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Federal Communications Commission DA 16-510 Before the Federal Federal Communications Commission DA 16-510 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Annual Assessment of the Status of Competition in ) MB Docket No. 15-158 the Market for the Delivery of Video Programming ) SEVENTEENTH REPORT Adopted: May 6, 2016 Released: May 6, 2016 By the Chief, Media Bureau: TABLE OF CONTENTS Heading Paragraph # I. EXECUTIVE SUMMARY.................................................................................................................... 1 II. INTRODUCTION................................................................................................................................ 13 A. Scope of the Report........................................................................................................................ 13 B. Analytic Framework ...................................................................................................................... 14 C. Data Sources .................................................................................................................................. 15 III. PROVIDERS OF DELIVERED VIDEO PROGRAMMING.............................................................. 16 A. Multichannel Video Programming Distributors ............................................................................ 16 1. MVPD Providers ..................................................................................................................... 16 a. Regulatory Conditions Affecting Competition................................................................. 23 b. Market Conditions Affecting Competition ....................................................................... 37 2. MVPD Business Models and Competitive Strategies ............................................................. 45 3. MVPD Operating and Financial Statistics .............................................................................. 72 a. Video Programming Pricing ............................................................................................. 72 b. Video Subscribers and Penetration ................................................................................... 73 c. Revenue ............................................................................................................................ 75 d. Video Margins .................................................................................................................. 77 B. Broadcast Television Stations........................................................................................................ 78 1. Introduction ............................................................................................................................. 78 2. Broadcast Television Industry Providers................................................................................. 80 a. Horizontal Concentration.................................................................................................. 84 b. Vertical Integration........................................................................................................... 87 c. Conditions Affecting Entry and Competition................................................................... 91 (i) Regulatory Conditions................................................................................................ 92 (ii) Non-regulatory Conditions......................................................................................... 96 d. Recent Entry and Exit....................................................................................................... 99 3. Broadcast Television Business Models and Competitive Strategies..................................... 101 a. Price Rivalry ................................................................................................................... 102 b. Non-Price Rivalry........................................................................................................... 106 Federal Communications Commission DA 16-510 4. Broadcast Television Station Operating and Financial Statistics.......................................... 114 a. Audiences........................................................................................................................ 115 b. Revenue .......................................................................................................................... 118 C. Online Video Distributors............................................................................................................ 130 1. Introduction ........................................................................................................................... 130 2. OVD Providers...................................................................................................................... 133 a. Horizontal Concentration and Vertical Integration......................................................... 143 b. Conditions Affecting Competition, Entry, and Exit ....................................................... 148 (i) Regulatory Conditions.............................................................................................. 149 (ii) Marketplace Conditions ........................................................................................... 152 c. Recent Entry and Exit..................................................................................................... 168 3. Business Models, Competitive Strategies, and Marketplace Rivalry.................................... 171 4. Select OVD Operating Statistics and Financial Performance ............................................... 192 a. OVD Usage, Viewership, and Subscribership................................................................ 193 b. Revenue .......................................................................................................................... 203 c. Investment....................................................................................................................... 207 d. Profitability..................................................................................................................... 209 IV. CONSUMER PREMISES EQUIPMENT.......................................................................................... 210 A. Introduction.................................................................................................................................. 210 B. 4K and 8K/UltraHD Televisions ................................................................................................. 213 C. CPE Used to Access MVPD Services ......................................................................................... 215 D. CPE Used to Access OVD Services ............................................................................................ 222 E. Mobile and Specialty Video Devices........................................................................................... 225 V. PROCEDURAL MATTERS.............................................................................................................. 227 APPENDIX A – List of Commenters APPENDIX B – National Video Programming Services APPENDIX C – Regional Video Programming Services APPENDIX D – Regional Sports Networks I. EXECUTIVE SUMMARY 1. This is the seventeenth report (17th Report or Report) of the Federal Communications Commission to the United States Congress on the status of competition in the market for the delivery of video programming as required by Section 628(g) of the Communications Act of 1934, as amended (the Act or Communications Act).1 In this Report, we focus on developments in the video marketplace in 2014. Herein, we categorize entities into one of three groups – multichannel video programming distributors (MVPDs),2 broadcast television stations,3 and online video distributors (OVDs).4 We 1 47 U.S.C. § 548(g). 2 For purposes of this Report, MVPDs are entities that offer multiple channels of video programming to consumers for a subscription fee. The term “MVPD” is defined more fully below in Sec. III.A.1. 3 We consider broadcast television stations separately for this Report, as we have done in previous reports. Although full-power television stations have transitioned to digital transmission and have the capability to offer additional multicast linear digital channels, they still offer far fewer programs and channels than are available from MVPDs, and do not provide a subscription service. Accordingly, we treat broadcasters as a separate group. See 47 U.S.C. § 521(1); S. REP. NO. 102-92, at 8-12 (1991). See also General Motors Corporation and Hughes Electronics Corporation, Transferors, and The News Corporation Limited, Transferee for Authority to Transfer Control, MB Docket No. 03-124, Memorandum Opinion and Order, 19 FCC Rcd 473, 509, para. 75 (2004) (citing Competition, Rate Deregulation, and the Commission’s Policies Relating to the Provision of Cable Television Services, MM (continued….) 2 Federal Communications Commission DA 16-510 describe the providers of delivered video programming in each group, summarize their business models and competitive strategies, and present selected operating and financial statistics. 2. The most significant trends since the last report include the continuing development, and consumer usage, of time and location shifted viewing of video programming, the expansion of digital and high definition programming, and the progress of the online video industry. The following is
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