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Cable Operators Show Them the Money

Mari Silbey
6/17/2013

Cable companies sure know how to make life tough for the competition. According to Bloomberg, Time Warner Cable Inc. and other pay-TV operators are now offering cash incentives to programmers to keep content out of the hands of their Web-TV rivals. In some cases, cable companies are reportedly writing bigger checks to lock up video assets. In other cases, they're threatening to drop programming if content owners don't agree to withhold distribution from companies like Apple Inc. and Intel Corp. Deals for content exclusivity are nothing new in the pay-TV business. Take the DirecTV Group Inc.'s long-standing deal for the exclusive rights to NFL Sunday Ticket. As Time Warner spokesperson Maureen Huff puts it, "exclusivities and windows are extremely common in the entertainment industry." (See DirecTV Might Sack Its NFL Exclusive.) However, there are concerns that cable companies are amassing too much power. Most over-the-top (OTT) video providers have made little headway in the traditional pay-TV market, largely because of content licensing issues. Netflix Inc. has been successful, but only with an offering based primarily on back-catalog content and select original programming. Microsoft Corp. abandoned plans to mount its own pay-TV service in 2012, due to high licensing costs. Likewise, Intel appears to be having a difficult time signing up programmers for its quest to launch a subscription service this year. (See Microsoft Puts Pay-TV Plan on Pause) Meanwhile, just because cable companies don't want competition from OTT providers doesn't mean they don't want to send their own content over the top. Time Warner Cable, for example, already has apps for subscribers who want to view cable content on Roku Inc. set-top boxes and Samsung Corp. smart TVs. (See TW Cable App Debuts on Roku.) Cable operators are quite happy with the TV Everywhere concept, as long as it's on cable's terms. — Mari Silbey, Special to Light Reading Cable

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Vikram Chari
Vikram Chari
6/19/2013 | 11:20:25 PM
re: Cable Operators Show Them the Money
Throwing good money after bad, or bolting the stable door after the horses have fled. This can only happen for a short period of time, and guess who pays for it - the subscribers. This will only attract anti-trust cases and legislation from Congress (albeit watered down due to their lobbying). Instead of sitting down with the content folks (including 'nets and syndicated content providers) and hashing out a workable plan which reduces churn and gives subscribers what they want, the cablecos are on an unsustainable path.
Cableco44
Cableco44
6/18/2013 | 11:39:14 AM
re: Cable Operators Show Them the Money
The model is very important to shareholders at the moment. Making a barrier to entry for new comers or those without market driving leverage is very important. This is money better spent than the daily letters I get asking me to switch to cable from my cable operator. I already subscribe and nearly every day, I get a letter asking to subscribe. I do not get it.
Peyton Maynard-Koran
Peyton Maynard-Koran
6/18/2013 | 3:07:08 AM
re: Cable Operators Show Them the Money
Are you saying that MSOs are paying more for content, while constantly losing subscribers of that content? That sounds like the newspaper business model. It also seems to me that Netflix, whom now has more subscribers than any MSO and more then HBO for that matter, can wait that strategy out. With the average margin for a video sub at 17%, how much more money are we going to spend on this product and model?
mendyk
mendyk
6/17/2013 | 2:21:50 PM
re: Cable Operators Show Them the Money
Good to see the lawyers racking up the billable hours. Somebody has to buy the boats that content providers can no longer afford.
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