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Time Warner and Comcast team up to launch online video service

June 24, 2009 |  9:05 am

Two of the biggest media titans are teaming up to build a system to offer more television shows online to people who currently subscribe to cable television. 

As expected, Time Warner Inc. Chief Executive Jeff Bewkes and Comcast Corp. Chief Executive Brian Roberts this morning unveiled a partnership that initially will provide shows from two of Time Warner's cable channels -- TNT and TBS -- through a broadband connection to cable subscribers. The test will begin next month with 5,000 Comcast subscribers, and to all Comcast customers nationwide by year's end.

Both Bewkes and Roberts stressed that current cable subscribers will not pay more for the service. "They don't have to pay any extra fees for it," Roberts said. "This marks the very logical next evolution of cable television."

However, people will have to subscribe to a pay television service -- initially Comcast and eventually other cable companies such as Time Warner Cable -- or a satellite service provider or a telephone company. The initial test will be available only to Comcast customers.

The initiative, which Comcast is calling OnDemand Online and Time Warner has dubbed TV Everywhere, is a response to the migration of viewers to the Internet. Bewkes and Roberts said they simply want to adapt the current economic model to the Internet so people could watch their favorite cable shows on their computers or mobile phones.

The move demonstrates a divide in the media industry. Companies including NBC Universal and News Corp. have hurried to make their hit TV shows available free online on video sites such as Hulu. But cable companies pay programmers some $22 billion annually for the rights to play their TV shows, and they don't want those same programs shown for free on the Internet.

Time Warner has not offered streams of its cable channel shows, including TNT's "The Closer" or "Saving Grace," on sites such as Hulu.  Bewkes said that while he recognized that more people were watching shows online, he wanted to preserve the current economic model -- a combination of advertising revenue and cable subscription fees -- that underwrites the cost of producing television shows.

"It is a very innovative model that the industry has. We are trying to take that basic structure and put it on the Internet, augmenting its appeal and its convenience," Bewkes said. "We anticipate all of our networks coming into this."

Cable companies have been fine-tuning a technology to "authenticate" whether the person logging on to a website also is the same person who is paying for cable or satellite service.  Roberts and Bewkes said the technology was relatively easy. 

-- Meg James