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Dennis O'Brien

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Ad Skipping: Careful What You Wish For

Posted: 05/18/2012 9:34 am

No one likes watching TV commercials, except, perhaps, during the Super Bowl. Even those whose livelihoods depend on them have a hard time convincing family members not to fast forward past them in this DVR age.

Now, Dish is trying to make the TV commercial completely avoidable. They are introducing a DVR that, among other things, can automatically skip all commercials -- no fast forwarding necessary. It's called Ad Hop, and is part of their 'Hopper' (the subject of this great ad). Sounds great, but the problem is, it will ultimately cost you money.

As Les Moonves of CBS asked (rhetorically): "How am I going to produce CSI for $4 million without ads?" He can't. Neither can AMC produce Mad Men, nor ABC Modern Family, nor ESPN Sportscenter. The vast majority of television content -- even that on YouTube and Hulu -- relies on ad dollars. Broadcast of course, is in the unenviable position of being totally dependent. In the short term, ad skipping tightens the noose on the traditional broadcasters especially, which generate almost all of their cash in ad dollars. Less money for them means cheaper programming -- hello even more reality TV! The question is, if these ad dollars go away, or erode further, where will the money to produce these shows come from?

The answer, ultimately, is you. The only other big source of dollars to underwrite big, quality TV programs is subscriber fees -- the money that distributors like Dish, Direct, Comcast and Time Warner pay networks for the rights to air their channels (i.e. Comcast pays ESPN to carry their channel). So if advertising on TV declines, the likelihood is that eventually, subscriber fees will go up. Then, the cable or satellite will pass along those costs to the consumer.

So while skipping commercials sounds good, in the end, its likely going cost you money.

 

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