I started reading Edward Jay Epstein‘s book The Big Picture: The New Logic of Money and Power in Hollywood a few days ago. I’ve enjoyed his articles on Slate for a while now, and the book’s also pretty enjoyable. It breaks down the finances of how Hollywood works, and how the studios ultimately became tools in larger media empires. I find this stuff fascinating, but you all know I’m weird.
One issue that interests me is the fate of News Corp. See, Rupert Murdoch had the idea that satellite TV would be a distribution system that rivalled cable. As far as TV goes, he’s been proved right. While DirecTV can’t do on-demand too well, it’s got a great signal, and it has unique content that people are willing to pay for (in my case, the NFL HD package). Satellite’s been growing rapidly in the last few years.
Unfortunately, I’m also paying my cable company for internet service. I had some bad service from Verizon DSL a few years ago, and have done okay with my local cable company for that part of the package.
The thing is, the cable companies can (and do) provide TV, internet and voice services. The phone companies are trying to get to that point too, by laying down “last-mile” fiber-optic lines. Satellite, however, is pretty much a one-way technology; users receive signals and can send back short dribbles of info, but there’s no way to provide realistic internet and voice service via DirecTV.
Which gets me back to the question of what News Corp. exactly plans to do. And that gets me to BusinessWeek this morning, which asks Can Murdoch Win on the Web?
One theory in the article is that News Corp. will attempt to brand DirecTV’s internet service using WiMax wireless technology. Other wireless technologies are mentioned in the article, and that struck me as a pretty amazing way of getting around the Gordian knot.
In this case, the knot consists of all those cables and landlines that would need to be brought to every consumer’s home: fiber-optic, digital co-ax, etc. By going with a wireless system, News Corp. could avoid much of the massive capital cost associated with all of that “last-mile” work.
If a wireless solution offers comparable speed and access to cable and fiber, News Corp could be in a position to undercut its phone and cable competitors, which have to pay off those capital costs.
Like I said, “I find this stuff fascinating, but you all know I’m weird.”