Bloomberg News

Fox Delays Access to TV Shows Online for 8 Days With Paywall

July 27, 2011

(Updates with closing share price.)

July 27 (Bloomberg) -- News Corp.’s Fox television network will delay Web access to new shows for eight days after their initial broadcast, creating a new TV pay wall to protect advertising and subscription sales.

Viewers without Hulu Plus, Dish Network or other participating pay-TV services won’t be able to watch Fox shows such as “Bones” and “The Simpsons” on the Web during that time, Los Angeles-based Fox said yesterday in a statement.

The change, effective Aug. 15, is designed to “enhance the value” of pay-TV subscriptions, Michael Hopkins, Fox’s president of affiliate sales, said in the statement. Fox is asking cable systems to pay so-called retransmission fees for the right to carry the network’s signal, giving the broadcaster a stake in protecting pay-TV revenue.

“It’s about preserving the integrity of the network TV business and retransmission ecosystem,” David Bank, an analyst at RBC Capital Markets in New York, said in an e-mail. “In the long run, if you give it away for free on the Internet, you can’t charge for it on cable.”

Fox, the most popular TV network among the younger viewers targeted by advertisers, is the first broadcaster to create an exclusive period for shows on the Internet. ABC, owned by Walt Disney Co., and CBS Corp. are also weighing a pay-TV wall, the Wall Street Journal reported, citing unidentified sources.

News Corp., controlled by Chairman and Chief Executive Officer Rupert Murdoch, fell 16 cents to $16 at 4 p.m. New York time in Nasdaq Stock Market trading. The Class A shares have gained 9.9 percent this year.

Cable networks already restrict Web access to paying subscribers. Disney’s ESPN and Time Warner Inc.’s CNN this year began providing Web and mobile access to programming to subscribers of participating pay-TV services. Time Warner Cable Inc. and Cablevision Systems Corp. are streaming channels live on the Internet to customers.

Fox’s decision also makes the $7.99-a-month version of Hulu, a provider of TV shows online, comparatively more valuable than its free service.

Hulu, owned by Fox, ABC and Comcast Corp.’s NBC Universal, was put up for sale last month. The Los Angeles-based site is drawing interest from Apple Inc., Google Inc. and Yahoo Inc., among others, people with knowledge of the situation said earlier.

--Editors: Stephen West, Anthony Palazzo

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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