National Cable and Telecommunications Association president
Michael Powell warns operators, programmers and sports leagues that they need
to be careful that escalating sports rights costs don't blow up their business
model and prompt government intervention.
an interview for C-SPAN's Communicators series, Powell was asked by Lynn
Stanton of Telecommunications Reports what would happen when sports programming
costs exceed the ability of consumers to subsidize them.
Powell called it the "billion-dollar question."
He said operators are facing the choice of either absorbing
the cost, which he said they have been doing to some degree, or passing it on
to consumers still trying to recover from a painful recession -- he did not add
that they could be facing yet another recession if the fiscal cliff is not
"Is there a point at which they say we can't handle it
anymore? Is there no longer an ability to absorb these costs and the whole
model has the problem? I can't control that the NFL has the power to demand a
73% increase for Monday Night Football,
which I find astonishingly insane." He also said he couldn't believe that
A-Rod made $250 million to play baseball, but that he also had relatives who
would pay half their mortgage to see the Yankees in the series. "It is
just a reality," Powell said.
But not an immutable one, he suggested. "We all ought
to wake up and be careful, programmers and operators [NCTA members include
both], about how we manage our relationship with each other and out of a
fiduciary responsibility to the consumer so we don't blow this into smithereens
at some point and invite the government to come do it for [us], in which case
nobody would be a winner."
Asked how social media would impact the future of TV, he
said he thought it was an extension of the conversations that have always
surrounded the medium, and that it will be a complement that is already helping
fuel a golden age of TV and would provide opportunities to do TV even better.
But Powell suggested there were limits to designing one's
own TV experience through social media and online input from friends -- or
programmers -- about what they should be watching. "I think we shouldn't assume
lightly that all of that will be enjoyable to consumers," he cautioned.
Powell said there was sometimes a consumer backlash against
being "too intimately tracked," and "too stalked."
He cited the 2012 presidential election, saying he felt
creepy about candidates with big databases "hunting his every move,"
adding: "At some point I believe it crosses a dark chasm in which you feel
a discomfort in the degree to which you are being watched and tracked."
His reference to stalking, he said, was essentially talking
about advertising. "Whatever the purposes, whether political or selling a
product, the ability to track and create a composite of me and my preferences
and my travels through digital media, certainly has created a form of
advertising that has a high degree of metrics and specificity in a way that
television advertising never did," he said.
Powell said there would be no technical concerns about TV
advertising following the same trend of tracking consumers. He pointed out that
Xbox was working on an application that can differentiate people by their
skeletal frame. He said that would allow for differentiating between whether he
or his son was watching, and could be used to target ads. "But where is
the comfort level in that relationship?" he asked.
Powell suggested their remained a philosophical difference
between delivering Web and cable content.
Facebook and Google come from very different foundational
places, he said. "We have a very secure, trusted, expensive relationship
with the consumer. We take your money, we send somebody into your home. [We]
have to protect that trust relationship to a greater degree than some of the
tech companies have to. When you have a subscription model you have a trusted
relationship. The Internet has blown past that model."
He said Facebook's Mark Zuckerberg has made no secret about
feeling that information was meant to be free and available to all people at
He pointed to that as one of the reasons they are in a
"never-ending iterative battle with governmental forces about where the
line is because I think they are very comfortable that there is a very thin
line. I understand the argument, but I am not sure it is going to comport with
most people's view."
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