Video services

The New Deal

11:10 AM -- Following weeks of contentious negotiations, Walt Disney Co. (NYSE: DIS) and Time Warner Cable Inc. (NYSE: TWC) finally agreed to a carriage-and-retransmission deal that gives the MSO (along with Bright House Networks ) long-term access to channels such as ESPN, Disney Channel, and local ABC broadcast stations in markets that include biggies like New York and Los Angeles. (See Disney, TWC Seal the Deal.)

But the deal was much bigger with that, of course. As cable operators and programmers enter an era of TV Everywhere, the negotiations also hinged on new forms of access that allow cable subs to access Disney programming using broadband and via myriad devices.

One key was the inclusion of ESPN3.com, ESPN's broadband-fed sports channel that's only available when bundled in (reportedly in the neighborhood of 10 cents a sub) with the regular cable channels, a model that has attracted such critics as the American Cable Association (ACA) .

The deal also expands the available library of traditional video-on-demand content and the intro of a new service called ESPN Goal Line, which is shaping up to be the college football equivalent of the NFL Networks' RedZone channel.

Perhaps more importantly, the agreement ties in a new "authenticated" service that gives TWC and Bright House the OK to offer three linear nets -- ESPN, ESPN2, and ESPNU -- via broadband and on mobile devices like the iPad. Launch details are coming, but TWC has already been talking up an iPad strategy. (See TWC Preaches Openness With iPad Tilt .)

In some ways, the agreement sets the bar on how these types of retrans consent deals will come together, as MSOs seek out rights to deliver content everywhere, and programmers look to get paid for that access, while trying to protect the distribution of their stable of channels.

Although this deal was one a major MSO like TWC could swallow, the Tier 2 and Tier 3 end of the cable operator market remains wary of what it views as a "broken retransmission consent process" and "price-gouging" by broadcasters.

"Small and medium-sized cable operators are paying excessive fees for retransmission consent because broadcasters are able to exploit federal regulations to their advantage," ACA president and CEO Matthew Polka said, in reponse to the deal between TWC and Disney/ABC. "Claiming the system works because a deal got done or because no one complained is akin to a con artist saying extortion works because no one called the police."

— Jeff Baumgartner, Site Editor, Light Reading Cable

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