July 27, 2009

At the Cable Show in 2007, Time Warner CEO Glenn Britt actually committed news. Spewing fightin’ words, he warned programmers if they planned to serve their shows for free on the Internet, they shouldn’t expect to command the same subscriber fees they’d been receiving from cable operators.

Glenn Britt

Makes sense, right? You can’t really double dip.

Turns out Britt’s words were prescient more than two years ago, well before Hulu launched and proved that some consumers indeed want to watch full episodes of TV shows online, and nearly all would gladly watch cable shows for free as opposed to paying for them via their monthly cable bill.

So what’s a cable programmer to do? Give in to customer demand or keep its distribution partners happy?

That’s the dilemma programmers face because, unlike broadcasters who can easily stream full episodes online without biting the hand that feeds them, cable networks enjoy dual revenue streams of advertising and cable subscriber fees.

Right or wrong, Time Warner receives kudos from us for taking the lead on this hot issue. Britt and company have made it clear that cable programmers must remember where their bread is buttered. And Britt also is offering a solution. At last year’s CTAM Summit in Boston, EVP and chief strategy officer Peter Stern discussed in depth Time Warner’s plans to work with programmers to develop a Web replica of cable programming.

"We think there is a solution that is sustainable: Deliver all your Web content to paying customers online and just a small amount to non-paying customers," he told Summit attendees.

That project has since become known as TV Everywhere, envisioned as an industry-wide initiative for multichannel providers to offer cable programming online. TV Everywhere will let multichannel video customers, be they cable, satellite or telco subs, watch cable network shows online, provided they’ve been authenticated as subscribers.

That’s a big hill to climb. Verifying subs is not easy, nor is inking deals with cable networks for their shows, especially given the complexity in securing online rights — something Hulu still deals with when networks pull shows off its site from time to time.

Still, Time Warner has tested online access for HBO programming in Milwaukee as a proof of concept for TV Everywhere and says to look for additional market trials this year.

Fast Facts

• Hulu is now the second-most popular video site on the Web with more than 10 million unique viewers watching more than 380 million streams each month.

• Some cable shows are already online: Hulu carries USA’s Burn Notice, Comedy Central’s The Daily Show with Jon Stewart and FX’s It’s Always Sunny in Philadelphia, among others.

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