Commentary

Asking Viewers To Pay Again for TV Programming? Don't Ask

by Wayne Friedman , Staff Writer, April 3, 2009

Walt Disney's chief executive Bob Iger wants to keep his digital options open -- and mostly free for consumers. Some of his business distribution partners feel they are being left out of the mix.

Disney revolutionized the whole idea of TV on new digital platforms -- first with its iTunes deal, then with direct streaming of its shows on the Internet. Initially, much of this involved just the ABC networks shows.

Increasingly, this doesn't sit well with the cable industry. It wants to extend its control of the video it airs on its systems -- from Disney network and cable channels, for example -- to online.

Cable companies might want to charge consumers a little extra per month - or at least have those consumers be "authenticated" that they already have a traditional cable system agreement. Two cable-minded companies, Comcast Corp. and Time Warner, are toying with this idea -- but Iger isn't likely to support it.

"Preventing people from watching any shows online, unless they subscribe to some multi-channel service could be viewed as both anti-consumer, and anti-technology, and would be something we would find difficult to embrace," Iger said during the National Cable & Telecommunications Association's annual show in Washington, DC.

Cable operators don't like that big media companies continue to offer Internet viewings of TV shows free of charge -- while at the same time charging cable operators a sub fee for carrying their programming.

TV executives believe extra digital platforms act like a big whirlpool -- creating more activity that brings more viewers into the mix. Research has shown that, so far, the Internet and other digital airings haven't hurt traditional TV and cable platforms.

So why are cable companies worried? They are concerned they could be pushed out of the mix in future years.

What do to? Perhaps solve the problem the same way media companies took care of its TV affiliates: give them a piece of the advertising revenue action.

Big media has to keep finding ways of keeping up with consumers -- otherwise everyone will lose. We'll be reduced to watching cats skateboarding -- or Web series where someone hosts a late-night TV show out of his garage. (Hey, that sounds pretty good).

Start charging consumers extra for TV programming? Too many digital alternatives will give consumers many reasons to stop cable service, power up a Kindle, watch a mobile device -- or, worst of all, just steal some content

4 comments about "Asking Viewers To Pay Again for TV Programming? Don't Ask".

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William Hughes from Arnold Aerospace, April 3, 2009 at 11:11 a.m.
It's been over two years since I payed a Subscription Fee for Cable TV. I got tired of watching the same shows repeated on so many stations, along with the fact that almost 40 percent of the show is Commercials, that I questioned why should I pay in order to watch them. If a Program isn't on DVD I will not watch it.
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J S from Ideal Living Media, April 3, 2009 at 1:13 p.m.

I love my cable company, but suspect that in general cable cos. may indeed lose viewership as "television" increasingly becomes IPTV. Iger's comments reveal that content producers appear to agree with this scenario, and view it as a win for themselves. It appears cable cos. then have two solid revenue generators remaining:

1. Broadband connectivity.
2. Produce their own local television stations.

As a Lexis-Nexis exec told me years ago -- while Google was still being run out of a dorm room -- predicting the downfall of their own "walled garden" revenue streams, "Whoever owns the content, wins."

Cable companies can at least breathe a sigh of relief that the digital transition appears to have not lost them customers, but generally helped them gained them.

Drew Robertson from localbroadcast.tv, April 3, 2009 at 1:37 p.m.

"Research has shown that, so far, the Internet and other digital airings haven't hurt traditional TV and cable platforms."

I'd really like to stress-test that research. Look at the stock market performance of the various affiliate broadcasters eg Sinclair -- they are down over 80-90% in the last two years. It's almost as bad for the big boys like CBS, GE and NWS.

I know correlation does not equal causation but you'll surely agree that digital delivery (eg Hulu w/ and w/o Boxee) has been one of the drivers to the graveyard for old media.

When ABC, CBS et al finally kill their affiliate systems, Mr. Iger will have few choices except to take his orders from the MSOs. If they want to charge they will.

Michael Greeson from The Diffusion Group, April 3, 2009 at 5:34 p.m.

One thing that cable operators have that online video doesn't have is their high-value carriage-restricted content. To simply say that should be available for free without any consideration of what a two-screen business model may look like is naive. Yes, there is a "moral" argument one can make regarding the notion of entitlement for PayTV subscribers (that is, what's fair and what is not), but there is also a "business" argument that must be evaluated. TDG's research indicates that a large number of cable subscribers would pay to have access on their PCs (both desktop and portable) to the same types of services and content they receive on their TV. Ask yourself if you would not be willing to pay a fee - albeit minimal - to have remote access to all of this great programming, from an Internet-connected terminal in the world? As a frequent traveller, I would easily lay down an extra $10 per month to be able to watch my own home TV programs (live, recorded, and on-demand) when I'm in London. This place-shifting aspect of two-screen services is not at all considered when pundits rant against charging extra for having such online access. "There is gold in them there hills" - if, that is, in our rush to simply give everything away we can pause and reflect as to what reasonable fees could be assessed for such an extraordinary level of access and service.