Viacom May Charge To View Shows Online

The Daily Show with Jon StewartAt least two major programmers are warming to a system that would take some of their online content and place it behind barriers. Viacom is "very open" to ensuring that only those who pay a monthly cable bill for its MTV and Comedy Central content will have access to full episodes of the networks' shows online.

CEO Philippe Dauman said this week that Viacom has been working with cable operators to develop some sort of "authentication" process, in which visitors to ComedyCentral.com might need to enter a user name and password to watch a full version of "The Daily Show." Currently, a slew of MTV Networks hits are streamed online unfettered and gratis.

Still, as much as Viacom wants to please cable operators such as Time Warner Cable (as well as satellite and telco TV providers), Dauman indicated that lean-forward consumer action could reduce consumption. And if there is a wall, it shouldn't take a sledgehammer to break through.

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"We think it has to be very seamless to the consumer," he said at an investor event. "You can't have to type in a pin number every time you do that."

Last fall, ESPN Executive Vice President of Sales and Marketing Sean Bratches said the company is also evaluating "authentication technology"--potentially impacting the NBA playoff or SEC football games it now offers consumers free online.

Time Warner CEO Jeff Bewkes said Monday that essentially all content available on TV should be on the Web, but on similar terms. "The only condition is that everybody that's getting it on broadband should be a multichannel TV subscriber," he said.

If programmers had their druthers, they would continue on the current double-dip path that allows them to collect fees from cable operators for rights to their channels, while pursuing as many ad dollars as possible from free Web streaming.

With TWC threatening that carriage fees will go down if content providers do not cooperate, programmers have started to come to the table and participate in tests. TWC has been testing an "authentication" system in Wisconsin, where subscribers to HBO could also watch shows online. (Requiring a cable subscription in order to watch shows online is one option. Another less likely option is some sort of widely used pay-per-view system.)

But HBO offers a different dynamic than other networks. As a premium channel, consumers are already paying extra; plus, it currently does not offer full episodes on the Web. For an MTV or ESPN, a putting-the-genie-back-in-the-bottle complexion could emerge.

ESPN has already taken a major step, ostensibly to placate cable operators, stopping with episodes of the popular "Pardon the Interruption" and "Around the Horn" available free to all on ESPN.com. Instead, the shows are now available only to people who pay a fee.

But ESPN apparently continues to frustrate cable operators with its ESPN360.com service. The online video hub offers coveted sports events live online. While its NFL games are not streamed free on the service, a wealth of its top-tier NBA, Major League Baseball, college football and basketball games are--along with Grand Slam tennis tournaments.

The content, however, is not as widely available as episodes of MTV's "The Hills" or other Viacom offerings--not to mention those from Time Warner-owned TNT and TBS and other leading cable channels.

The reason: cable operators.

ESPN has pursued a model for which it is asking operators to pay a fee for the rights to offer ESPN 360 free to its broadband customers. Large distributors TWC and Comcast have refused, perhaps looking to institute an "authentication" process first.

However, tens of millions of people with high-speed Internet service from Verizon and AT&T (and some other cable operators) don't need to pay for ESPN 360, where they can watch dozens of college basketball conference tournament games over the next few weeks.

ESPN 360 offers perhaps the clearest illustration of how tough it may be to execute the sort of industry-wide "authentication" process that Bewkes advocates. "It's something that we should organize--it's very easy to do," he said.

But the Wisconsin test involved corporate siblings Time Warner Cable and HBO. In order for the system to work on a large scale, it would require immense cooperation between foes.

Take a person with TV service from Time Warner Cable and broadband from Verizon. At some level, the two companies would have to agree to swap information about that customer to restrict access--and ESPN would also be involved.

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