[Infowarrior] - Report: Time Warner Cable Is Paying To Keep TV Shows Offline

[Richard Forno]

(oh look -- something OTHER than a piece about the NSA surveillance program!  --rick)

Time Warner Cable Content Incentives Thwart New Web TV

By Andy Fixmer and Alex Sherman - Jun 12, 2013

http://www.bloomberg.com/news/print/2013-06-12/time-warner-cable-content-incentives-thwart-new-web-tv.html

Time Warner Cable Inc. (TWC) and other pay-TV operators are offering incentives to media companies that agree to withhold content from Web-based entertainment services such as those pursued by Intel Corp. (INTC) and Apple Inc. (AAPL), people with knowledge of the matter said.

The incentives can take the form of higher payments, or they can include threats to drop programming, said the people, who asked not to be identified because the discussions are private.

Cable companies are seeking to keep customers by ensuring access to exclusive content while fending off competition from upstart Web providers. Time Warner Cable has more than 300 contracts, and some of them may bar media outlets from providing content to online pay-TV services, Chief Executive Officer Glenn Britt said yesterday in a meeting with analysts at the National Cable & Telecommunications Association show.

“We may well have ones that have that prohibition,” Britt said at the conference in Washington. “This is not a cookie-cutter kind of business.”

Some agreements require media companies that license content to Web-based systems to offer the same online rights to Time Warner Cable, Britt said.

There’s a brewing battle being waged against incumbent cable-TV companies and telecommunications providers, which already have the rights to distribute TV and movies over their networks.

Failed Progress

Arrayed against them are technology companies such as Intel, Apple and Google Inc. (GOOG), which are eager to cut deals that would let them provide programming over the Web. These newcomers have been working for years on devices, software and services that have failed to loosen the grip of cable and satellite distributors because they haven’t secured enough content to woo customers.

Charter Communications Inc. (CHTR), the fourth-largest cable company, seeks to protect the existing pay-TV “ecosystem,” Chief Financial Officer Chris Winfrey said at the conference yesterday.

“It’s in everybody’s mutual interest that we are protecting the ecosystem in a way that continues to keep the value of that programming that we have and the way it’s delivered to our subscribers today,” Winfrey said, declining to comment on specific agreements.

Maureen Huff, a spokeswoman for New York-based Time Warner Cable, declined to elaborate on Britt’s remarks. Alex Dudley, a spokesman for Charter Communications, headquartered in Stamford, Connecticut, declined to say more on Winfrey’s comments.

‘Different Conversation’

AT&T Inc. (T), the largest U.S. phone company and the owner of the U-Verse fiber-optic TV service, is negotiating paying less to media companies that also provide content to Internet-based services, Jeff Weber, president of content, said last month at an investor conference.

“If they’re going to go over-the-top, then that’s a very different conversation and a very different value for our customers,” Weber said. “Exclusive versus non-exclusive has materially different value for our customers. And I think we would want that reflected.”

Mark Siegel, a spokesman for Dallas-based AT&T, declined to comment beyond Weber’s remarks.

The U.S. Justice Department is investigating whether cable companies are violating antitrust laws by limiting competition from Internet video providers, people familiar with the matter said in June 2012.

‘Anticompetitive’ Actions

The pay-TV companies’ actions are anticompetitive, said Gigi Sohn, president and co-founder of Public Knowledge, a Washington-based consumer-rights group that focuses on communications and technology issues.

“Is it anticompetitive generally? Of course it is, they are keeping programming from their competitors,” Sohn said in an interview. “Does it rise to the level of antitrust violation? That’s something for the Department of Justice to decide.”

The plight of the Internet-based services is similar to when satellite companies couldn’t get access to media companies’ content until Congress passed legislation in 1992, Sohn said. Government regulators may need to get involved to grant technology companies similar access, she said.

“These sorts of practices are as old as the hills,” she said. “Over-the-top providers are in regulatory No Man’s Land and they can’t get access to the programming.”

The U.S. Federal Trade Commission should investigate whether pay-TV companies’ arrangements violate antitrust laws, Rich Greenfield, an analyst at BTIG LLC, said in a report yesterday.

“Virtual cable systems, or over-the-top providers, would be wonderful for consumers,” Greenfield said in a phone interview. “It appears certain pay-TV operators don’t want that to happen.”

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer at bloomberg.net; Alex Sherman in New York at asherman6 at bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo at bloomberg.net; Nick Turner at nturner7 at bloomberg.net

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