TV Disruption and the Politics Wildcard

I love the idea of a free market, one “...in which there is no economic intervention and regulation by the state, except to enforce private contracts and the ownership of property.” Unfortunately only the childlike, uneducated or the naive (um, like the Simpsons) would believe that the current and coming war for the digital living room is one which won’t see enormous political machinations. Especially since corporations are now people and can spend whatever they please to get whomever they want elected and thus get the votes for legislation in their best interests.

Unfortunately those best interests are rarely in line with startups, entrepreneurs or innovators threatening incumbents.

A friend of mine just sent me a link to the VC Fred Wilson’s article, “TV and the Digital Living Room,” and I was going to respond by email but realized that this was a post that had to be written. Fred pointed to an article by Mark Suster wherein Suster discusses “The Future of Television and the Digital Living Room.” In it Suster starts off with this and then details his Top Ten list of issues that form his perspective:

Nobody can predict 100% what the future of television will be so I won’t pretend that I know the answers. But I do know that it will form a huge basis of the future of the Internet, how we consume media, how we communicate with friends, how we play games and how we shop. Video will be inextricably linked to the future of the Internet and consumption between PCs, mobile devices and TVs will merge. Note that I didn’t say there will be total “convergence” — but I believe the services will inter-operate.

The digital living room battle will take place over the next 5-10 years, not just the next 1-2. But with the introduction of Apple TV, Google TV, the Boxee Box & other initiatives it’s clear that this battle will heat up in 2011. The following is not meant to be a deep dive but rather a framework for understanding the issues. This is where the digital media puck is going.

Suster and Wilson both miss one, huge wildcard that might just be the biggest obstacle or the saving grace of TV as it is and as it could be.

In January of 2010, the Supreme Court ruled that corporations are people as it pertains to political spending. From Law.com comes this:

The court in Citizens United v. Federal Election Commission ruled that the ban on direct corporate expenditures before elections, with criminal penalties, is a powerful chill on legitimate political speech. “Its purpose and effect are to silence entities whose voices the government deems to be suspect,” wrote Justice Anthony Kennedy for the majority. “If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.”

Also See: Supreme Court Opinion (pdf)

The Supreme Court ruling that “corporations are people” with the same rights for “free speech” and thus can fund political “free speech” with zero disclosure (though there are many rules for PACs, 527s and other entities) means that big money can gather together like at this event and drive political representation beholden to their interests. Getting in to office an “incumbent friendly” candidate will be a no-brainer.

If I had that sort of power and control over candidates—and was an incumbent cable provider, TV network or telecom company—you’d bet that I’d collude with others to guarantee Washington was packed with people sympathetic and legislatively inclined to side with we incumbents over disruptive startups or encroaching behemoths (i.e., Google & Apple). Then I’d periodically fall on my knees begging for forgiveness as a hedge to stay out of hell later on.

So let’s hope the free market is allowed to actually be one by the accelerating financial power manipulating government through campaign contributions and lobbying. Otherwise, like the Simpsons in the photo above, our digital living room will be lacking the breadth, depth and scope of content choices a true free market would deliver.