Carriage disputes in Europe: a framework for analysing power conflicts in broadcaster-to distributor...
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Carriage disputes in Europe:analysing power conflicts in
broadcaster-to-distributor markets
Tom Evens Ghent University
European Media Management Association (EMMA)‘Digital Transformations and Transactions’
Bournemouth, 13-14 June 2013
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Context
Strategic context of TV broadcasting altered Technology shock: quid legacy business models? Regulatory: quid structures, conduct & performance? New markets, entrants and services (OTT)
Challenge existing power relationships Distributors as gatekeepers (platforms) Broadcasters bypassing distributors
Power conflicts broadcasters and distributors
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Context (2)
Erosion of ad-supported business model Television advertising markets shrinking (-16% in 2009) Impact of the Internet (re-allocation of budgets) Audience fragmentation, affects ad prices Time shifted viewing + ad-skipping
Alternative and more stable income source Diversification of revenues Subscriptions are growing
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Context (3)
FTA networks seeking payments Market-based remunerations (negotiations)
‘Fee fights’ ended up in blackouts Channel pulling signal from platform Operator unwilling to carry a channel (cut off)
Retransmission fees could save FTA Compensate decline in advertising income
Implications for the viewers Investment in original, domestic content Higher subscription prices (cable, sat, IPTV)
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Least generous television retransmission terms Limited copyright protection Pay significant access fees
Controversy: Sky lowered access fees (rate-card) BBC: reduction from £9.9m to £4.4m by 2014
BBC: ‘Sky should pay for privilege of carrying PSB’ Instead of paying £16.5m (in 2009) PSBs should receive £55-80m per year
Impact on PSBs revenues: £190-220m (DCMS) Likely impact on expenditure on original UK content Likely impact on subscription prices: + £17/year
UK market
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Broadcaster Distributor
Producers Carriers
Advertisers Subscribers
Subscription marketAdvertising market
Infrastructure marketProgramming market
Broadcaster-distributor market
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24
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Buyer-supplier relationship
Analogy with brand manufacturers and retailers Control shelf space allocation (positioning) Have pricing power (promotion) Promote affiliated brands (white labels)
Literature suggests manufacturer-retailers are in most cases skewed in favour of retailers Gatekeeping position pressures manufacturers to lower
wholesale prices But: suppliers also have bargaining power!
Market failure creates CA and power asymmetries
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09/04/2023 12
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BARGAINING POWER
POLICY AND REGULATION- Media Regulation- Telecom Regulation- Competition Law- Copyright Law
MARKET STRUCTURE- Industry Concentration- Number of Buyers/Sellers - Entry and Exit Barriers- Technological Change
FIRM STRUCTURE- Relative Size- Conglomerateness - Vertical Integration- Financial Resilience
PRODUCT- Asset Specificity- Product Differentiation- Switching Costs- Brand Equity
INDIVIDUALS- Bargaining Skills- Relative Familiarity- Reputation for
Fairness- History of Conflicts
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Conclusion
Respective position in chain does not adequately explain (relative) bargaining power “Content is King, distribution is King Kong” Power asymmetries but bilateral bargaining power
Allocation of power is context-specific and varies between different settings (market, regulatory) Different markets = different power configurations Need more country studies: call for cooperation
Power is multi-dimensional concept Assess specific power attributes
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Further reading
Evens, T. (2010). Value networks and changing business models for the digital television industry. Journal of Media Business Studies, 7(4), 41-58.
Evens, T. (2013). The political economy of retransmission payments and cable rights fees: implications for private television companies. In K. Donders; C. Pauwels & J. Loisen (Eds.), Private Television in Western Europe: Content, Markets, Policies (pp. 182-196). Basingstoke: Palgrave MacMillan.
Evens, T. & Donders, K. (2013). Broadcast market structures and retransmission payments: a European perspective. Media, Culture & Society, 35(4), 415-432.