Compared to NFL playoffs, online video is about as important as
Pop Warner in the Fox-Time Warner Cable retransmission face-off.
Source: Flickr user tripphotography
Fox Broadcasting (NWS) and Time Warner Cable (TWC) have been getting into the holiday spirit lately by stepping up their brinkmanship over retransmission fees, each threatening to sideline New Years Day Bowl-game viewers if a deal isn’t reached by Dec. 31 while trying to pin the blame on the other.
Earlier this month, Time Warner Cable launched a preemptive PR strike, setting up a web site aimed at stoking subscriber anger at greedy programmers by warning that higher carriage fees could lead to a bigger monthly cable bill. Last week, Fox fired back with a web site of its own, accusing TWC of not “playing fair,” and warning subscribers they could miss out on the Sugar and Fiesta Bowls (which Fox has the rights to), the last weekend of the NFL season and, most devastating of all, the return of “American Idol.”
In truth, as Pali Research analyst Rich Greenfield pointed out in an overview of the spat last week (updated Monday), the blackout would affect only about 3.9 million of TWC’s 14 million total subscribers, where Fox owned-and-operated stations overlap Time Warner’s footprint. The rest of TWC’s footprint is served by Fox affiliates, who make their own retransmission deals.
Fox is said to be seeking $1 per month, per subscriber from cable operators for the right to carry its signals. Greenfield is pessimistic that a deal will get done in time to head off the blackout, as both sides have larger points they’re trying to prove: Fox, that carriage fees aren’t just for pay-TV networks; Time Warner Cable, that the current retransmission rules give broadcasters too much leverage and the FCC should take some back. Greenfield thinks they’ll eventually settle somewhere around $0.50-$0.60 per sub, though not before service is interrupted.
One interesting question will be what Fox does about Hulu during any disruption on TWC systems. Many Fox shows are available on Hulu the day after airing, which means broadband subscribers affected by the blackout could still get access to the missed episodes. The network could drop the shows from Hulu for as long as the dispute lasts but that would likely anger non-Time Warner subscribers as well, not to mention Fox’s own online advertising sales.
Another approach would be to try to block access to Hulu from TWC broadband households. But that would impact Fox’s joint-venture partners ABC and NBC as well, who presumably would want to have some say in the matter.
Fox, of course, is mostly banking on its sports programming, which doesn’t show up on Hulu, to give it leverage, so it might not worry too much about online access to “Simpsons” episodes. At least this time.
The Hulu question once again highlights the conflicting interests of cable operators and programmers when it comes to broadband delivery.
The ideal arrangement for Fox in this (hypothetical) case would be to have Hulu behind a TV Everywhere-like authentication and authorization wall. That way, online access to particular shows could be selectively authorized or not for individual MVPD subscribers, based on the particulars of their subscription plan. If your cable subscription did not include your local Fox station because of a dispute between the network and your cable operator, then online access to Fox shows could be blocked by the authorization process. Authorization can only work, however, if specific content assets can be mapped to individual cable households’ subscription packages. And the only place that subscription information can come from is your cable provider. So in this case, Time Warner Cable would have to provide the authorization information Fox would need to deny online access to its shows to TWC broadband customers, which would obviously not be in TWC’s interest.
Hulu isn’t yet behind an authentication wall, of course, so the issue is moot for now. But it’s a telling example of the kind of push and pull the industry will have to face before TV Everywhere becomes reality.