How the Brighthouse – FOX dispute could change media forever

By | December 28, 2009
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Thoughts about the Time Warner versus Fox battle that could soon leave millions without The Simpsons, American Idol, the Sugar Bowl, and a bunch of other programs:

bright house foxThis might be part of an overall change in distribution philosophy for Fox. Fox continues to try to strong-arm content distributors. Fresh off their dispute with Google, they are trying to hold Time Warner hostage by increasing costs to Brighthouse by an alleged 300 percent.

If Fox was smart, they would pull the plug on Brighthouse’s TV division all together. They would make all of their programming exclusive to sites such as Hulu.com, Youtube, Myspace (which Fox owns) or their individual websites such as FoxNews.com. They could even drive viewers of their shows to each shows’ respective website (GlennBeck.com, Simpsons.com, etc.).

The dilemma is in advertising. So far no one has yet figured out how to make fistfuls of dollars from online advertising. If Fox could drive its advertisers online and get the same income without having to pay the middle man they wouldn’t need Brighthouse. If Fox can pull it off, don’t be surprised to see NBC, CBS, ABC and other cable networks slowly migrating off cable television.

For Time Warner, which recently let AOL go it’s own way, their position is understandable. They have to know paying exorbitant amounts to be the middle man in the media chain is a losing venture. The money from big-money advertisers is moving to online ventures and away from the networks (see Pepsi’s decision to not air a Super Bowl commercial and divert the money to a social media campaign). From Time Warner’s point of view, there is no way they could re-coup value in a mega deal with a media distributor.

However, if Fox fails to get the same advertising dollars, it may make viewers pay for content on its sites. I personally think this won’t work, but Fox could gamble on the loyalty of its viewers and charge for each online viewing of the The Simpsons, 24, American Idol, etc. It may even choose to set up website subscriptions, such as those seen on adult sites. I could definitely see Fox offering $4.95 a month for unlimited online content.

(Side note: charging for Myspace would be the nail in the coffin for the once prosperous social media site. I guarantee having to pay would drive local bands, film makers, and other media creators from Myspace and on to more independent networking sites.)

This is a battle Brighthouse can’t win on the cable front. However, I wouldn’t be surprised if the battle shifted platforms to the Net very, very soon. If Fox were to leave Brighthouse, Time Warner does hold the trump card of Brighthouse’s internet access. Time Warner could block Fox’s websites from their millions of subscribers. This would prevent the average Brighthouse customer from having access to Fox-distributed media on any platform. Fox would definitely lose money as Brighthouse customers would have to decide where their loyalty lay.

I think we could soon see a day where customers choose their cable/internet distributor based on what content they have multi-media deals with. Of course, if unfiltered, completely neutral wi-fi access is eventually free and open as the radio spectrum is now, we would not only avoid this problem, but would see the end of cable television as we know it.

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2 thoughts on “How the Brighthouse – FOX dispute could change media forever

  1. Brian

    I think it’s too soon for a move like that for Fox – yes, the net and social media are powerful, but one 30-second prime-time spot is more exposure and viewers and power than anything you can do online by way way way far still.

    Pepsi can yank that money out of the Super Bowl because they’re Pepsi – they’re as ingrained in the public’s psyche as breathing. (What they’re doing is very clever really – the fact they’re not doing a Super Bowl ad will get as much coverage as any Super Bowl ad they could do.)

    In any case, the money Fox makes on American Idol especially is obscene – they can’t afford to gamble with that in an online pay-per-view format. Even if they wanted to, the infrastructure isn’t there yet – yes, U2 managed a good live concert, but that’s not gonna fly every week, and how many people no longer watch Idol if they have to sit at their computer pay for it?

    Give it another five years for the broadband strength to increase and the hardware for net connection to get into everyone’s TVs, and something like that can happen.

    And cable is not going anywhere – cable stations make a ton of money and are in a huge growth period. What we may see soon is NBC/ABC/CBS/FOX become full-on cable channels.

    What Comcast and Sony are doing is very interesting and it’s where to track the future perhaps – Sony especially, because they’re the only one that has content creation and hardware manufacturing under one corporate roof.

    What’s really interesting is the one who started a lot of this streaming content – Netflix – is probably going to get left out in the cold as the studio realize they can do it themselves and cut them out.

    I guess I have lots of thoughts about this. lol

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