NEW YORK (Reuters) - Cable programmers and operators are putting aside usually difficult negotiations to solve their most pressing challenge this year: How to make more TV shows mobile without harming their lucrative business.
This issue will top the agenda for a cable industry at this year’s Cable Show, when industry executives gather this week. The industry has watched credible new rivals such as Netflix Inc, Apple Inc and Google Inc, start to offer flexible new ways for consumers to watch favorite cable shows beyond the TV set in the traditional living room.
The Holy Grail for cable executives, who have previously battled to keep agreements locked within the traditional cable system, is how to ensure programing can be seen everywhere, on any device and at any time for paying customers.
“The economic strains and competition we’ve seen in the last few years have resulted in more contentious conversations,” said Denise Denson, executive vice president, content at Viacom Inc. “Technology is moving faster than ever, so it’s even more important that operators and programmers work together to stay relevant with consumers.”
With the vast majority of programmers’ profits coming from cable and satellite distributors, the programmers are being careful not to rush into new deals with the likes of Google and Microsoft Corp whose plans not only rival cable, but unbundle TV shows from traditional cable networks.
This was the thinking behind TV Everywhere, a proposal led by Time Warner Inc Chief Executive Jeff Bewkes and Comcast Corp CEO Brian Roberts in 2009. The idea is to allow cable customers to access their shows online away from home once they were authenticated as a paying customer.
“Even in the middle of one of the worst recessions, there’s an increase in TV viewing without new homes. TV Everywhere gives us an chance to extend the existing model beyond the home,” said Andy Heller, vice chairman of Turner Broadcasting System, a unit of Time Warner. “We’re not being altruistic. We’ll be able to ... keep the eyeballs, so there’s upside for us, the cable operators and for the customers, as we’re giving them more access to content for no extra charge.”
But even though it now reaches nearly 70 million homes the basic concept of TV Everywhere has not set the industry alight -- and one reason for that are the complicated licensing agreements between distributors and programmers.
Even something as seemingly straightforward as cable companies launching iPad apps to allow customers watch TV shows on their iPads at home resulted in lawsuits earlier this year between Time Warner Cable and Viacom.
Many players still need to be convinced said Gabelli Fund portfolio manager Chris Marangi.
“The theme of this year’s show is ‘everything’s possible’ and, while that’s true in terms of technology, it’s the business realities that still need to be hammered out,” Marangi said.
The cable operators for their part have seen an increasing share of their operating profits generated by broadband services rather than video.
Cable Show co-chair Jerry Kent, who is also CEO of Suddenlink, said this might be the year broadband, telephone and other services overtake video as the generator of most profits.
Kent said the ability of cable operators to offer their subscribers mobility was one important way of keeping customers happy.
“We are working closer with our programing partners to figure out how best to provide portable Internet video to our customers,” Kent said.
Yet, even while trying to figure out how to develop new video offerings in and out of the home, cable companies are working on new services that take advantage of its growing dominance in broadband, including computer security, home management and other communications services.
At this year’s show, Comcast will demonstrate its new video calling partnership with Internet phone company Skype.
The new service will allow Comcast customers to make HD video or audio calls to any of Skype’s 145 million customers. The service will be paid for monthly through a customer’s bill, although both companies said an agreement has yet to be reached.
“Video is becoming more of social experience and we want to create a better value for our customers,” said Cathy Avgiris, senior vice president of communications and data services at Comcast.
Reporting by Yinka Adegoke; editing by Andre Grenon