Time Warner Cable Says It’s Blocking Some Programmers from the Web — But It’s Still Not Holding Up Web TV

Is Time Warner Cable blocking some TV programmers from selling their stuff to online video outlets?

Yes we are, says Time Warner Cable.

Here’s the company’s response to a Bloomberg piece today, which said that one of the country’s biggest cable TV operators had distribution agreements which would penalize TV networks that tried to do deals with “over the top” Web TV providers.*

Short version: “Everyone does it, and we’re hardly the worst offender.” Longer version, via an emailed response from the company’s PR office:

“It is absurd to suggest that, in today’s highly competitive video marketplace, obtaining some level of exclusivity is anticompetitive. Exclusivities and windows are extremely common in the entertainment industry; that’s exactly how entertainment companies compete. This is why, for example, you can only watch Fast and Furious 6 in a movie theater (not in your living room), Sunday Ticket on DirecTV, and the new Arrested Development episodes on Netflix. In fact, the amount and scope of exclusivity and windowing in Time Warner Cable’s arrangements with programmers pales by comparison to that found between other players in the entertainment ecosystem.”

So does this explain why would-be cable competitors, like Intel, have yet to reach deals with programmers?

Not really, according to industry executives I’ve talked to.

Their argument: Time Warner Cable has deals that penalize some programmers from selling to new outlets. But it doesn’t have those deals with the biggest programmers, like Discovery, Viacom and Comcast’s NBCUniversal — which are the ones that an Intel, or an Apple, or whomever, would need to sign on to launch a competitive TV product.

“Can you imagine [News Corp. COO] Chase Carey signing a deal like that?” said an industry executive familiar with the cable industry. (News Corp., which owns Fox, Fox News and other TV networks, also owns this website).

In general, those programmers are at least interested in selling to new entrants like Intel, because they’d like as many people buying their stuff as possible. They were also happy to sell programming to satellite TV providers when they showed up 20 years ago, and they were also happy to sell to telco TV providers when they showed up 10 years ago.

The gates to new Web TV deals, I’m told, are more basic: Intel, or whoever wants to buy TV from the programmers, will have to buy it the same way everyone else does — in bundles that don’t allow much flexibility. And the programmers expect the Web video guys to pay more than everyone else, because they’re the new kids on the block.

What will be interesting to see is how lawmakers and regulators respond to Time Warner Cable’s admission.

The company clearly doesn’t think they are violating antitrust regulations. Its 12 million subscribers make Time Warner Cable the country’s second biggest cable TV player, behind Comcast; overall there are about 90 million pay-TV customers in the U.S. But if their actions prevent most of the country from watching programming on a new outlet, how will that go over in Washington?

Perhaps John McCain will have something to say about that.

* Bloomberg’s piece followed a research note from BTIG Research analyst Rich Greenfield, who raised the same issue without identifying Time Warner Cable.

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