June 12, 2013
Time Warner Plays Hardball In Effort To Preserve Ailing TV Model
Michael Harper for redOrbit.com — Your Universe Online
For many years, analysts and fans alike have been patiently waiting for Apple to release either a physical television set or a new set top box, both expected to be paired with a new and revolutionary content delivery system. The most common assumption is that providers like the Food Network or HBO will allow viewers to buy access to their content just as they´d buy an app, giving the viewer an all-around Ã la carte experience.
Inside sources have even said Apple is working with these providers to arrange deals to bring their shows and programs to an Apple platform. While this is obviously great news for consumers, it has the potential to completely upend the traditional cable model of content delivery — paying a package price for hundreds of channels when only a handful are watched with any regularity.
Bloomberg reported yesterday that Time Warner Cable is going on the offensive against Apple and any others who are looking to usher in a paradigm shift in the industry by offering incentives to providers who refuse to sign such industry disrupting deals. According to People Familiar With the Matter, Time Warner isn´t afraid to play a little hardball, either. The cable company may offer some media outlets higher payments if they promise to steer clear of Apple, but they could also threaten to drop their programming altogether if they make too friendly with the Cupertino giant.
Many consumers are beginning to cut the cable cord and find their entertainment online via Amazon, Hulu or Netflix, the latter of which has been able to score exclusive deals with several content creators, making their service the only venue in which to view those shows.
Time Warner and other companies are fighting to maintain the traditional business model and keep web-based content at bay. According to Bloomberg, Time Warner may already be using these incentives and threats in some of their more than 300 contracts with individual content providers. At a recent meeting with analysts at the National Cable & Telecommunications Association show, Time Warner CEO Glenn Britt suggested these sorts of prohibitive deals may be in place, saying “This is not a cookie-cutter kind of business.”
Charter Communication´s CFO also made a comment during the National Cable & Telecommunications Association conference about preserving the traditional cable model.
“It´s in everybody´s mutual interest that we are protecting the ecosystem in a way that continues to keep the value of that programming that we have and the way its delivered to our subscribers today,” said Chris Winfrey who refused to discuss any specific deals his company has signed with providers.
It´s no surprise that cable companies want to protect their business, particularly from companies like Apple and Google. Though neither of these companies have yet produced anything other than set top boxes which stand between the cable (or Internet) and the television set, a cable-competing offering from either company could be completely disruptive of the status quo in the comfy traditional cable industry. Additionally, Apple is known for their shrewd negotiations in the past, most notably with record labels in the earlier days of digital music, book publishers in 2010 and most recently with music labels again over rights to stream music in iTunes Radio.
Time Warner and other cable companies likely feel they need to attack quickly before Apple and Google gain too much momentum in their plans. As the saying goes, the best defense is a good offense. However, it´s doubtful whether even a Napoleonic offensive can change the fate of an increasingly moribund and unpopular model of service.