Battle Between Cable Programmers, Operators Expected to Deepen

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The apparently growing chasm between cable operators and the programmers who sell them content will likely widen before settling down, if a first-day session at The Cable Show 2011 in Chicago is any evidence.

The session, featuring an equally split group of operators and programmers—including Comcast, which now operates on both sides of the business—agreed that they need to cool the fighting that has flared as programmers charge more for their wares and sell them to over-the-top competitors, and as operators try to move as much content as possible off TVs and onto IP-based devices without paying more for the privilege.

Time Warner Chairman and Chief Executive Officer Jeffrey Bewkes drew the most publicity from the session after he told the audience that content owners and distributors should simply adapt to the new era of programming distribution by making all content available on any device at any time.

“Put the TV on the Internet,” said Bewkes, who coined the term “TV Everywhere” that now serves as a model for multiplatform distribution. “Don't change the business model, don't charge people to use it and present it in a way that people are accustomed to.”

But Philippe Dauman, president-CEO of Viacom, said stakeholders need to collaborate to develop a measurement system that will tell programmers like Viacom how many eyes are focused on content on IP-based devices “so we can sell ads, because that's the currency. That's one of the obstacles for getting ad-supported programs on TV Everywhere.”

Dauman indicated that he was not pleased with Viacom content being delivered to non-television devices like iPads. That displeasure is evident in the fact that Time Warner Cable and Viacom are in court over the matter. But at the same time, he extolled the value of Netflix as a “programming library” that “gets people interested in watching the current programming.”

For Viacom, Netflix is a bonanza, he said.

“We had no syndication value in the 10-year-old Beavis and Buttheads that we have,” he said, noting that the old cartoons are “now making money by selling it to Netflix.”

Glenn Britt, CEO of Time Warner Cable, and Pat Esser, President of Cox Communications, both urged some semblance of fiscal responsibility with programming costs. Britt went so far as to reiterate his now-frequent pleas for lower-cost, smaller bundles of programming for the less affluent. There is, he said a “growing underclass of people … who can't afford us” who need smaller channel packages.

“We're in a different economic environment than we were five years ago,” he said. “We have to be very sensitive that at the end of the day we serve customers and they either have disposable income or they don't.”

Aside from the programming and how it's going to be delivered, the arguments between programmers and service providers are as old as cable television, said Chase Carey, deputy chairman, president and chief operating officer of News Corp.

“You're always going to have buyer-seller tension,” he said. “The industry had difficult negotiations around the value of content for 20 years, 30 years.”

One way to settle the tension is to gain stakes in both sides of the pie, as Comcast does now that it has acquired NBCUniversal.

“Steve Burke and I can pick up the phone and talk to each other every day,” said Neil Smit, president of Comcast Cable Communications about the former Comcast chief operating officer who now heads NBCU. “It's just a matter of conversations happening.”

By Jim Barthold