Channel conflicts between broadcasters and distributors: developing a framework for assessing regulatory intervention

TitleChannel conflicts between broadcasters and distributors: developing a framework for assessing regulatory intervention
Publication TypeConference Paper
Author(s)Evens, T., and K. Donders
Affiliation (1st Author)iMinds-MICT, Ghent University, Belgium
Section or WGCommunication Policy and Technology
DateFri 28 June
Slot CodeCPTF3b
Slot Code (Keyword)CPTF3b
Time of Session14:00-15:30
Session TitleDigital broadcasting and policy
Submission ID5019

Undeniably, television broadcasting markets are in a period of industrial reform these days. Digital technology has broken traditional boundaries between IT, telecom and media worlds, and lowered barriers for new players to enter the production and distribution stages of the industry. Like other media industries, television has been highly affected by the digitisation wave that enables convergence players to explore new opportunities and address new challenges across the value chain. The far-reaching integration of broadcast content with broadband delivery platforms, exemplified by the rise of over-the top (OTT) platforms and Connected TV devices, are producing opportunities to bypass established operators and destabilising mainstream business models. Over the years, content distributors have expanded into content production and acquired premium rights whereas broadcasters are directly connecting with viewers through partnerships with OTT operators including online video aggregators and hardware manufacturers. As a consequence, power relationships are largely reshuffled and affected by the respective positions firms occupy in the media business ecosystem.The increasing complexity of the ecosystem, together with the impact of the global economic crisis, has provoked ‘channel conflicts’ between broadcasters and distributors. With ‘broadcaster-to-distributor markets’, we refer to the markets in which broadcasters and television distributors (cable, satellite, over-the-top and similar service operators) negotiate about the carriage of particular video programming, the price to be paid for the exploitation of that programming, and (in some cases) the tier and position in the electronic programming guide (EPG) on which the programming is to be offered to the end customer. Most of such ‘carriage disputes’ have appeared in the US, with high-profile disputes between Fox and Time Warner Cable, and ABC and Cablevision. The disputes, however, are not limited to the North American market, but also found their way to European television markets. In the last couple of years, carriage disputes appeared in lots of European countries, including Belgium, the Netherlands, Hungary, Romania, Germany, Finland and the United Kingdom, to name only a few. Last year, the BBC claimed it could save £50 million over five years if leading pay-TV platform Sky would waive the costs of carrying the BBC’s channels on its satellite platform. The BBC also argued that Sky should actually pay their channels for carrying them, since they are the most popular on the Sky platform. Sky, however, refuted the arguments that it should pay the BBC for carrying their channels. Ironically, News Corp, Sky’s largest shareholder, has successfully persuaded US pay-TV operators to pay the Fox free-to-air broadcast network. The question then arises which party has power over the other?With regard to the distribution of power in broadcast markets, and more specifically between broadcasters and distributors, two opposite approaches are found in academic literature. Traditional political economists refer to concentration patterns in production and distribution, and conclude that distribution, not production is the key locus of power and profit. According to the more technology-optimistic viewpoint, however, technological forces, especially abundance in transmission technology, may loosen and eventually eliminate this distribution bottleneck. Instead of this bipolar discussion of which player exerts power over the other reducing the debate to a ‘patron-client’ relationship with companies either in distribution or programming dominating the market, we will argue that the allocation of power within broadcast markets is probably much more complicated. Rather than sticking to hollow aphorisms like ‘content is King, but distribution is King Kong’, we assume that the allocation of power is not a linear process but highly depends on the institutional context of broadcasting, including the set of complex relationships between different parties in the business ecosystem. Hence, economic power, and more in particular bargaining power, in broadcast markets is context-specific, highly determined by the allocation of scarce resources within the industry and the individual nature of the broadcaster-distributor relationship and path dependency in media policies.The main goal of the paper is to analyse how broadcaster-to-distributor relationships are structured and to what extent regulatory intervention is required to ensure a more equitable balance between broadcasters and distributors. Since most of these debates largely occur in a vacuum, however, empirical evidence is needed to ground the arguments made and justify policy intervention in the market. Hence, a systematic overview of broadcaster-to-distributor and related markets would allow policy makers to monitor developments in the market, identify possible problems and define adequate answers based on the availability of reliable and valid research data. Empirical findings drawn from in-depth interviews with policymakers and industry representatives from several European markets (Belgium, Denmark, the Netherlands, Finland, the United Kingdom), a European-wide survey among broadcasters and distributors, and document analysis (with a focus on media legislation) will allow us to build an analytical framework that accurately describes the individual nature of relationships between broadcasters and distributors and that allows for the assessment of economic power in broadcaster-to-distributor markets. Such instrument will provide insight into the economic mechanisms underlying the production and distribution of media content, and will help policymakers in really understanding the hotly debated carriage disputes in many markets around the world, with a substantial influence on the quality and approach of broadcasting policy.

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