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What the Industry Reads First Volume 25 / No. 030

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Thursday — February 13, 2014

Sochi Olympics: All About DigitalEven Bob Costas’ eye infection, which has become a viral sensation, couldn’t outshine heavy digital talk during NBCU’s Sochi Olympics conference call Wed. This year’s Games will be a good glance into what the future holds for the pay-TV industry. As Alan Wurtzel, NBCU’s head of research and media development, said on the call, “cross platform viewing is really what the future is going to be.” Initial stats from this year’s Winter Games coverage showed that the majority of viewers are watching them on TV and on other devices simultaneously, Wurtzel said. He cited 54% digital growth so far from the Vancouver Games, crediting users’ increased ease with authentication. That helped push NBCU’s total audience measurement index, which measures engagement from all platforms, to 160mln consumer media exposures, up 11% from Vancouver. Among viewers, about 2/3 used TV and at least one other device to follow the Games, he said, citing a survey the net conducted during the first 3 days of Olympics programming. About 15% of those viewers used 4 different platforms—TV, PC, mobile and tablets. Other findings: the smart phone is the device that people use most often, followed by tablets and PC/laptops. In fact, use of PCs and laptops is declining in favor of tablets, according to the survey. The survey also found younger viewers trying more new ways to consume Olympics content than ever before. “I am looking at some of the conventional metrics and saying we are doing great. I am looking at the new metrics and saying we are doing incredible,” said Wurtzel. Meanwhile, 2nd-screen viewing seems to be aiding NBC’s primetime broadcast, as “the more screens people watch on, the more they consume on TV,” Wurtzel said. Over the weekend, some 44% of viewers who knew results prior to Sun coverage said they would still watch the broadcast. Case in point: Team USA snowboarder Shaun White’s bum run. “The ratings were tremendous, even though most people knew he hadn’t won. They wanted to see how it happened. It was a changing of the guard of sorts,” NBC Sports Group chmn Mark Lazarus said. White’s loss on Tues was the 2nd most-streamed (600K streams) in Olympic history, behind London Games’ women’s soccer final. In 2 years, with the Olympics in Rio and the time difference only 1 hour, NBCU is looking to air the Games live, Lazarus said. As for Costas’ pinkeye, Lazarus said the long-time Olympics host is “staying in a hotel, in a dark room trying to get better.”

Measurement: Nielsen is excluding broadband-only TV homes from local measurement and ratings for the time being, with the change going into effect beginning with the ’14-’15 Universe Estimates. The hybrid measurement was slated to begin later this year, with NAB’s board voting unanimously last week to approve a resolution calling on Nielsen to delay the measurement until it can be fully tested. Broadband-only HHs will continue to contribute to national ratings and the National People Meter sample. Pat McDonough, Nielsen svp of insight and analysis, said the change was based on “a thorough evaluation of the viewing patterns in broadband-only homes and industry feedback on the need to maintain stable mea-surement in local television.” Nielsen said it will continue to track consumer behavior in broadband-only homes for all clients.

Across the Pond: Virgin Media, one of the 1st European ops to have teamed with TiVo on cloud-DVR, has signed on

Thursday, February 13, 2014 ● Page 2CableFAX Daily TM CABLEFAX DAILY (ISSN 1069-6644) is published daily by Access Intelligence, LLC www.cablefax.com 301.354.2101 Editor-in-Chief: Amy Maclean, 301.354.1760, amaclean@accessintel.com Exec Editor: Michael Grebb, 323.380.6263, mgrebb@accessintel.com Editor: Joyce Wang, 301.354.1828, jwang@accessintel.com Sr Community Editor: Kaylee Hultgren, 212.621.4200, khultgren@accessintel.com Advisor: Seth Arenstein Assoc Publisher: Amy Abbey, 301.354.1629, aabbey@accessintel.com Sales Mgr, Susan Kim, 301.354.2010, skim@accessintel.com Dir of Market Dev: Laurie Hofmann, 301.354.1796, lhofmann@accessintel.com Prod:Jo Fato, jfato@accessintel.com Diane Schwartz, SVP Media Comms Group Scott Gentry, Dir of Bus Dev, sgentry@accessintel.com Group Subs: Laurie Hofmann, 301.354.1796, lhofmann@accessintel.com Sub Questions, Client Services: 301.354.2101, clientservices@accessintel.com Annual subscription price: $1,599/year Access Intelligence, LLC, 4 Choke Cherry Road, 2nd Floor, Rockville, MD 20850

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2mln TiVo customers. Other stats: Virgin Media subs launched 174mln apps in ’13 vs 104mln a year ago. Netflix, which was launched on TiVo in Nov, is the 2nd most popular behind the BBC iPlayer, followed by YouTube. In addition, Virgin Me-dia subs watched 519 VOD programs on the TiVo platform last year. The MSO, with 4.9mln subs, launched TiVo in Dec ’10.

Watch Out for Orange Flames: Weather Channel is asking the FCC to investigate the closed -captioning practices of DirecTV and WeatherNation. Weather Channel, which DirecTV dropped last month and replaced with WeatherNation, told the FCC in a filing last week that the net’s accompanying closed captioning is so inaccurate, it “amounts to complete failure to caption the programming” (hat tip to B&C’s John Eggerton for first reporting on ex parte). How bad is it? Weather Channel’s examples are pretty nonsensical (and somewhat profane). For example, the net said the person on screen said, “But these are huge. In Worthington, Ohio, my goodness, this will come right at you.” Weather Channel reported that the accompanying caption read, “It is for you ridge in warning to the lab my goodness this will come right assholes….” Another example seemed to change “perhaps up towards Flint” to “some orange flames.” In a statement, WeatherNation said, it offers closed captioning of its broadcast and “has deployed the enCaption3 platform to improve the accuracy of real time captioning. WeatherNation remains committed to improving its overall captioning accuracy to ensure that all viewers can access its services.” Meanwhile, Weather Channel is nearing its 1-month anniversary of a blackout on the satcaster.

Vandalism: Verizon tech Vincent Gargano was charged Tues with criminal mischief and tampering for allegedly cutting Cablevision lines last month and blacking out service for about 6K CVC customers for nearly 6 hours, according to local news reports. A Verizon rep confirmed that Gargano is an employee. “Actions such as the police describe are not consis-tent with how Verizon conducts business. Network sabotage can present a public danger, so it’s something we take very seriously. We are assisting the police in their investigation,” he said. The NY Post reported, citing sources close to the probe, that the 40-year-old suspect was seen on surveillance cameras at a home near where the lines were cut. Suddenlink was plagued by vandals last year, with sections of fiber cut 5 times, nixing service to thousands in Humboldt County, CA.

Nagin Found Guilty: Former Cox gm and New Orleans mayor Ray Nagin was found guilty Tues of 20 out of 21 counts of bribery and fraud. Prosecutors said he accepted gifts such as free travel and bribes as the city’s mayor. Nagin was a visible presence at New Orleans-based Cable Shows after being elected to the job in ’02. He held the job through May ’10, wel-coming cable back to New Orleans in ’08 after NCTA had to move the convention from the city to Atlanta in 2006 because of Katrina. Nagin was indicted in Jan ’13 on charges he accepted hundreds of thousands of dollar in bribes and other gratu-ities in exchange for helping contractors secure city contracts. He is free on bond while awaiting sentencing.

In the States: As promised, Time Warner Cable is rolling out its Ultimate 100 Mbps HSD tier to NYC. Subscribers to its Ultimate 50 tier will get upgraded automatically with the service available across all of NYC by the end of next week. The Ultimate 100 features double the download speed, 30 email accounts, 10 GB email storage space and free home WiFi. The service debuted in Kansas City in Dec ’12, and recently launched in L.A. and HI. As previously announced, TWC is readying a 300 Mbps service in NYC and L.A. -- Mediacom’s home automation service, Home Controller, is now available throughout its IA markets. Home Controller uses iControl software. It requires Mediacom’s Internet ser-vice and is available at price levels ranging from $34.99 per month to $44.99 per month.

At the Portals: Has your company done something cool to advance accessibility for people disabilities? The FCC wants

Thursday, February 13, 2014 ● Page 3CableFAX Daily TM

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BUSINESS & FINANCECableFAX Daily Stockwatch

BROADCASTERS/DBS/MMDS21ST CENTURY FOX: ............32.57 .......... 0.42DIRECTV: ...............................71.44 .......... 0.35DISH: ......................................57.51 .......... 0.44DISNEY: ..................................77.91 .......... 0.12GE:..........................................25.39 ........ (0.04)

MSOSCABLEVISION: .......................16.88 .......... 0.17CHARTER: ...........................137.57 ........ (0.33)COMCAST: .............................55.24 .......... 0.24COMCAST SPCL: ..................52.95 .......... 0.21GCI: ..........................................9.56 .......... 0.06LIBERTY GLOBAL: ................84.19 .......... 0.49LIBERTY INT: .........................27.93 .......... 0.21SHAW COMM: ........................23.17 .......... 0.10TIME WARNER CABLE: .......135.31 .......... 0.41

PROGRAMMINGAMC NETWORKS: .................66.92 .......... 1.27CBS: .......................................61.85 .......... 0.95CROWN: ...................................3.07 ........ (0.03)DISCOVERY: ..........................82.86 .......... 0.09GRUPO TELEVISA: ................29.48 .......... 0.10HSN: .......................................54.86 .......... 0.01INTERACTIVE CORP: ............65.40 ........ (0.79)LIONSGATE: ...........................32.60 ........ (0.11)MADISON SQUARE GARDEN: 59.11......UNCHSCRIPPS INT: ........................77.83 .......... 1.05STARZ: ...................................29.60 .......... 0.32TIME WARNER: .....................65.06 .......... 0.22VALUEVISION: .........................5.84 .......... 0.04VIACOM: .................................84.39 .......... 1.16WWE:......................................22.77 .......... (0.1)

TECHNOLOGYADDVANTAGE: .........................3.10 ........ (0.05)ALCATEL LUCENT: ..................4.23 .......UNCHAMDOCS: ...............................43.44 ........ (0.22)AMPHENOL:...........................88.28 .......... 0.32AOL: ........................................44.81 ........ (0.28)APPLE: .................................535.92 ........ (0.04)ARRIS GROUP: ......................25.90 ........ (0.28)AVID TECH: ..............................6.88 .......... 0.08BLNDER TONGUE: ..................0.92 ........ (0.02)BROADCOM: ..........................30.81 .......... 0.02CISCO: ...................................22.85 .......... 0.14CONCURRENT: .......................8.43 .......UNCHCONVERGYS: ........................19.66 .......... 0.22CSG SYSTEMS: .....................26.56 ........ (0.22)ECHOSTAR: ...........................48.50 .......... (0.3)

GOOGLE: ...........................1186.69 ........ (3.49)HARMONIC: .............................6.41 ........ (0.09)INTEL:.....................................24.55 .......... 0.08JDSU: .....................................13.37 ........ (0.03)LEVEL 3:.................................37.24 .......... 0.54MICROSOFT: .........................37.47 .......... 0.29NIELSEN: ...............................45.64 .......... 0.64RENTRAK:..............................64.21 .......... 0.23SEACHANGE: ........................11.49 .......UNCHSONY: .....................................17.32 .......... 0.21SPRINT NEXTEL:.....................8.07 .......... 0.17TIVO: ......................................12.34 .......... 0.07UNIVERSAL ELEC: ................36.26 .......... 2.02VONAGE: ..................................4.49 .......... 0.11YAHOO: ..................................38.11 ........ (0.39)

TELCOSAT&T: ......................................32.94 ........ (0.01)VERIZON: ...............................47.37 .......... 0.16

MARKET INDICESDOW: ................................16013.94 ...... (30.83)NASDAQ: ............................4201.29 ........ 10.24S&P 500:.............................1819.26 ........ (0.49)

Company 02/12 1-Day Close Ch

Company 02/12 1-Day Close Ch

to know about. It is seeking nomina-tions for the Chairman’s Awards for Advancement in Accessibility, which honors private and public sector ven-tures introduced to the public between Aug 1, ’12 and Dec 31, ’13. Email nominations to ChairmansAAA@fcc.gov from Feb 17 through Mar 31.

On the Circuit: Enrollment is now open for CTHRA’s annual Human Capital Metrics Survey. The dead-line to register is Mar 21. Contact Christine Teed at 630-599-7103 or cteed@cthra.com. -- Comcast’s Tony Werner, Bright House’s Nomi Berg-man, opXL’s Tom Gorman and Time Warner Cable’s Christine Whitaker will serve as officers for the SCTE Foundation for the ’13-’14 term. Wer-ner is in his 3rd year as pres. Under him, the Foundation has raised more than $2mln to be used for programs that increase the quality and diver-sity of the cable telecommunications engineering workforce.

Public Affairs: As part of Time War-ner Cable’s Connect a Million Minds initiative, the company will provide $500K in cash and in-kind support to help Boys & Girls Clubs of America engage youth around the country to develop interest in STEM subjects.

People: Ricky Kelehar is leaving IWC Media to join BBC America as vp, unscripted programming. -- El Rey expanded its ad sales team by hiring Renée Mizrahi, who was most recently with Viggle, as vp, integrat-ed marketing and ad sales.

Thursday, February 13, 2014 ● Page 4CableFAX Daily TM

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Forget the technical stuff for a moment. What FilmOn is pointing out—and that Aereo has carefully avoided by saying they only sell the signals within a local market—is that if the “private leased antenna” scam works, it can work for “distant” as well as “local” signals. No reason why not. After all, the “Slingbox” has been around for quite a while, and the broadcasters have been very careful not to legally challenge it. They understood that if an individual can record OTA signals anywhere for their own enjoyment and then transport them via the Internet to wherever they are, then the whole broadcast cartel is under attack. It would mean cross-market intra-broad-caster competition!

The broadcast business model is based on the local broadcaster only servicing a defined (DMA) area. It’s a cartel, and the networks don’t give the local broadcasters the rights (copyright clearance) to distribute their product anywhere other than in that area. That’s why cable’s wish to negotiate with more than one network affiliate to get retrans fees to be more “market based” can’t currently work. The broadcaster doesn’t have the rights to negoti-ate. But what happens if now consumers have the right to move remotely received programs from one “market” to another? It potentially blows a major hole in the entire non-competitive network broadcast business model.

Admittedly, as noted above, even if the Court allowed all this it would be a slow process, not a revolutionary collapse. And I would still guess the FCC or Congress would step in and re-define the respective “rights” be-fore too much major damage was done. But if I were a broadcaster, the market-crashing, not the retrans fees, are what I would worry about first.

Be AfraidCommentary by Steve Effros

OK, listen up broadcasters: you’ve been focusing everyone’s attention on the wrong things in the Aereo case, and “AereoKiller,” aka “FilmOn,” has fi-nally clarified why you should be afraid.

We can’t read the legal, business or entertainment news without hearing about the Aereo Case and that the Su-preme Court has decided to hear it. Oral argument is set for April 22. The drumbeat surrounding the case, however, is primarily about “retransmission fees” and whether Aer-eo’s new theory regarding copyright liability will seriously limit those fees forcing broadcasters to fail, or else take their programming and move it directly to non-over-the-air distribution. The notion is that current MVPDs, cable and satellite, will immediately adopt the new “mini-antenna” rental gimmick en masse if the Court OKs it, and that could spell the demise of broadcasting as we know it.

Now as I’ve been saying for a long time, those scenarios are not likely and are only written about by reporters who misunderstand the current business model. Current MVPDs have these things called contracts. They run for years. The idea that if the Supreme Court says the Aereo copyright loophole is valid, then everyone will quickly jump through it is simply not possible. There are other reasons as well, both technical and legal, but we need not go into them here. The point is that a sudden col-lapse of broadcast retransmission consent fees is not in the offing, no matter what the Supreme Court rules.

That’s not what the broadcasters should be afraid of, this is: FilmOn has just announced its newest gambit, “Teleport Technology”. The idea is to put multiple mini-computers in 13 major markets, hook them up to Aereo-like mini-antennas, and then let folks anywhere “lease” and connect with the computer/DVR/antenna and view it on their own computer or tablet wherever they are.

(Steve Effros was President of CATA for 23 years and is now an advisor and consultant to the cable industry)

T:202-630-2099steve@effros.com