July 2013
Volume 33 No. 5

October 2013
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My Two Cents

Recently, a U.S. federal court ruled in favor of TV ad-skipping services. This is unfortunate not only for the television industry, but also for consumers. Indeed, if there is a way to release stress and relieve depression, rather than using DVRs, PVRs, the Hopper, TiVo or other similar TV broadcast-killing hardware to skip commercials, viewers should set up the devices to skip TV programs and record commercials instead.

Nowadays TV shows — including sitcoms, news and documentaries — are a source of aggravation, causing anxiety and frustration. To the contrary, a good dose of happy-go-lucky TV spots will restore confidence, security and pleasantry.

Just imagine how uplifted you’d feel after watching McDonalds’ He’s Happy TV ad, compared to a breaking news story: “Russia’s U.N. ambassador said that Russian experts determined that Syrian rebels made sarin nerve gas and used it in a deadly attack outside Aleppo.” Or how euphoric one might become after watching FIAT’s Boob Job ad, versus being saddened by WorldVision’s documentary, The Tragedy of Child Labor about child slavery in India? What about the fulfilling Annie’s Song commercial by Values.com versus the gory scenes of the series Masters of Horrors?

According to a study published in the August 2009 issue of the Journal of Consumer Research, commercial interruptions often enhance enjoyment of television, at least for younger viewers. The three authors of the study (professors from Berkeley, New York University and Carnegie Mellon), entitled “Enhancing Television-Viewing Experience Through Commercial Interruptions,” wrote: “Consumers prefer to watch television programs without commercials. Yet, commercial interruptions can actually improve the television-viewing experience. Consumers’ enjoyment diminishes over time. Commercial interruptions can disrupt this adaptation process and restore the intensity of consumers’ enjoyment. Studies demonstrate that, although people preferred to avoid commercial interruptions, these interruptions actually made programs more enjoyable regardless of the quality of the commercial.”

Then, if the federal judges feel more pedestrian than academic, they could always check the popularity of the TV ads during the Super Bowl (the championship game of American football), the year’s most watched U.S. TV broadcast with over 110 million viewers. During the 4.5 hours of broadcast, some 70 commercials are shown to an enthusiastic audience, with advertisers paying on average $3.5 million for a 30-second spot. This is because Super Bowl advertisements have also become a cultural phenomenon; many viewers only watch the game to see the commercials, while national surveys (from major media outlets such as USA Today) judge which advertisement carried the best viewer response.

Now back to the court ruling that pitted FOX against Dish’s Hopper. Gene Kimmelman, a former senior antitrust official at the Justice Department, is quoted as saying: “This is another indication of the slow erosion of a dominant media company’s control over distribution of content. That control is slowly being handed over to the consumer.”

Similarly, ruling Judge Sidney Thomas determined that consumers were free to do anything they want with their recordings of FOX programs, as long as they don’t resell the content. The judge also added: “FOX owns the copyrights to the television programs, not to the ads aired in the commercial breaks.”

Now, I have several issues with both statements and concerns for the future of FTA, the erosion of viewers’ rights and increasing costs to consumers.

On the legal side, I think copyrights on the ads are partly extended to the broadcast TV outlet since they’re also responsible for their content.

On the economic side, if the FTA gets reduced ad revenues, broadcasters will have to raise retrans fees to cable and satellite services, which, in turn, will increase consumers’ subscription costs. Not only that; high-quality programs will migrate to premium services, leaving the FTA with low-brow shows.

Finally, to justify ad-skipping technology, Judge Thomas cited the 1984 Supreme Court ruling that made VCRs legal. However, in that case VCRs created an industry (home video), while it looks like the Hopper will destroy an industry. Big difference!

Dom Serafini

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