The presidents of six cable network owners shared a panel at the Cable Show in Washington Wednesday and split 3-3 on whether streaming full-length episodes of their original series for free online is a good idea. Rich Battista of Fox Cable Networks Group, Bonnie Hammer of NBC Universal Cable Entertainment and Van Toffler of MTV Networks came out in favor. Josh Sapan of Rainbow Media, Steve Koonin of Turner and Scripps Networks president John Lansing were all opposed.
One likely reason for the split: Fox and NBC-Uni jointly own Hulu, the site from which most full-length TV episodes are streamed, while MTV’s parent company, Viacom, is in litigation against Hulu’s main rival, YouTube. Turner, Scripps and Rainbow Media, on the other hand, are mostly programmers, with little in the way of platform strategies.
Another reason: Fox and NBC-Uni cable networks share a corporate roof with broadcast networks, which have been far more generous than cable nets in making their programming available online. Scripps, Turner and Rainbow are cable-only.
None of the participants acknowledged the distinctions, but the split was pretty obvious nonetheless.
“Putting full-length episodes online is a bad model as it is implemented now,” Sapan said. “It creates bad habits.”
Making pay-TV content available for free online, according to Sapan, will ultimately undermine the dual-revenue stream model–advertising plus subscription fees–that he said is critical to creating high-quality programming.
“It is a practice that doesn’t provide an economic reward and compromises the model that creates great TV,” he said. “The industry generates around $25 billion in affiliate fees and somewhere around that in advertising fees. If we jeopardize that, it’s a pretty high price to compete on a daily basis for share.”
NBC’s Hammer said online streaming can be critical to building an audience for linear TV.
“‘The Office’ didn’t really get ratings until we streamed it online,” she said. “A lot of people really discovered it online and that build the audience for the show, so in that sense [streaming] is very important to us as programmers.”
It also, of course, increases the value of Hulu and NBC.com, where ‘The Office’ is streamed.
Even Hammer, however, squirmed a bit when it came to the cable-only networks on her P&L.
“It has to be a balance,” she said. “We don’t make everything available online. But you can’t be so naive as to say we’re going to hold back content and not give access to it except on the big screen. Our audience is looking for our content online.”
Hammer was also cautious about online authentication, while Sapan and Scripps’ Lansing were all for it.
“If there were some real security there that we weren’t hurting our overall business, authentication could be an interesting model,” she said.
“If we don’t keep our audience within the subscriber base than we’ll regret it years from now, just like the music business learned,” Lansing countered.
On Thursday, Disney chairman/CEO Bob Iger joined the ranks of the ambivalent. Disney makes full episodes of many ABC series available for free online, or for purchase via download through iTunes. But it’s more parsimonious with ESPN content.
“Authentication could be a great opportunity, and we’re open to exploring the possibility of streaming full networks online,” he said in his keynote address. “On the other hand, preventing some people from watching any show online unless they subscribe to a multichannel video provider could be perceived as anti-consumer or anti-technology and we could not embrace that.”
Earlier in the week, of course, Disney inked a deal with YouTube to make full-length episodes of ABC series available through the online portal, as well as some additional material from ESPN. The Mouse House is also negotiating with Hulu about taking an equity position in the company in exchange for making its content available.
I wonder whether gaining a substantial equity position in Hulu would make Disney more or less ambivalent about online authentication.