I have a guest post up this weekend over at GigaOm where I discuss some of the potential technical and anti-trust problems with Time Warner CEO Jeff Bewkes’ concept for TV Everywhere, particularly the amount of cooperation and information sharing among nominally competing service providers necessary to make the system work.
But there are other potential problems that could also scuttle the industry’s best-laid plans. Like the imperfectly aligned interests of programmers and service providers.
It’s striking, although perhaps not surprising, that much of the impetus for the plan is coming from programmers. The idea was first articulated by Time Warner CEO Jeff Bewkes, who coined the term TV Everywhere (at the time Time Warner still owned Time Warner Cable but was in the process of spinning it off). But other programmers have been quick to jump on board.
“It’s clear that consumers want to be able to access content when, where and how they want, so as a programmer you’re basically forced to figure out how to do that,” NBC Universal counsel Rick Cotton said at the Digital Media Conference in Washington last week. At the same time, though, he added, “there has to be some mechanism by which the cost of professionally produced content is defrayed.”
Aye, there’s the rub. Making the content freely available to consumers online, presumably supported by advertising, ultimately undermines the value to consumers of paying Comcast for access to the same content on their TV. And so they’re less likely to continue paying, or paying as much.
In which case, Comcast is likely to find that paying programmers carriage fees for the rights to offer their networks to subscribers of similarly degraded value. And so they’re also less likely to continuing paying, or paying as much.
Thus, TV Everywhere: The content will be available online but only to confirmed subscribers to Comcast or some other MVPD.
“I think you”ll see cooperation among all the participants,” Cotton said.
Perhaps, but I wonder how long that will hold, especially if anti-trust regulators were to start poking around and making everyone tense.
Carriage and re-transmission fees, after all, are the most contentious of all issue between programmers and cable operators. The sides have fought titanic battles over the years, on Capitol Hill, at the FCC and in the marketplace, most recently in the showdown late last year between Viacom and Time Warner Cable that very nearly led to MTV, Nickelodeon and Comedy Central going dark on Time Warner systems.
So, while programmers are keen to preserve high carriage fees, ultimately, cable operators’ interests lie in minimizing carriage fees while protecting the value of basic subscriptions. The two are linked, to be sure, but there is also tension between them. Moreover, as advertising dollars shift from traditional broadcast and cable channels to online channels, programmers will face growing pressure to chase those dollars by moving more of their content online–not quite irrespective of the implicatons for cord-cutting by consumers but not quite deterred by it, either.
What we have, then, is a “partnership” (in not quite a conspiracy) between programmers and service providers to protect each of their respective interests. But those interests are not mutual, and are to some degree in conflict. The service providers end of the bargain, moreover, is legally fraught because it involves horizontal cooperation among competitors in one market to keep prices high in their other, monopoly markets.
We’ll see how long the center can hold.