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Desire of pay TV distributors to be gatekeepers to broadband and tablets could increase programming costs

August 13, 2010 | 12:24 pm

One of the biggest fears among pay-television distributors is that as more content becomes available on new platforms, consumers will cut the cord to their cable and satellite suppliers.

That's why the cable industry is pushing "TV Everywhere," which is basically an authentication service that would require consumers to prove that they are cable subscribers before being able to watch their favorite television shows online. Comcast and Time Warner Cable, the nation's two biggest cable operators are the big drivers of TV Everywhere, but other distributors are also on board.

Now the distributors are turning their attention to the iPad and other tablet devices. Comcast detailed its plans for iPad application that will allow its subscribers to get content on their device and Friday's Wall Street Journal said seven other big distributors are developing their own applications.

The distributors not only don't want consumers to cut the cord, they also want to make sure their programmers don't look to create their own platforms as well. After all, if Comcast is paying an FX or TBS good money to carry their channels, they don't get happy to see their shows available elsewhere.

For now that's not really a risk. Programmers such as Time Warner's TNT and Discovery don't want to risk that revenue stream.

But that doesn't mean programmers won't want more money from their distributors for letting them be the gatekeepers to the Internet, tablets and whatever other platforms and devices emerge in the years to come. If Comcast and others find a way to make a few extra bucks through TV Everywhere and assorted applications, programmers will demand a piece of the pie.

"The programmers are certainly going to want their fair share of that down the road," says Deana Myers, an analyst with industry research firm SNL Kagan.

Walt Disney Co., parent of ABC as well as cable networks ABC Family and Disney Channel, has not said what its plans are regarding TV Everywhere in part because it wants to be paid for allowing distributors access to their content on the Web. 

"Disney has been kind of playing on their own to see if they can do it better than some operators," said Kagan's Myers.

Of course, any real effort by distributors to stop programmers from offering their content elsewhere would not likely be met with a great reception by regulators. However, the distributors can use their leverage to try to lower the fees they pay for content if programmers insist on putting their shows on platforms that can undercut their incumbent distributors. 

— Joe Flint

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