Technology

TV Shows on the Web: The Haggling Begins


Disney boss Bob Iger is maneuvering to offer consumers online TV viewing. Cable companies will likely fight to protect their subscriber base

Could cable subscribers one day go to the Web to watch their favorite TV channel, much like they do today with their television sets? That day is coming, at least according to Walt Disney (DIS) Chief Executive Robert A. Iger, who clearly wants his company to be among the first to offer the capability. "We are certainly open to exploring that possibility," Iger said in a keynote speech on Apr. 2 to the annual Cable Show in Washington, D.C.

Iger was treading on potentially treacherous territory, as content owners and cable operators have been eyeing one another warily these days over the issue of "authentication," the latest industry buzzword. Authentication would effectively require content owners who offer TV shows to consumers online to certify that those folks aren't canceling their cable bills to get the online feeds. How they would do this isn't clear, although cable companies, such as Time Warner Cable (TWC), are already working on ways to bill folks for the amount of time they use the Internet.

Needless to say, cable operators want to be assured that their customers aren't "cutting the cord," as Time Warner Cable CEO Glenn A. Britt said recently, in order to go channel surfing online. Moreover, the cable operators have a point: They pay billions each year to Disney, Viacom (VIAB), and other content creators to carry their channels and aren't likely to take kindly to seeing their customers go off—with a content owner's help—and watch it free online.

Laying Down His Marker

Iger clearly wasn't offering anything close to caving in to cable industry demands. Giving consumers ABC or some other network online, he said, "would be an interesting and potentially compelling feature," if the two sides could work out a compromise on the authentication issue.

What's not likely to happen, at least in Iger's view, is the day when consumers will be blocked from watching Disney's shows online, whether on ABC.com or the popular Hulu.com site that streams shows to viewers. Disney is widely expected to take an equity stake in Hulu. In a none-too-subtle declaration of his intentions, Iger said that "preventing people from watching any show online, unless they subscribe to some multichannel service, could be viewed as both anticonsumer and antitechnology, and would be something we would find difficult to embrace."

Iger has been down this path before. Bucking the Establishment, Disney was Hollywood's first studio to buck the Establishment, putting ABC shows online and offering them through Apple's (AAPL) iTunes service. Now the practice is considered routine for every studio. Iger makes no bones about the fact that Disney, which generates revenue by selling ads against its online viewing, is also helping cable operators generate revenue by selling online services folks use to surf for shows. "They are also paying YOU to access through your varied broadband services," he said to the cable executives gathered in Washington for the annual event.

Where is that likely to leave cable operators and content owners? Both sides have said nice things to one another—Comcast (CMCSA) CEO Brian Roberts has called online TV viewing "our friend, not our foe," and he told the same Washington audience that he looks forward to figuring out ways to make money with online content. For his part, Iger commended the cable companies for TV, phone, and wireless services offered at an affordable price and "higher quality," even parroting cable giant Comcast's "Comcastic" advertising tagline to emphasize his high marks. But these two industries have a history of talking nice in public, then pounding their fist in private. With his gentle, statesmanlike delivery, Disney's Bob Iger seems to have started the negotiations.

Return to The Future of TV Special Report Table of Contents

Grover is Los Angeles bureau chief for BusinessWeek.

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