Time Warner, Comcast Plan to Wall Off Online TV

Want to watch that hit TV show online? You may have to prove you're a cable-TV subscriber first

By Tom Lowry

Amid the rush to make programming available for free online, Time Warner and Comcast are fighting back. The companies on June 24 announced a new model that will require viewers to prove they are cable subscribers before they can stream hit shows online. The announcement puts both companies squarely into the fray of a growing debate over whether people should be forced to pay for content online instead of getting it for free.

In outlining their plans at a press briefing, Time Warner (TWX) and Comcast (CMCSA) carefully framed the initiative as just another way to give consumers programming when and where they want it. "This marks the very logical next evolution of cable TV," Time Warner CEO Jeffrey Bewkes said. "Consumers have spoken, no, more like yelled."

What the executives didn't address is the direct threat to their business model because consumers can already get a lot of programming for free, on such sites as Hulu.com, owned by News Corp. (NWS), NBC Universal, and Disney (DIS). The concern for cable is that as more programming becomes available at no charge, consumers will drop pay-TV subscriptions. Such so-called cord-cutting is not occurring yet in big numbers; Time Warner and Comcast want to keep it that way.

They hope other TV networks and service providers will join the effort. A big incentive: More than half of cable networks' revenue comes from the fees that service providers such as Time Warner and DirecTV (DTV) pay. Nobody wants to jeopardize those dollars in tough negotiations with angry service providers upset that programming they pay for is also being given away by the channels for free.

Trial Run, Then National Rollout

Here's how the trial will work: Starting in July, 5,000 Comcast subscribers will be able to see shows online from Turner Broadcasting's TNT and TBS channels, like The Closer and Tyler Perry's Meet the Browns. But first, they each will have to demonstrate that they're a Comcast cable-TV subscriber through a screening called authentication. That most likely will entail a user name and password. Comcast will offer the shows on Comcast.net and Fancast.com, and Turner on TNT.tv and TBS.com. Technology so far is not allowing Turner to stream the shows concurrently when they run on TV but shows will be made available several hours after they air.

Comcast CEO Brian Roberts says he hopes to roll out what he is calling Comcast On Demand Online nationally by the end of the year. Bewkes and Roberts conceded their partnership is still very much an experiment and that advertising models still need to be worked out. Both companies are talking to ratings giant Nielsen about coming up with ways to measure audiences for online video that are more consistent with TV measurements.

As for TV networks that agree to sign on, their shows will be available exclusively on the cable service providers' sites or on the networks' own sites for a certain amount of time. In other words, you won't be able to see those shows on sites like Hulu, at least for a certain window of time.

Business Exchange

Track and share business topics across the Web.