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Venture of Warner Bros., AOL to Provide Old Television Shows a New Life Online

Times Staff Writers

Welcome back, “Kotter.”

Time Warner Inc. plans to announce today that it will make more than 100 old television series -- including “Falcon Crest,” “Kung Fu” and the ‘70s sitcom that made John Travolta a star, “Welcome Back, Kotter” -- available for free in the first major archive of TV shows on the Web.

For the record:
12:00 AM, Dec. 03, 2005 For The Record
Los Angeles Times Saturday December 03, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 40 words Type of Material: Correction
Online television -- A photo caption with an article in the Nov. 14 Business section about Time Warner Inc.'s plan to put old TV shows online misspelled the first name of “Chico and the Man” star Freddie Prinze as Freddy.

When it launches in January, the joint venture between Warner Bros. Domestic Cable Distribution and America Online could help TV, Internet and advertising executives gauge the appetite for longer entertainment programs on the Web, which is dominated by shorter bits typically lasting no more than a few minutes.

The project, dubbed In2TV, may give new life to once-popular TV programs that have fallen out of syndication. It’s also a bid to tap into the booming market for online ads, including streaming video commercials.

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In2TV is the latest example of how rapidly the Internet is transforming the television business.

Studio executives watched warily as the Internet threatened the music business with free services that offered unlimited -- but illegal -- song downloading. So they are experimenting with ways to let people watch shows on computers and mobile devices legally, hoping to tap new revenue streams in the process.

“Filmed entertainment is getting its act together pretty fast now,” said David Card, senior analyst with Jupiter Research. “There’s life in the old dog yet.”

In just the last month such major broadcasters as ABC, CBS and NBC Universal have struck deals to make some of their hit programs available through various services for 99 cents to $1.99 the day after the shows first air.

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The AOL service differs because it offers free access to TV shows no longer on the air. The economic model replicates that of traditional TV: Advertisers are expected to foot the bill, through four commercial breaks of 15 or 30 seconds during each half-hour show. Viewers will be able to choose shows from six channels, then watch episodes streamed to their computers. AOL is negotiating with major sponsors, such as PepsiCo Inc., that are looking for new opportunities to advertise online.

AOL plans to put a new-media twist on the material by offering trivia contests, polls and other interactive features. Users will be able to e-mail short videos to their friends, such as a clip of a 1987 appearance in “Growing Pains” by Brad Pitt, with shoulder-length feathered hair, as well as clips of Leonardo DiCaprio, Jay Leno and other celebrities before they became famous.

AOL’s access to Time Warner content is a big reason the Internet service provider has become such a hot commodity. Microsoft Corp. and Google Inc. are vying to buy a piece of AOL, both for its Web search business and for its ties to traditional media content. AOL plans to promote the service heavily as part of its conversion to a free advertising-supported Web portal from a subscriber-only service.

The project also begins to fulfill some of the promises made during AOL’s $99-billion acquisition of Time Warner in 2001. The deal’s architects proclaimed that Time Warner would create the content and AOL would deliver it over the Internet.

That prediction proved premature, but nearly five years later, the pieces are falling into place. High-speed Internet connections and improved software have made online video much more closely resemble TV pictures. Kevin Conroy, executive vice president of AOL Media Networks, said the In2TV service would allow full-screen viewing at DVD-quality resolution.

AOL initially will license shows exclusively from the Warner Bros. vault, and the two divisions will share the ad revenue. Eventually, AOL wants to expand its offerings by including TV programs from other studios.

Internet advertisers have been clamoring for more high-quality video on which to place their ads, and presenting shows that have track records on TV could draw in marketers who have been reluctant to pitch their products online, said Toby Gabriner, president of ad agency Carat Fusion.

“What we’re seeing now is that the big media companies realize they cannot hold back content and deliver it in the way they always have,” he said. “The Internet is giving this content a place to live and to be served up in a way that it couldn’t be otherwise.”

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There are significant challenges to bringing TV programs online, such as clearing the digital rights to the music used in the shows. AOL and Warner Bros. executives said they began talking about such a partnership two years ago but it had taken this long to figure out the business model and clear the rights.

Three paralegals working full-time for the last year have managed to clear 300 of the studio’s 800 television series. For the next round, executives need to decide whether to pony up more money to rights holders or, in some cases, to replace the licensed music with new songs.

“We always have this stuff on the shelf,” said Eric Frankel, president of Warner Bros. Domestic Cable Distribution. “I don’t think people will be upset when we go out and take the programs we spent tens of millions of dollars creating and try to distribute and monetize it.”

There’s no guarantee consumers will go for it. Decades-old shows such as “Chico and the Man,” “Alice,” “Lois & Clark: The New Adventures of Superman” and “Eight is Enough” may not prove to be big draws among younger people.

“A lot of people might latch on to these shows that didn’t see them for the first go-round,” said Craig Leddy, analyst for research firm Points North Group. “But how do you grow this beyond a novelty?”

Tracey L. Scheppach, video innovation director for Starcom USA, a major ad buying firm, said she would encourage advertisers to experiment with AOL’s new service because there was little downside. Like traditional television, she said, AOL plans to structure its ad rates based on the number of viewers delivered.

“It will have measurable results so advertisers will get what they pay for,” Scheppach said.

Additionally, some surveys have shown that people prefer viewing short videos, no more than a few minutes, on their computers.

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“It’s not very pleasant to sit at a chair and watch a very small screen, particularly when there’s other entertainment content on your TV set,” said Mike Vorhaus, managing director at Frank N. Magid Associates.

That might be particularly true for those old enough to remember Travolta playing one of the “sweat hogs” in “Welcome Back, Kotter.”

“I’ve just spent eight hours on my computer, so I’m not sure I want to watch 22 minutes of ‘sweat hogs,’ ” Scheppach said. The real breakthrough, she said, will come when people can stream online to their TVs.

“It’s just a matter of time before that happens,” She said. “But we’re seeing a definite trend here, to more consumer control.”

Some restrictions will be placed on In2TV users. They will be able watch the shows when connected to the Internet but won’t be allowed to download them to their PCs or mobile devices, and AOL will make only 10 episodes from each TV series at a time available to choose from.

And In2TV is not replacing Warner Bros.’ current mainstay of TV revenue: selling shows to networks and reselling them in syndication to cable channels and TV stations. Its shows such as “Friends” and even the 18-year-old “Full House” won’t be on the Internet anytime soon because they are still huge revenue engines in syndication, said Frankel of Warner Bros.

“This programming is looking for a natural new window of distribution,” said Conroy, the AOL senior vice president. “Somebody’s got to go first, and we’re willing to be that somebody.”


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