[governance] Cable companies want a way to win with online TV

[Yehuda Katz]

Cable companies want a way to win with online TV
The Associated Press [USA]
By DEBORAH YAO – February 25, 2009

Art. Ref.:
http://www.google.com/hostednews/ap/article/ALeqM5gUxTy3ntI9tf65eGFh1b2DFTHWrwD96IJ1LG0

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PHILADELPHIA (AP) — HBO on your PC? It could happen sooner than you think.
Wary of the growing number of consumers watching TV shows online for free —
and yet reluctant to upset viewers by yanking shows from the Internet — the
nation's largest cable operators are in talks with media conglomerates to take
back control. They would create a platform to release cable TV shows online,
but exclusively for paying subscribers.

It's a delicate dance for those involved, which include Comcast Corp., Time
Warner Cable Inc., Cox Communications Inc., Cablevision Systems Corp., General
Electric Co.'s NBC Universal, News Corp., Viacom Inc. and Time Warner Inc.

Cable networks considering the project include Time Warner's HBO, Viacom's MTV,
Discovery Communications Inc., owners of Discovery channel, TLC, Animal Planet
and others; Cablevision's Rainbow Media Holdings, the owner of AMC, IFC and
Sundance; Turner Broadcasting, owner of CNN, TBS and TNT; as well as Scripps
Networks, owner of Food Network and HGTV.

Potentially at stake is the business model of cable TV operators. They pay
networks a per-subscriber fee each month for the right to carry channels. But
the cable companies have groused that they are paying for content that
programmers are giving away for free on the Web.

Jeff Gaspin, president of NBC's Universal Television Group, said the idea of
collaborating with cable operators on online video has been floated for a while
but talks began in earnest this year.

"There's pressure on all of us," he said, referring to TV networks. "We get
paid quite a bit of money from cable operators. ... It's important we find ways
to do business that protects that business model."

At the same time, "consumers want content where they want it and when they want
it," Gaspin added. If the networks don't provide it, "they'll get it any way
they can."

Gaspin and others familiar with the project said the new service likely will be
free to cable TV subscribers. But it's also possible a small fee might be
assessed.

Sam Schwartz, executive vice president of Comcast Interactive Media, said the
company isn't looking at the effort as "some enormous new revenue opportunity"
but wants to add value that will keep customers from leaving. Comcast calls its
initiative "On Demand Online."

One model being discussed is for Philadelphia-based Comcast to expand its
lineup of cable shows on Fancast.com, its Web site that aggregates TV shows and
movies for free viewing, much like Hulu.com. But only subscribers could access
the shows. It's not yet clear how subscribers would be authenticated; it would
be easier if the customer also buys high-speed Internet service from the cable
company.

The other cable operators wouldn't create a new Web site, but they would steer
subscribers to the cable networks' Web sites, such as HBO.com, where they would
be able to see an expanded array of shows.

These plans could still change because negotiations are preliminary.

Denise Denson, MTV Networks' executive vice president of content distribution
and marketing, called the discussions "a new and necessary testing ground for
the industry."

Cable operators and the networks have to walk a fine line between preserving
their business without standing in the way of the online video revolution.

About 34 percent of adults who go online at home watch videos over the Internet
at least every week, up from 25 percent two years ago, said a survey released
Monday by Leichtman Research Group.

People aren't yet cutting the cord en masse — the Leichtman survey found that
people who watch recent TV shows online every week are not more likely to give
up TV service than other people. But the industry is heading off what could end
up as a troubling trend. After all, the availability of free content online has
befuddled other media industries, from music to newspapers.

Hulu, a joint venture between NBC and Fox that streams free TV shows and
movies, already has felt pressure from content providers. It recently ended
access to its shows from Boxee, a startup's free program that lets viewers
watch online shows easily on their TV sets. Industry executives say Hulu is
losing money, but Hulu declined to comment on its financial status.

The cable companies and others involved in the talks for a TV service said
their goal isn't to kill the online video goose, but to work out a plan that
keeps everyone's business intact.

"A TV-everywhere solution could give consumers more for their money while also
helping to preserve the current business model that is generating and
delivering popular branded shows viewers want," said Keith Cocozza, a spokesman
for Time Warner Inc.

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