I saw several diaries recently about the rough treatment MSNBC's getting from some cable/satellite providers. And how the game appears to be rigged against MSNBC.
So why not change the game? Why not broadcast the channel, for free, on a DTV subchannel - as well as carry it over cable?
Multicasting is one of the big selling points for DTV. Let's explore, on the flip, why it might just work for MSNBC.
Economics of cable news
All four news channels get their revenue from 2 sources:
- Monthly license fees account for about half.
- Advertising revenue from commercials makes up the rest.
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License fees: Less to lose
License fees are a kind of tax. They're negotiated between networks and cable/satellite providers, and assessed on each subscriber. Watch or don't watch, the license fee is bundled into your cable bill.
So how much money do they represent?
CNN earned $550 million in license fees last year, up 6% from 2007.
Fox News earned $475 million, up 22% from 2007. In terms of license fees, it was the big winner in 2008.
What about MSNBC?
MSNBC was expected to see 6% growth in license-fee revenue, $171 million in 2008, up from $161 million the year before.
If MSNBC is available over the air - as well as on pay TV - you can expect that cable companies will squawk. They may try to cut the fees they're paying now. But so what? Access fees haven't budged in the last 9 years!
When MSNBC started in 1996, its fee per subscriber was 13 cents a month. In 2000 it inched up to 15 cents, where it now remains, the lowest among the three channels by a significant margin. . . .
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Ad revenue: More to gain. Much more.
Compared with license fees, MSNBC cleaned up on the ad side last year. Ad revenue in 2008 was $172.7 million - up $37.3 million from the previous year.
So let's see: License fees are stagnant. Ad revenue's growing fast. Where should MSNBC focus?
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Grow the audience.
MSNBC's ratings are up, and all things being equal, license fees should rise, too. But that will take time. License fees change only when contracts come up for renegotiation.
With ad revenue, the bump comes sooner. And as we've seen, those revenues are already up.
But the effect of higher ratings is limited by the size of the space you have to work in. Currently MSNBC is boxed in. It has roughly the same coverage (number of households that can get it) and weekly reach (number of different viewers in a week's time) as its competitors. And for now anyway, Verizon FiOS isn't even carrying MSNBC in the part of the New York TV market served by Cablevision.
There are two ways out of the box:
Add broadcast to cable/satellite, and you instantly increase coverage 20%. Remember, about one in six households still relies exclusively on free broadcast television. Some by choice (raises hand). That's a potential 20% increase in viewers - and ultimately a 20% increase in ad revenue. The upside could be even higher when you figure in first-mover advantage. For some time, MSNBC would be the only 24-hour news channel available over the air.
And as it turns out, there's space in the broadcast spectrum already set aside and waiting for MSNBC.
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NBC Weather Plus
Weather Plus was NBC Universal's answer to the Weather Channel: 24/7 weather coverage that combined national programming with local cut-ins. Launched on NBC's owned-and-operated stations, Weather Plus was eventually carried by 80 independent NBC affiliates, on a DTV subchannel.
Weather Plus ran 4 years - until NBC Universal bought Weather Channel.
So what's the Weather Plus subchannel doing now? Many former Weather Plus stations have gone back to running radar sweeps and the like. But the equipment hasn't gone anywhere. Using it to run MSNBC couldn't be difficult.
Besides, there's already precedent for recycling an existing TV channel. And it just happens to involve MSNBC.
NBC launched the America's Talking cable channel as a spinoff from CNBC on July 4, 1994. Just over two years later, however, MSNBC replaced America's Talking on satellite transponders and the cable systems that carried it. The switchover took place on July 15, 1996.
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What do you think?
If someone's seeing a downside to broadcasting MSNBC, please comment. Because all I'm seeing is:
- greater coverage
- potential for higher ad revenue
- first-mover advantage in DTV
- insurance against any drop in pay-TV subscriptions in case hard times linger
- and an "out" for kossacks who prefer not to subsidize Fox News
Bottom line: If you feel the game is rigged against you, change the game.