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Presentation provides a better understanding of the underlying dynamics of carriage disputes between broadcasters and distributors. By drawing an analogy between retailers (buyers) and distributors on the one side, and brand manufacturers (suppliers) and broadcasters on other side, and by developing an analytical model by which means the bargaining position of a broadcaster and distributor respectively can be assessed, it becomes possible to capture all decisive elements that determine the bargaining position of negotiating firms during carriage agreements.
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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
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
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
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)
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
Broadcaster Distributor
Producers Carriers
Advertisers Subscribers
Subscription marketAdvertising market
Infrastructure marketProgramming market
Broadcaster-distributor market
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24
3
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
09/04/2023 12
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
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
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.
