Federal Communications Commission DA 17-71 Before the Federal
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Federal Communications Commission DA 17-71 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Annual Assessment of the Status of Competition in ) MB Docket No. 16-247 the Market for the Delivery of Video Programming ) ) EIGHTEENTH REPORT Adopted: January 17, 2017 Released: January 17, 2017 By the Chief, Media Bureau: TABLE OF CONTENTS Heading Paragraph # I. EXECUTIVE SUMMARY .................................................................................................................... 1 II. INTRODUCTION ................................................................................................................................ 14 A. Scope of the Report ........................................................................................................................ 14 B. Analytic Framework ...................................................................................................................... 15 C. Data Sources .................................................................................................................................. 16 III. PROVIDERS OF DELIVERED VIDEO PROGRAMMING .............................................................. 17 A. Multichannel Video Programming Distributors ............................................................................ 17 1. MVPD Providers ..................................................................................................................... 17 a. Regulatory Conditions Affecting Competition ................................................................. 25 b. Non-Regulatory Conditions Affecting Competition ......................................................... 31 2. MVPD Business Models and Competitive Strategies ............................................................. 40 3. MVPD Operating and Financial Statistics .............................................................................. 67 a. Video Programming Pricing ............................................................................................. 67 b. Video Subscribers ............................................................................................................. 29 c. Revenue ............................................................................................................................ 69 d. Video Margins .................................................................................................................. 72 B. Broadcast Television Stations ........................................................................................................ 73 1. Introduction ............................................................................................................................. 73 2. Broadcast Television Industry Providers ................................................................................. 76 a. Horizontal Concentration .................................................................................................. 80 b. Vertical Integration ........................................................................................................... 82 c. Conditions Affecting Entry and Competition ................................................................... 85 (i) Regulatory Conditions Affecting Competition .......................................................... 86 (ii) Marketplace Conditions Affecting Competition ........................................................ 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 4. Broadcast Television Station Operating and Financial Statistics .......................................... 114 a. Audiences........................................................................................................................ 115 b. Revenue .......................................................................................................................... 118 568 Federal Communications Commission DA 17-71 C. Online Video Distributors ............................................................................................................ 128 1. Introduction ........................................................................................................................... 128 2. Overview of OVD Marketplace ............................................................................................ 130 a. OVD Business Models .................................................................................................... 131 b. Selected OVD Providers ................................................................................................. 132 c. Horizontal Concentration ................................................................................................ 135 d. Vertical Integration ......................................................................................................... 135 e. Conditions Affecting Competition .................................................................................. 139 (i) Regulatory Conditions Affecting Competition ........................................................ 140 (ii) Marketplace Conditions Affecting Competition ...................................................... 143 f. Recent Entry and Exit ..................................................................................................... 153 3. Competitive Strategies .......................................................................................................... 157 a. Content ............................................................................................................................ 159 b. Supported Devices .......................................................................................................... 167 c. Price ................................................................................................................................ 170 d. Advertising...................................................................................................................... 174 4. Selected OVD Operating Statistics and Financial Performance ........................................... 177 a. OVD Usage and Subscribership ..................................................................................... 178 b. Revenue .......................................................................................................................... 182 c. Investment ....................................................................................................................... 185 d. Profitability ..................................................................................................................... 187 IV. CONSUMER PREMISES EQUIPMENT .......................................................................................... 188 A. Introduction .................................................................................................................................. 188 B. Ultra High-Definition and High Dynamic Range Televisions ..................................................... 189 C. CPE Used to Access MVPD Video Services ............................................................................... 190 D. CPE Used to Access Application-based Services ........................................................................ 194 V. PROCEDURAL MATTERS .............................................................................................................. 196 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 eighteenth report (18th 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 2015. 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 describe the 1 47 U.S.C. § 548(g). On August 5, 2016, the Commission issued a Public Notice seeking data, information, and comment for the 18th Report. Media Bureau Seeks Comment on the Status of Competition in the Market for the Delivery of Video Programming, MB Docket No. 16-247, Public Notice, 31 FCC Rcd 8796 (MB 2016) (Notice). Comments and replies were due on September 21, 2016 and October 24, 2016, respectively. 2 For purposes of this Report, MVPDs are entities that offer multiple channels of video programming to consumers for a subscription fee. More detail concerning this definition is provided below. See infra Section III.A.1 and note 23. 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