One Good Reason Disney Sacrificed Freeform in its New Charter Deal

Disney may have sacrificed carriage of Freeform (nee ABC Family, Fox Family, The Family Channel, CBN, Christian Broadcasting Network) in part because it was easier to give up carriage of a linear channel which had an "ironclad" obligation to carry The 700 Club, the conservative evangelical Christian talk show for 2 hours every day (currently 11PM and 9AM ET).

In the recent past, "shelf space" for fully distributed basic cable TV channels was perhaps the most valuable asset in the media. Basic cable networks with inexpensive programming like MTV, could run at greater than 50% margins. Cable cord cutting has reduced those margins, in some cases pretty dramatically. Programming companies, like Disney, have been prioritizing entertainment investments in growing on-demand services like Disney+ and Hulu over the declining "linear" TV business of 24 hour scheduled channels. Disney CEO Bob Iger has discussed its options for the linear services in a recent interview on CNBC; they "might not be core to Disney".

The Disney-Charter deal, which saw the inclusion of Disney+ and ESPN+ in Charter's Spectrum "cable TV" packages, despite the fact that they had not, to date, been considered cable TV services. The services clearly have some attractive programming. Charter had asked for it to be included in its deal for free for Charter customers; the announcement of the deal made it clear that Charter is paying a "wholesale" rate for them. Depending on what that rate is, the inclusion of these services in Spectrum's cable video packages could represent a lot of value to Charter or a lot of value to Disney. Most likely, it is a little bit of both.

What is clear is that the Disney linear services that were carried by Spectrum systems in its expired deal, but not in the new one (Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild, and Nat Geo Mundo), were no longer growing assets for Disney nor highly valued by Spectrum. 

Cable operators have been pruning their cable lineups to control the cost of their video service which have looked expensive and bloated next to the much cheaper streaming services over the last decade. It was very clear that the streaming services were also getting more and more of the high profile new original programming, because the programming companies had been rewarded by the stock market for the growth of their streaming services, despite the fact that these services were all highly unprofitable.

Whether these straight-line trends towards streaming and away from cable video will continue now that the fast growth of streaming has ended, investment in streaming programming is being cut back, and streaming retail prices are going up sharply, is less clear.

I believe consumers' move from cable to streaming was much more about the relative value they offered than the "inevitability" of the newer technology.

Value Is the Problem with Current Regional Sports Offerings

Consumers are moving to better value services, not away from traditional services. Basic cable TV represented an outstanding value in the 1990s when it cost $20 per month and there was no service like Netflix. 

In the 1990s cable TV competed with free broadcast television and, for those who wanted something more and were willing to pay, video stores. In the 2020s, basic cable TV service costs more like $75 per month. While video stores are no longer significant players, free broadcast television is very much around and there are a number of subscription video services (e.g., Netflix, Disney+, Max, Paramount+) which offer additional entertainment choices for those who want something more and are willing to pay. iTunes and Amazon rentals are the new video stores.

It was inevitable is that consumers would leave services that seemed to offer less compelling value and move to services that offered better value. Streaming was the technology that enabled these options; it wasn't necessarily that the technology was better (virtually all of the viewing is still at home on a TV; phones and tablets are a small part). 

It is not inevitable that the streaming offerings in the marketplace now (e.g., Bally Sports+ typically at $20 per month, MSG at $30 per month, NESN at $30 per month) will be the solution to the regional sports network business going forward. The CEO of Diamond Sports Group, the parent of the Bally Sports RSNs, David Preschlack, is an experienced sports executive with stints at both NBC's regional sports networks and ESPN. Preschlack had to admit yesterday in court, that its over-the-top a la carte subscription service had only 203,000 subscribers after 9 months in the marketplace, a figure is only 55% of the entity's budgeted number. That 203,000 subscriber count works out to an annual revenue "run rate" of only $36 million, which is a fraction of the amount of revenue that Bally's needs to generate to make up for the shortfall it is seeing it its fees from MVPDs, whose customers continue to "cut the cord" in large numbers.

Sports fans still want to watch their local teams' games. It appears to me that the fundamental problem here is that customers don't think that the value of these streaming services is attractive. Consumers see the same problem that caused them to drop cable TV in the first place. 

The other streaming services, all of which have a monthly ticket cost of less than $20/month, are perceived by customers as a reasonable value (if not quite as attractive a value as they were a few years ago). 

The contrast between a pro game every day or two on Bally Sports+ in a given month for $20 and Max at $16 (or less with ads), for a content library with hundreds of high-profile hours does not flatter the sports service. From a content standpoint, Bally Sports matches up more favorably with a service like Apple TV+, which retails for only $6.99/month. Like Bally's, Apple TV+ is a service focused on new programming; it doesn't have a large valuable library of popular older content.

Regional sports networks are not required to sell themselves on a monthly subscription basis. All of the services I have mentioned in this post also provide an annual subscription with an effective discount for those who purchase it (for Bally it's $190 annually, a savings of 20%). In addition to cutting the monthly rate, the services might also experiment with selling single games or other lower-priced offerings. Ultimately the rights holders should be flexible in considering how they might entice fans to want to buy in. Running a sports service is a fixed cost business and the games can't be sold after they are played. In this way, the business is much like an airline. Airline-style "yield management" might make a good deal of sense to maximize each service's revenue.

The RSNs are not alone in the annals of communication in finding their historical business model does not seem to be holding up in today's world. A similar situation is playing out in audio, as FM radio continues to hemorrhage listeners. Unlike cable TV, FM radio listening is free and the streaming solutions for music (e.g., Spotify, Apple Music) generally have a monthly subscription fee. FM represents a poor value for music listeners is because of the high commercial advertising load on such stations. FM became a lousy listener experience at some point and eventually services emerged as alternatives (first Sirius XM, later Internet delivered services). Music fans are willing to pay for Spotify to avoid the high commercial load on FM (Ad-supported Spotify has a much lower ad load than commercial FM stations). Also those who don't subscribe to a streaming music service can easily put together hours of their own audio programming via free podcasts and collections of music they have assembled on their phones and can easily play in their cars.

NFL Network Gets New Deal with Comcast; Peacock Gets Exclusive NFL Playoff Game

Today news broke that the NFL had agreed to sell the rights to a playoff game to Comcast's past-nascent-but-not-yet-well-established Peacock streaming service. This is quite a coup for Peacock. Generally, the NFL, as the purveyor of the most popular sports programming sticks to leading television services for their marquee events. Amazon Prime Video, after all, started with a package of often-lackluster Thursday night regular season games in its first NFL season.

Close observers will note that less than two weeks ago, on May 2, 2023, NFL chief Roger Goodell and Comcast leader Brian Roberts were personally involved in negotiating a new agreement for NFL Network and NFL Red Zone, restoring the service to the systems of nation's largest cable operator after they had been dropped a day earlier.

It appears the parties recognized that each had something the other really wanted.

Have the Phoenix Suns Created a New Model for Regional Sports Networks?

The first new model deal to replace an RSN appeared in Arizona on April 28. The NBA Phoenix Suns, along with the WNBA Phoenix Mercury, agreed with a local broadcaster (Gray Television) to move all of their games to free-to-air television, along with a separate direct-to-consumer offering. This deal, with respect to the Suns, would begin this fall, as the rest of the Suns' games this year are post-season games that will be carried by national services like ESPN, TNT, and ABC. The first regular season game for the Mercury that will be part of this deal is set for May 25.

There are a few wrinkles here worth noting. 

First is that in-bankruptcy Diamond Sports Group, which carried the Suns' games this season on its Bally Sports Arizona RSN, is threatening to sue the teams for breaching their contract which they claim provides the RSN to match any new offer the team might receive. Additionally, if the Suns are relying upon the right to terminate the contract because Diamond declared bankruptcy, while it may be a surprise to non-lawyers, those provisions are usually unenforceable. Companies in bankruptcy, in some respects, have a more favorable position than those that are not. For example, Diamond's failure to make a rights fee payment might give the Suns a basis for termination. Once Diamond has the protection of bankruptcy, the court typically wouldn't allow them to do so, as it would look at the Suns' rights agreement as a crucial asset of the business that might be needed to help pay off Diamond's creditors.

Update: On May 10, 2023, the US bankruptcy court blocked the Suns move to enter into this new agreement, saying that it violated Diamond's contractual rights, notably its right to match any deal for the Suns renewal. Recall the Diamond-Suns deal only ran through the 2022-2023 regular season. As the Mercury were not carried on Bally Sports Arizona, their portion of the Gray deal was unaffected.

Second is that of the 70 regular season games in the typical RSN season, 40 or so are planned for Gray's full power TV station, independent KTVK, channel 3, and the rest will be on a co-owned low-power TV station KPHE-LD, channel 44. The distinction between full power and low power stations is important for two reasons. For those receiving the station via an antenna, low power stations, as their name would suggest, do not cover as large an area as a full power TV station does. 

For those receiving a station via a cable, DBS or similar distributor, low power stations are not always carried by those distributors, full power stations almost always are. KPHE does not appear to be carried by either Dish Network or DirecTV, at least not yet. Gray may need to negotiate a new deal to get KPHE carried on the systems of  many, possibly all, distributors. 

Considering KPHE as a broadcast station may be technically true. However, if most of that station's value is in the Suns programming, it is, from the perspective of a distributor, effectively an RSN -- a channel that needs cable carriage to reach customers save for those in its over-the-air footprint (note the linked map doesn't show any area where the station can be received with an indoor antenna). Depending on the retransmission consent fee that Gray/KPHE might request, that might be a tough sell to Dish which has dropped the RSNs in every market. KPHE is also branded like a cable channel, using the slogan Arizona's Family Sports and Entertainment Network; big TV stations typically include their channel number as part of their branding (as KTVK 3 and KPHO 5 do). Note also that none of the games are scheduled to be carried on Gray's most viewed Arizona TV station, CBS affiliate KPHO, channel 5.

Third is that the television deal is non-exclusive, unlike most RSN TV rights deals. The Suns also entered into an agreement with Kiswe, a streaming video technology company. It looks like the streaming concept is that the Suns (and Mercury) would be the face of the streaming service containing the programming. Kiswe would be the technical backend to that streaming service, not the name visible to consumers. Having a different media rights holders is not unusual in that teams typically have a television deal with one company and a radio deal with another. KMVP-FM is the radio rights holder for the Phoenix Suns; it is owned by the radio giant Audacy. However, for streaming vs. traditional TV, this may be a new precedent.

Updated: 5/11/23 to add bankruptcy court ruling and streaming plan

Updated: 5/12/23 to add KPHE signal map, branding information

Hulu Puts Down Its Free Service - The Evolution of Broadcaster Streaming

Word came last week that Hulu is dropping its free service of fresh off-broadcast programs. It is hard to overstate how big a change this is.

The change has not gone unnoticed. When Seventeen magazine publishes a story "Hulu is Getting Rid of the One Thing You Love About Hulu"...well, having multichannel business issues show up in Seventeen...that isn't something this blog has ever seen before.

What it means to me is that the original motivation for the formation of Hulu by NBC and Fox (later joined by ABC and recently by Time Warner) -- the fear of piracy is now much less of a concern for these companies and the potential of creating a subscription revenue business is a much greater one.

At the time of Hulu's launch, it solved a few problems for its owners:

• legitimate alternative to piracy (which was a growing problem and decimated the music business which ignored it and was well addressed by streaming)
• allowed them to share the cost of the technical platform and advertising sales force (and avoid competing with each other for developers, etc.)

Because they controlled Hulu, they had opportunity to revise program licensing terms (if business conditions change/require it). Because the partners were all in the same business, they knew that they were all facing the same types of issues.

In the event there was a business in this, that would play out over time and the big networks didn't have to worry about valuation issues since they were equal partners (and were licensing programs to Hulu on similar terms).

Hulu launched to the public in March 2008 and was rightly declared a success within a year per Forbes. The successful launch decimated the market for pirating the programs available on Hulu.

And then the business evolved...

In 2009, Fox CEO Chase Carey said Hulu would need start charging for some content. Presumably there wasn't enough ad support to be attractive. Hulu Plus (a service at the time without ads) launched in 2010; Netflix was on the radar screen.

When Hulu launched retransmission consent revenues were a small part of the business of most broadcasters. When that revenue stream started growing, the multichannel providers (cable, satellite and telco) wanted something in exchange for their higher payments. Since the broadcasters couldn't shut off over-the-air access to their shows, they offered the multichannel operators a "window" of exclusivity in online access to their shows. If a viewer wanted to watch the program online during the week after it aired, the viewer would need to "authenticate" that he or she had a multichannel subscription.

Comcast bought control of NBC in 2011. Part of what made NBC attractive to Comcast was the growing retransmission consent revenue stream for the broadcast network.

In 2011, Fox changed its Hulu policy to push its most recent episodes of its network series behind the paywall for one week after airing. The impact on piracy was swift and dramatic. According to TorrentFreak pirate downloads of two representative Fox shows went up over 100% following the change.

When Hulu launched on the Apple TV in 2012, there was no free service only Hulu Plus was available.

As Netflix's growth exploded and its valuation followed, Hulu's owners saw the market making the investor case for a video streaming subscription service. Being ad-supported had become passé.

Some might see the change at Hulu cynically. Recode's Peter Kafka writes that Hulu's network owners "have been uncomfortable with the notion of putting all their stuff up for free on the web. And they’ve been trying to back away from it for many years." To my eye, the story is a bit more nuanced. The owners were always looking for the money and didn't have any idea where it was at first. Since they found the money, they have been following it.

In some ways, this latest change -- to exit free -- may be all about branding. As Seventeen notes, free streaming from Hulu will still exist, but not on hulu.com. The new streaming service will be called Yahoo View. I supposed branding a free service as from Yahoo is as good a way to kill it as any other.

Comcast's New Video Service "Stream"

Last week Comcast announced a new service for streaming video and DVR service not-very-creatively named "Stream". Priced at $15 a month, it seems like an incredible value, at first.

"With Stream, Xfinity Internet customers can watch live TV from about a dozen networks - including all the major broadcast nets and HBO - on laptops, tablets and phones in their home." according to a Comcast blog post by Matt Strauss.

Inattentive reporters may lump this with Netflix as a service for cord cutters. but that's very far from accurate.

Perhaps the best way to see how this service compares to Netflix, the 800 pound gorilla of over-the-top video, is to use an analysis that I learned from a great architectural historian. In the three-column analysis, the left side has the things unique to the first building, the middle has the things the buildings have in common, and the right has the things unique to the second. Given the horizontal constraints of this blog, I've transposed the analysis to top-middle-bottom.

Unique to Stream:

• Includes live channels
• Includes broadcast channels
• Includes network DVR functionality
• Content from HBO

True for both:

• Available in Comcast's cable footprint
• Available to Comcast Internet subscribers
• Can be watched in-home
• Includes significant recent on-demand programming
• Can be watched on a computer, tablet, or phone
• Does not require a cable video subscription

Unique to Netflix:

• Viewable outside of Comcast's cable footprint (i.e., in any part of the US)
• Available to customers via any form of Internet access
• Can be watched in- and out-of-home (e.g., office, neighbor's house, mobile, coffee shop)
• Easily viewable on a TV
• Large library of movies and TV programs
• Some high profile original programming

Stream is a very different service from a Netflix.

I believe the target market for this product is customers who don't buy cable video service and customers who don't have a traditional TV set, but are interested in TV programming. I don't know how many people fit in this group, but Comcast clearly will have an easy time finding its Internet customers who don't buy TV service from them. Easy targeting allows for efficient marketing.

In offering this service, Comcast gets the following:

• An up-sell service for its Internet service
• A press release -- "we have a strategy to address cord-cutters"
• A way to monetize TV Everywhere infrastructure (As Comcast's post notes, "Xfinity Internet customers can just sign-up online, download our Xfinity TV app and start watching." (emphasis added))
• A new service that should not cannibalize the core cable video business.

That's a solid list of benefits for Comcast without a whole lot of downside. Why not?

Is it a threat to Netflix? On some level, Stream is a threat. A lot of the viewing is at home and some of it is not on the TV. Streampix, a component of Stream, does include a library of movies and TV shows, so it is a poor man's Netflix on that dimension. The inclusion of the broadcast channels would appear to have a lot of value. However, if you are the sort of person who does not own a television, I wonder how much you would value broadcast content. Also, Netflix, starting at $7.99 per month, is materially less expensive.

Is it a threat to HBO Now? As an alternative way to get the content, sure. All that we know about the usage of Netflix suggests that vast majority of its usage is in the home. While Stream would not provide the benefit of out-of-home use (or on-TV viewing) that HBO Now does, it offers a lot of other benefits, that could make that trade-off attractive to some customers. Stream seems like more of a threat to HBO Now than to Netflix. Since the price of both services is the same, how do you value HBO Now's benefits (view on the TV, view out of home) vs. Stream's (get broadcast content, get DVR functionality).

Certainly Comcast benefits strategically by creating a threat to any of the threats to its core video business. A good offense is a good defense. By utilizing its existing infrastructure and customer list, the incremental cost of this service should be modest. If it turns out that Stream is cannibalizing the core video business, Comcast can always pull the plug, like Cox did with its OTT service FlareWatch.

In the future Comcast could also address the most ridiculous limitation of Stream and let people watch it on a TV. The limitation is ridiculous because it is so clearly self-imposed and so clearly designed to protect the core video service. While I understand that as a 20-year veteran of the industry; it is exactly the thing that people hate about their cable company. As Wired's headline put it: Comcast's Streaming Service Sounds As Bad As You'd Expect. It hurts because it is true.

An OTT Watershed Moment

We could soon be looking at the watershed moment for over-the-top video: According to a Multichannel News posting, that the FCC is considering making "being a multichannel video program distributor" (MVPD) an option for online video providers (the conclusion is implied from the actual FCC .pdf release). To date, online video providers have not been able to be considered MVPDs because they do not own the facilities that transmit channels of programming to end users.

Sony's OTT video offering will be delivered to its PlayStation game consoles

In one fell swoop, this could clear up three big issues for potential OTT providers who are direct MVPD competitors, offering a package of linear "cable TV" networks.

#1 Access to top name-brand broadcast and cable network programming

Much like cable and DBS, any MVPD would have the right to negotiate with broadcast TV stations over retransmission consent and the stations would have the right to demand must-carry. For example, Aereo, which the Supreme Court declared was not legal because it distributed programming like an MVPD, but was denied the right to be an MVPD when it used the Supreme Court's argument at the US Copyright Office, would no longer be in a legal no-man's-land. Clarity on this point is overdue, as David Oxenford in BroadcastLawBlog notes, the Sky Angel case has been before the FCC for a long time, long enough, it turns out, for Sky Angel to go bust in its over-the-top incarnation.

#2 A way around online streaming restrictions in MVPD affiliation agreements

Restricting the distribution of cable programming on some "other" technology was a backdoor way to get some exclusivity, now the other MVPDs will have to negotiate exclusivity versus other MVPD competitors through the front door and many programmers have, not unreasonably, been historically reluctant to do exclusive deals that reduce MVPD competition.

#3 A way around rights issues for cable TV programming and advertising (e.g., SAG members get paid differently for commercials produced for the Internet than for those produced for TV)

Right now, only companies that explicitly clear "Internet rights" are allowed to put the programs on their TV channels on the Internet. Once an online video distributor is an MVPD, the linear stream of programs, as presented on a cable program service like Lifetime, can go to any MVPD.

[If the programmer owns the program and all its rights, like Major League Baseball, one can find MLB Extra Innings on cable TV or DBS (with internet streaming as added-value for "authenticated" subscribers), or as a stand-alone OTT offering at mlb.tv (although the TV commercials are usually not included in the Internet stream as the advertisers do not want to pay the performers for both the TV and Internet exhibition).]

Unfortunately for the soon-to-be-nascent-direct-MVPD-competitor, the over-the-top business still has two big remaining issues:

#1 Bandwidth caps

It might be politically poisonous for a cable MSO facing a direct competitor delivering "cable TV service" over-the-top to announce bandwidth caps that would make it uneconomic for any of their customers to use such a service. That said, the cable industry, like many other industries, has historically looked to protect its business against competition. Certainly that's what Netflix thought Comcast was doing when the streaming performance of Netflix customers using Comcast as their ISP declined in late 2013. Bandwidth caps would be great protection for MSOs against online video competition.

#2 The reality of the marketplace

This combines several issues: Is the consumer offering attractive enough? Are the programmers willing to negotiate with these new MVPDs? Are there terms that the programmers will find attractive enough that create a business opportunity for the new MVPDs? On the first one, Sony's rumored $80 per month offering is considerably more expensive than many had hoped.

Cable TV programmers have been supportive of new, clearly legal entrants to the program distribution business. More competition among distributors is always good news for the program suppliers who now have a new set of customers. Viacom certainly thinks so. Going over-the-top and preserving the existing pay-TV packaging (and business model) appears to be more attractive than going over-the-top on one's own like World Wrestling Entertainment's $9.99 monthly offering.

Rather than going-head-on against the pay-TV incumbents, it would seem that a more prudent course for new MVPDs would be to find a segment of the marketplace that is un- or poorly-served by the incumbents, but which also has high broadband Internet penetration. That may be a difficult combination to find.

My earlier post: The Virtual MSO Opportunity (19 July 2013)
Update (14 October 2014): Aereo asks the FCC to classify it as an MVPD (via Deadline), Brian Fung in the Washington Post thinks Aereo is making this request only in the short-term
Update (29 October 2014): FCC Chairman Tom Wheeler makes his views explicit in an FCC blog post "Tech Transitions, Video, and the Future". In short, he supports OTT video providers getting the rights that MVPDs have, believing that it will foster competition.

Intel Media Lessons

Word has come out that Intel Media, which has hired some 300 people to work on its over-the-top (OTT) cable service competitor, is now looking to Samsung and/or Amazon to assist in the business. That doesn't look good for the first true OTT competitor to cable.

What have we learned here:

1. To compete on the high end of the multichannel television business, you need to have all the channels. Having any significant gaps in the lineup means your product isn't meeting the expectations of consumers for a super-premium service. So, Time Warner Cable's Internet restrictions with some programmers, even if a super-premium service provider has networks 1-15, gaps in the coverage of networks 16-50 are problematic. TWC CEO Glenn Britt made these restrictions public at the Cable Show in June.
2. To compete in the low end of the market, a new entrant must find a way to get more favorable pricing from programmers and there is little reason for the programmers to support such an effort.
3. If the programmers require Intel to meet minimum subscriber guarantees, that creates additional risk for Intel to enter the business beyond the expense of creating the distribution system and marketing it. Perhaps the programmers are unwise to do this -- after all, if Intel doesn't launch, then the multichannel distribution market (buyers of programming) is less competitive than it is otherwise, and that's not good for the programmers (sellers of programming). On the other hand, the programmers all risk annoying/jeopardizing their relationships with the current customers by selling to an OTT provider -- this is new territory and this threat/potential threat has been recognized by distributors for at least a decade. If programmers are going to antagonize their core customers, they might reasonably expect that Intel makes it worth their while. Additionally, there may be incremental costs to distribute their service over the Internet -- programming costs, creating a separate feed with separate advertising, etc.
4. The opportunity to compete with the multichannel incumbents may be smaller than Intel thought when they first pursued this effort. In the last year, it appears that the multichannel subscription television business has peaked, at least in terms of number of subscribers.
5. Perhaps an executive with experience outside the US was not the best choice to lead this business. The media and television businesses are still highly provincial as opposed to international. All of the problems that Intel has encountered were well known to me and likely dozens of other people with long histories in the US multichannel business. For clarity, I don't know Erik Huggers at all and have never heard anyone speak ill of him in any way -- my point is based solely on his CV. Having lived in the UK, I can say that its television marketplace is very different from that in the US in a number of ways -- the huge role of the public broadcaster (BBC), the national orientation of the media as opposed to local, the dominance of DBS (BSkyB) over cable in market share, the requirement that facilities-based Internet providers wholesale their infrastructure to competitors.
6. Any OTT video service faces the potential threat that limits on the amount of data a typical home broadband customer might consume could make using the video service (or using it extensively) impossible or cost prohibitive. This uncertainty certainly (pun intended) makes a big investment in a new business more problematic.

I'm sure there will be a more direct over-the-top competitor to multichannel subscription television someday, but that day looks further out now than it did a few months ago.

Updated (30 October 2013): According to Peter Kafka at AllThings D, Verizon is in talks to take Intel Media off of Intel's hands.
Updated (21 November 2013): According to Reuters' analysis, For Intel, Hollywood dreams prove a leap too far.
Updated (26 November 2013): According to Bloomberg, Intel is asking for $500 million for Intel Media/its OnCue assets

The Way to Implement TV Everywhere - TBS and TNT Live Streaming

Today, as part of the springtime-in-New-York TV upfronts, Time Warner's Turner Broadcasting announced that it will be live streaming TBS and TNT on a 24/7 basis this summer. This is what TV Everywhere should look like.

There are several great things about a live stream:

1. The content offering is understood by the viewers.
2. The advertising is already included and understood by both the buyers and the viewers.
3. The advertising is not subject to skipping and not because functionality that viewers expect has been defeated.
4. There are no bad interfaces or navigation issues to be overcome -- launch the app, watch the channel.
5. To the extent that the live stream has appeal to a different set of advertisers, substitute ads can be included in the stream.

Yes, Nielsen measurement of this viewing may not happen instantly. That, however, is solvable and will be solved shortly (if it hasn't been already). Also, the networks themselves will have extremely reliable viewership data about these live streams since they will be serving them, or paying for that serving themselves.

Congratulations to Turner for sorting out the rights issues and getting this done and for ESPN's spade work on WatchESPN. Live TV viewing is a perfect package of content and advertising. It is a package in which advertisers have supported great content for decades. On-demand is wonderful for users, but the role of advertising in it is much trickier and, advertiser support of it has lagged. It would seem that the television industry is well-served creating new, more convenient ways to watch live television and that's just what TBS and TNT have done here.