georgia, promotes Roku's set-top box as a $5 add-on to its broadband service.
More rural cable companies, like BTC Broadband in Oklahoma, are also providing high-speed fiber internet, which could push customers away from pay TV and toward reliable broadband.
Over 1 billion people around the world are studying English. Now they have a new test to see how they're doing — and if you're curious, you can see how your language skills measure up.
The efficacy of the Secret Service has come under scrutiny lately, after an armed man ran into the White House. Under pressure from lawmakers, the service's chief resigned.
Omar Gonzalez was indicted by a federal grand jury on three counts, including entering a restricted building with a weapon. Gonzalez allegedly jumped a fence, then ran into the White House.
Mauritius won't let in anyone who's been to an Ebola-affected country over the past 60 days. That mindset won't stop the outbreak. But it could deal a blow to the Pan-African economy.