Cat Fight in the Fox’s Den

Until moments ago (mid-day Jan. 1), when a deal was reached, Fox was threatening to black out its channels, most notably Fox broadcast, from Time Warner Cable (TWC) unless TWC anted up a subscriber fee of reportedly $1 per subscriber per month. Historically, cable networks such as HBO, Showtime, AMC, etc. got those fees, but broadcast networks didn’t. They need them now, with ad revenue shrinking, and customers departing networks in favor of cable channels — a multi-decade trend — and, more recently, video games, Internet TV sites such as Hulu, unauthorized (pirated) content, and user-generated content such as on YouTube.

Broadcast networks have started to get paid — CBS, for instance, reportedly gets up to $0.50. TWC apparently offered Fox only $0.30, but the terms of the deal they reached are undisclosed and most likely higher. Even though Fox ultimately didn’t pull the plug, it took the intervention of Senator John Kerry to keep football and “American Idol” from going dark on TWC. That’s not the sort of attention a media company wants. So why didn’t TWC just ante up the $1 and pass on the cost to consumers?

The answer is that MSO's (cable cos. like TWC) are afraid that if they keep raising cable prices, they'll drive more consumers to satellite or induce them to drop cable and just watch TV on the Internet. That is, instead of buying an Internet+cable bundle from Time Warner Cable, the customer might just drop the cable portion and buy Internet only.

Even worse for TWC: If customers opt for Internet only, some will be peeled away by telephone+Internet or cellular+Internet bundles from ATT or Verizon, causing TWC to lose the customer altogether. It’s called churn, and it’s especially likely because customer perception of cable company greed would dovetail with the belief that telcos offer better customer service anyway. Thus, raising cable prices could cost TWC dearly.

So, the battle between TWC and Fox is just another facet of an n-dimensional war between MSOs, satellite cos., landline telcos, cellular cos., cable networks, broadcast networks (ABC, CBS, CW, Fox, NBC), network affiliates (the local stations that actually broadcast the network signal), video game companies, Internet TV sites, unauthorized (pirated) content, user-generated content—and, of course, the consumer. And that's not even to mention the companies that manufacture the hardware, such as handsets, TV's, cable and satellite receivers, and other set top boxes. They’re always looking to play transmission companies off against each other and capture more of the consumer dollar.

To add to the confusion, there’s cross ownership between some of these companies but not all of them, meaning that ostensible competitors have very different profiles from each other, and also that they must often collaborate. For instance, when the Comcast – NBC Universal deal closes (assuming, of course, that it does), Comcast will control a cable system, a broadcast network, and multiple cable channels, whereas Time Warner Cable is a cable system only (that’s because Time Warner Inc. spun off TWC) and Fox’s parent, News Corp., lacks a cable system. Speaking of News Corp., throw in the fight between newspapers and Internet sites, and it’s clear that the Internet sparked a revolution that’s got everybody up in everyone else’s business. It’s the media equivalent of string theory, except that MBA’s usually have better hair than Einstein did.

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Subscribe to my blog (jhandel.com) for more about entertainment law and digital media law. Go to the blog itself to subscribe via RSS or email. Or, follow me on Twitter, friend me on Facebook, or subscribe to my Huffington Post articles. If you work in tech, check out my book How to Write LOIs and Term Sheets.

No More Sounds of Silence on the Music Composition Front?

Everyone knows that composers and lyricists make scales ... now they want to make scale as well. Union scale, that is (or, even better, above scale). One of the few non-unionized sectors of Hollywood, composers and lyricists - the people who write music (as opposed to musicians, the people who perform it) - are now in talks with the Teamsters for representation.

It's not as strange as it seems: the macho union of dock workers and Hollywood truck drivers (Teamsters Local 399 on the West coast and Local 817 in New York) also represents casting directors, location managers, and various other tenderfoots. An earlier bid to join the Writers Guild (WGA) apparently gained little traction.

All this according to recent pieces in Variety (here, here, and here) and a long piece today in the LA Times. An early-stage meeting Monday, which had been announced by the Society of Composers & Lyricists (a trade group, not a union) attracted over 300 people, about a third of the 900 who would be covered by a union agreement. About 200 of them signed union authorization cards, but the Teamsters are hoping for two-thirds (i.e., 600 or so) in order to move forward.

In other audible union news, AFTRA recently approved its interactive (i.e., video game) voiceover contract, while SAG voted down its similar pact, representing a rare defeat for SAG's new administration. Despite concerns with some aspects of the contract, that's unfortunate for SAG, because I'm told this sector is only about 25% unionized (AFTRA numbers + SAG's). That means that video game companies can easily move over to AFTRA - or go nonunion. The hard reality is that neither SAG nor AFTRA control the labor supply in this area, leaving them little leverage in negotiations. Sort of like bringing a PS2 to a PS3 meetup.

In still other news on the union front - sorry, I've been busy prepping for my UCLA gig, not to mention working for a living - the California Court of Appeals dismissed as moot an appeal by former SAG president Alan Rosenberg and his fellow Membership First plaintiffs newly-reelected 1st VP Anne-Marie-Johnson and board members Diane Ladd and Kent McCord of their suit against their own union. This cacophony lives on in the lower court, however, still costing the union money, but there's some hope that that court will adopt the appeals court's underlying reasoning and dismiss the entire proceeding on the same basis. Let's hope.

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Subscribe to my blog (jhandel.com) for more about entertainment law and digital media law. Go to the blog itself to subscribe via RSS or email. Or, follow me on Twitter, friend me on Facebook, or subscribe to my Huffington Post articles. If you work in tech, check out my book How to Write LOIs and Term Sheets.

Video Games with Gay Content

If you’re a gay gamer (a gaymer), you might have wished from time to time to find a game or two with some gay/lesbian content. Lucky for you, someone has prepared a list of such games. That someone is a conservative, and evidently homophobic, investment advisory firm, but no matter—we appreciate the list.

The games they don’t like, but you might, for glbt reasons, are: “Army of Two,” “Bully,” “Fable 2,” “Grand Theft Auto IV,” “Mass Effect,” “Saints Row 2,” various “Sims 2” games, and “Valkyria Chronicles.” Of course, shop wisely—some of these may not be gay enough for your taste (and it’s even possible you might not like them for other reasons).

A, BB, C - Activision Buys Bizarre Creations

Activision is buying Bizarre Creations, a UK based game developer, reports the Los Angeles Business Journal. The acquisition gives Activision automobile racing titles. Financial details were not disclosed.

Microsoft & Machinima

The machinima blogosphere has been abuzz for the past two weeks with discussions of Microsoft's new Game Content Usage Rules. The new rules allow machinimakers to do their thing using a number of Microsoft video games, with a few restrictions. The devil is in the details, and negotiations are underway to loosen the new rules a bit.

Machinima, in case you're not a devotee, is the art of producing animated films using video games: instead of playing the game, the filmmaker (machinimaker) makes the characters interact with each other and records the interaction, adding dialog or a sound track.