I usually comment more on the technical aspects of the television business than on content. However, I think the case of Keith Olbermann is an interesting example to illustrate some parts of today’s distribution business.
I have been associated with Current TV from the early days (9 months before it’s launch) until mid 2009. I have no intimate knowledge of the Olbermann’s deals and story.
However, I think there are things in that story that are easy to observe:
- Current TV’s revenue comes mainly from carriage deals with distributors. In those sort of deals distributors will carry a channel on a wide “tier” and the viewers will buy that tier as part of their subscription to cable or satellite. Typically, subscribers will get a channel like Current TV as part of a package: They are not choosing to get or not Current TV they are getting as part of a package and yet a few cents per month is going to Current.
- Current TV is an “independent” channel. This does mean that they are not controlled by a large distributors. In the cable/satellite world, most channels are owned by large distributors. Comcast controls NBC and it’s channels like MS-NBC, Time/Warner controls CNN and Fox controls Fox News and so forth. As a channel, when you are part of a large group, you have leverage to negotiate wide distributions. Your group can carry a competitor if they in turn carry your channel. If you are “independent” you don’t have that leverage.
- Early in Current TV history, they were able to acquire a base distribution (buying Newworld International’s distributions) and then expending it on the promises that they would bring a different kind of television channel. The concept was a channel to “democratize” news and information giving a large place to viewer contributed content. Current TV came short on delivering a channel that would engage a sizable part of the young adult that they were targeting and they needed to find something else to keep and expand their distribution.
- Current TV saw what they perceive as a great chance to redefine their channel and expand their distribution when Keith Olbermann became available after his fall-down at MS-NBC. I am sure that from Current’s perspective it was a great plan. Here’s a star that had a million dedicated viewers and all they had to do was to convinced him to come to Current. Then the viewers frustrated of Keith’s ousting would follow him to Current putting them in the big leagues. Further, since Current is distributed in about half as many household than MS-NBC, his fans will push the distributors to carry Current TV and therefore expand greatly their paid distribution.
This did look like a plausible scenario. I am sure that to get Olbermann Current did pay a lot more than what their distribution revenue was allowing them to pay (you still have to schedule other programs and run the business). In order for this to work, they absolutely had to expand their distribution otherwise you are just sinking a lot of money. Well, it seems that it did not work. Olbermann did not draw the bulk of his former audience to Current and the distributors didn’t feel the heat from the hordes to carry Current.
The audacious plan failed. Left with a distribution that is still pretty much at the same level as last year, Current had no choices other than to find a way to lower their costs. I believe that all the rest are pretexts and spins.