Following weeks of negotiations that left many wondering if a deal would ever be struck before millions cable subs would go on without some key TV channels, Walt Disney Co. (NYSE: DIS) and Time Warner Cable Inc. (NYSE: TWC) finally found common ground last week on a long-term retransmission and carriage deal that paved the way for the operator to offer Disney's stable of programming on multiple screens, possibly setting the bar for what new deals will look like amid the TV Everywhere (TVE) era. (See The New Deal .)

With several other major cable programmers still negotiating deals with distributors that could allow pay-TV subscribers to access subscription content on Web video sites and through mobile video devices such as Apple Inc. (Nasdaq: AAPL)’s iPad, Turner Broadcasting System Inc. VP of business development Jeremy Legg says several major US MSOs are on the brink of launching TV Everywhere Websites.

In an in-depth interview with Light Reading Cable, Legg details Turner’s TVE strategy, the obstacles that could thwart broader multi-platform distribution, and how he expects the sector to evolve.



Contents:

— Steve Donohue, Special to Light Reading Cable



Light Reading Cable: What’s holding back broader TV Everywhere rollouts?

Legg: We feel like we’re at the precipice of launching this at scale. There are obviously technology challenges, there are negotiation challenges, and other things which are true over the natural course of business given the scale of what we’re rolling out.

From a consumer perspective, the obvious piece here is that this is an industry-based effort to roll this out, but it’s not necessarily coordinated across the entire industry. That’s why you’re not seeing all programmers rolling things out at the same time, nor all distributors rolling things out at the same time. It’s really driven by bilateral negotiations between individual programmers and distributors. It’s a matter of rolling this out in a way over time which may ultimately make sense to the consumer.

Light Reading Cable: Is it a challenge to overcome the expectation from many consumers that video on the Internet should be free?

Legg:From our vantage point, our model makes the most sense because it’s part of an existing subscription that a consumer already pays. All we’re asking someone to do is authenticate against what it is they’re already doing. We’re not asking them to sign up and pay an à la carte fee of some type to access the content.

Light Reading Cable: Is TVE still in its trial phase?

Legg: For us, it’s moved beyond the trial phase. We are commercially live with Verizon Communications Inc. (NYSE: VZ) across their entire footprint, and we anticipate that we will go live with several other distributors over the back half of this year. We’ve been in the testing phase with TV Everywhere with a variety of distributors for the better part of a year, so we’re at a phase where we’re beginning commercial deployment. (See Verizon Tests 'TV Everywhere'.)Next page: Where's the TVE Money?



Light Reading Cable: Where’s the money in TV Everywhere for Turner -- ad revenue or an increase in license fees?

Legg: We don’t intend to charge consumers more for TV Everywhere. We think this is a part of their existing linear television subscription. We will certainly and fully intend to roll up advertising credit through C3 and Nielsen across these platforms, and accrue the ratings up to our linear television ratings. Nielsen is supposed to launch their broadband C3 panel, at least in the test phase, very soon, and then accrue it into the television advertising currency in Q1 of next year.

From an affiliate fee standpoint, we will enter into linear and broadband negotiations with distributors just as we traditionally have.

Light Reading Cable: When you negotiate distribution for the linear networks, do all of those talks include terms of how you will distribute online video content? (See Verizon Goes iPad Crazy.)

Legg:It’s certainly a component of the discussion, yes. I can’t speak for other programmers, but based on our experience TV Everywhere and authentication has become part of the linear negotiation process. That’s not in our view a bad thing. We fundamentally believe authentication is critical for the industry. The manner and mechanism in which it gets out there -- whether it’s via linear deals or via standalone TV Everywhere deals -- is not of enormous concern for us. We just think it’s something the industry needs to adopt.

Light Reading Cable: Do you offer any authenticated content through TNT.tv and TBS.com today?

Legg:We do. We’ve launched two Websites. Our traditional through-TNT.tv Website is still there, and we have a TV Everywhere Website, through TNT.tv/everywhere, and that has authenticated content. Until enough distributors are authenticating, we don’t want to disenfranchise other pay-TV customers whose distributors haven’t yet adopted authentication. That’s why we’ve ended up with two Websites. Over time we think they will merge into one. Next page: Expanding the TVE Universe



Light Reading Cable: Which pay-TV subscribers can access your TVE sites?

Legg: Verizon FiOS TV video subscribers.

Light Reading Cable: Do you hope to expand that to all other operators and satellite companies eventually?

Legg: We hope to, yes.

Light Reading Cable: What’s preventing that from happening today?

Legg: A variety of things. Some distributors want to launch their own video portals. In some cases technology has to be implemented on both sides to actually enable authentication to occur. And in some cases I’m sure there are deals that have to be done. I think it’s working its way across the industry, but there are several factors that go into folks launching.

Light Reading Cable: When do you think we’ll see another MSO offer Turner content on their own portal?

Legg: We have some content on Comcast Xfinity today. Comcast Corp. (Nasdaq: CMCSA, CMCSK) obviously got out of the gate in building their own video portal quite a bit earlier than a lot of the other MSOs. As you look across the landscape, you can rank order the rollout of things based on how industrial strength the distributor’s video portal is.

Light Reading Cable: Will Cox Communications Inc. and Cablevision Systems Corp. (NYSE: CVC) and Time Warner Cable also have Turner content on their portals by the end of this year?

Legg: You’d need to talk to them to comment on where they are with their individual rollouts. From our vantage point we’re working with several distributors to try and launch content on their portals as well as our own.

Light Reading Cable: Are you also negotiating rights with distributors that would allow subscribers to access Turner content on mobile devices?

Legg: We don’t look at mobile and tablets as separate categories anymore. These devices now have open-sourced browsers on them which can get to the same sites that a traditional PC would. And so via browsers you’re de facto going to be on these devices as a matter of course. So the question that we’re working on is, how do you authenticate these devices? And we’re also working with Nielsen on how these devices get measured over time.

Light Reading Cable: Will there be less advertising placed in TVE content compared to linear TV?

Legg: Within the C3 period you have to have equivalent ad loads -- linear to broadband. Within that C3 window, it would be the same as television because that’s the only way Nielsen will accrue the viewing. Outside of the C3 window it’s really kind of up to a relationship between the distributor and programmer as to what the ad load will be. Next page: TVE: The Consumer Angle

Light Reading Cable: Does anything stand out in terms of the number of viewers that are accessing the authenticated content and how long the sessions are?

Legg: We’ve seen, generally speaking, pretty good success with people completing the authentication process, and accessing the long-form video. From that standpoint we’ve been pleased. I don’t think it’s today at enough scale in its current commercial deployments to make any kind of definitive statements. I think we’ll have a better idea of that toward the back half of the year once we’ve launched with additional distributors.

Light Reading Cable: Is it easy enough today for subscribers to access authenticated content?

Legg: I think the industry needs to work on it. We’re trying to make it as simple as possible, but at the end of the day you have to validate that someone is who they are. You have to validate who they are and what television channels they subscribe to through the video distributor. That requires them signing in with information provided by those distributors so the distributors know who they are and what TV channels they pay for. I think as this matures it will become simpler and simpler for consumers to be able authenticate.

I also think, as you’ll see with what we’ve done with Verizon, we’ve gone out of our way to make sure it’s a process in which the consumer does not have to re-authenticate with any great frequency. They don’t have to sign in every browser solution, or every time they want to watch a video. They basically just need to go through the process just one time. And authentication works across all of Turner’s channels. You don’t have to authenticate separately on TBS and then TNT and other Websites. Once you complete the authentication process one time, it works across all of our channels and all of our TV Everywhere Websites.

Light Reading Cable: Have you settled on the number of episodes for each series that you’ll offer online at any given time -- would you offer the complete library of a series?

Legg: The vision of this is that consumers will be able to access whatever they’ve seen on linear television during that C3 window. The reality is this is going to be somewhat of an evolution based on rights, based on capacities of the various distributors.

— Steve Donohue, Special to Light Reading Cable