UCLA UCLA Entertainment Law Review Title Uber Television: Internet-Only Television Stations Permalink https://escholarship.org/uc/item/45r646ws Journal UCLA Entertainment Law Review, 23(1) ISSN 1073-2896 Author Perritt, Henry H. Jr. Publication Date 2016 DOI 10.5070/LR8231034310 Peer reviewed eScholarship.org Powered by the California Digital Library University of California Uber Television: Internet-Only Television Stations Henry H. Perritt, Jr.* TABLE OF CONTENTS I. INTRODUCTION �����������������������������������������������������������������������������������������������������66 II. STATUS QUO ��������������������������������������������������������������������������������������������������������68 III. A PERFECT STORM OF INFLUENCES ������������������������������������������������������������������������73 A. Audiences Are Moving to the Internet .......................................................73 B. Targeted Advertising is Flourishing ..........................................................77 C. Work Is Fragmenting .................................................................................81 D. New Tools Facilitate Content Collection and Moving It Around ..............84 E. Content Providers Are Proliferating ..........................................................87 F. Capital Markets Are Opening Up ..............................................................88 IV. INTERNET-ONLY TELEVISION’S EMBRACE OF DISRUPTIVE TECHNOLOGIES �����������������89 A. Content Capture and Production ...............................................................90 1. Application of the Coase Theorem .....................................................90 2. Using Stringers for Newsgathering ....................................................91 3. Stringer Recruitment and Training �����������������������������������������������������94 * Professor of Law and former dean at Chicago-Kent College of Law, the law school of Illinois In- stitute of Technology. S.B. Aeronautics and Astronautics, MIT; S.M. Management, MIT Sloan School; J.D., Georgetown University Law Center. Member of the bar: Virginia (inactive); Pennsylvania (inactive); District of Columbia; Maryland; Illinois; Supreme Court of the United States. Mr. Perritt was a member of President Clinton’s transition team, focusing on the Federal Communications Commission and subse- quently advised the White House on its regulatory philosophy for the Internet. He served on the National Academy of Sciences Computer Science and Telecommunications Board. He has written fifteen books and about a hundred law review articles, many on technology and law and on entertainment and law. He is a commercial helicopter and private airplane pilot, and an extra class radio amateur (K9KDF). The author acknowledges a considerable intellectual debt to his friend, news helicopter pilot Eliot O. Sprague, who provided idea incubation for this article through many conversations about disruptive news technologies, television programming, and patterns of viewership. Dylan Jost, actor, screenwriter, and Uber driver, provided comments on an early draft and educated the author about the realities of driving for Uber. Albert J. Plawinski, the author’s student and frequent co-author of articles relating to drones and their impact on newsgathering and other applications, provided his usual tough comments and sugges- tions, particularly on the sections relating to targeted advertising and video technology. Mark Aitken, Vice President of Advanced Technology, Sinclair Broadcast Group, and Fred Baumgart- ner, Television Product Manager at Nautel, were generous in sharing their views on the impact of ATSC 3.0; Eric Paradis, president of NewsCastic, and David Tynan, CEO of Huntington Broadcast Management Group, brainstormed with the author about Newscastic’s model for bringing stringers into the mainstream of television newsgathering. Dan Katz, Associate Professor of Law at Chicago-Kent, also made useful suggestions and emphasized the importance of live sports programming. © 2016 Henry H. Perritt, Jr. All rights reserved. 65 66 UCLA ENTERTAINMENT LAW REVIEW [VOL. 23:65 4. Stringer Management .........................................................................97 5. Production of Entertainment Content ...............................................101 6. Legal Relationships with the Station ................................................102 B. Programming ...........................................................................................103 1. News .................................................................................................104 2. Entertainment Programming ............................................................105 3. Stitching It Together .........................................................................106 4. Technologies .....................................................................................107 C. Distribution ..............................................................................................109 D. Advertising Revenue ................................................................................ 111 V. LIGHTENING THE LEGAL LOAD ���������������������������������������������������������������������������� 111 A. No Need for FCC Licenses ...................................................................... 111 B. Avoidance of Copyright Licensing Requirements for Traditional Content ................................................................................. 112 1. Fragmentation of Ownership ............................................................ 112 2. Motives to Slow Adoption of Disruptive Technologies ������������������� 116 C. Navigating Changes in Must-Carry And Retransmission Consent Fees ... 117 VI. BUSINESS MODELS AND HURDLES �����������������������������������������������������������������������120 A. Costs ........................................................................................................120 1. Labor ................................................................................................120 2. Infrastructure ....................................................................................122 B. Return On Investment ..............................................................................123 C. Revenue ....................................................................................................123 1. Advertising .......................................................................................124 2. Subscriptions ....................................................................................125 3. Licensing ..........................................................................................126 4. Data ..................................................................................................126 VII. WHY HASN’T SOMEONE DONE THIS ALREADY? ��������������������������������������������������126 A. Most Likely Candidates ...........................................................................127 B. Obstacles .................................................................................................128 VIII. THE 2016 BROADCAST INCENTIVE AUCTION PROVIDES AN OPPORTUNITY TO JUMP-START IMPLEMENTATION ����������������������������������������������������������������������130 I. INTRODUCTION Television is gradually moving to the Internet, and the FCC’s Broadcast In- centive Auction1 provides an opportunity to complete the transition. The Auction opens up a window of opportunity through which Internet-only television stations can become a reality. This new type of television station can embrace not only an alternative distribution mechanism, but also other technological and workplace 1 The Incentive Auction is a major step in the FCC’s long-term plan to have television broadcast stations surrender frequencies that then can be reassigned through forward auctions to broadband wireless carriers. Section VIII. discusses the auction process in more detail. 2016] UBEr TElEViSiON 67 developments that can reduce costs and increase the quality of program content,2 thereby accommodating shifting audience preferences for Internet distribution. More people than ever are watching television on the Internet.3 Every month, more and more cable customers pull the plug on their subscriptions.4 Local televi- sion stations are spending millions of dollars on figuring out how to establish a rele- vant presence on the Internet, even as they spend more to upgrade their transmitters and control rooms to accommodate digital technologies.5 Consumers seeking the benefit of this technological revolution often are disappointed, however. The plethora of multiple login credentials and interfaces is frustrating. This article argues that dramatic reduction in the cost of technology for tele- vision production and distribution, combined with the profound trend toward a gig economy,6 makes it possible to provide television entertainment through “stations” existing entirely on the Internet. By embracing a set of disruptive technologies7 ful- ly, video-programming entrepreneurs can earn a return on investment by providing a more satisfactory experience to television viewers. In order to do so, however, entrepreneurs must avoid traditional practices that restrict most television content available on the Internet. This will require cutting the cord8 with traditional content producers who routinely insist on restricting Internet users to particular channels and services to which they must subscribe.9