Cable firms seek online platform
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, owner of AMC, IFC and Sundance; Turner Broadcasting, owner of CNN, TBS and TNT; and 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 had 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 protect 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 probably would 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 wasn’t looking at the effort as “some enormous new revenue opportunity” but wanted to add value that would 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 website 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 website, but they would steer subscribers to the cable networks’ websites, 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 and not standing in the way of the online video revolution.
About 34% of adults who go online at home watch videos over the Internet at least every week, up from 25% two years ago, a survey released Monday by Leichtman Research Group said.