Thursday, March 26, 2009

Cable TV Wars

Interesting article in the St. Petersburg Times about how a local cable company is using its local 24-hour news channel as a weapon in its fight against a burgeoning rival.

Bay News 9 appears on Bright House Network in this market. BN9 is still characterized by the same automaton delivery its anchors have used since its founding in 1997.

Its uniformly personality-absent approach makes it the Muzak of local news. It serves as inoffensive background noise for doctors and dentists who don't want to subject waiting patients to game shows, soaps or any of the Judge Judy/Joe/Tom/Dick/Harry shows.

It has fans, gaining an audience in the morning that rivals that of at least two of the broadcast affiliates that do news.

A few years ago, Verizon began offering its cable TV service, called FiOS. Fiber optic cables, Verizon claims, give FiOS superior picture quality and more HD channels than mere cable as well as more bandwidth for Internet customers.

If it weren't for customer service problems, many deriving from Verizon's inability to meet demand, a two year contract (Bright House does not require one), and prices only marginally lower than Bright House's, Verizon might have encroached on more of Bright House's turf than it has.

Times Business Columnist Robert Trigaux theorizes that Bright House's biggest "differentiator," as he calls it, in its effort to fend off Verizon is Bay News 9.

Questions I have are:

How much of Bay News 9's costs are supported by advertising versus how much is subsidized by Bright House because BN9 serves as a differentiator?

How large a market share would Verizon's cable services have to capture before Bright House could no longer afford its own news department?

If I'm Verizon, I don't consider starting my own news channel yet; I try to win customers with picture quality, price and service -- including addressing the concerns mentioned above -- and wait for BN9 to fold.

THEN I'd launch my local news product -- if I thought it would differentiate me from any future challengers.

I don't know what that tipping point would be or how close Verizon could be to reaching it but it will be interesting to watch the contest.

(Strangely, Bay News 9 is on channel 6 in Pasco County.)

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