Fight over Time Warner Cable's iPad service comes down to philosophical differences
Imagine you go to the supermarket and buy a jar of peanut butter. Then when you get home, you scoop some of the peanut butter out and put it in a Tupperware container and put it in your fridge. Now imagine getting a call from the peanut butter company saying you need to pay extra for keeping it in a different container.
That's one way to look at the fight Time Warner Cable is in with several big programmers over whether the cable company has the rights to offer channels it has already paid for to its customers via the iPad. Time Warner Cable figures, hey, we already bought it, so what's the big deal?
The programmers would argue there is another way to look at this. Now imagine you own a newspaper and you sell the rights to distribute the newspaper on street corners. Only it turns out the guy you sold the rights to is now selling the paper on the Internet as well as street corners even though that wasn't part of the deal.
So far, the programmers appear to be winning. On Thursday, Viacom, Discovery and News Corp. all got Time Warner Cable to pull their channels off the cable company's iPad service. The lawsuits were literally on the verge of being filed when Time Warner Cable said uncle. In total, 12 channels, including MTV, Discovery, Comedy Central, FX and TLC, were removed.
Bloodied but not beaten, Time Warner Cable said on Friday it was offering 17 new channels via the iPad. However, the channels it has added are, for the most part, not of the stature of the channels it lost. That's not meant to be a knock against the Jewelry channel and C-SPAN 3.
One of the issues is technical. After all, the Slingbox does something very similar to what Time Warner Cable's iPad app does. In fact, the Slingbox should be of greater concern to programmers. Unlike the iPad app, which only works in the home of the cable subscriber, the Slingbox allows its user to watch live TV on a computer or hand-held device anywhere. That's like taking the peanut butter in the Tupperware out to the park for a picnic!
However, because the Slingbox goes from the cable box to the computer, it gets a pass from programmers. The iPad app does not go from the cable box to the iPad but instead is delivered via Internet Protocol and that, programmers argue, violates the agreement. That doesn't mean programmers like the Slingbox any better, but because it comes through the cable box, it is tougher for them to make a legal case.
What makes this fight even more interesting is it comes at a time when Time Warner Cable and other operators including Comcast are trying to push programmers into backing their TV Everywhere initiative. In short, TV Everywhere would require consumers to prove they are cable subscribers in order to access cable content online. It is the cable industry's effort to fight so-called cord-cutting by consumers.
Programmers, though, seem wary of jumping on the TV Everywhere bandwagon. It may just be a money play. As with the iPad app, programmers feel that if the cable company is going to try to use their content to keep consumers from cutting the cord, then they should be compensated for it. The cable operators counter that the programmers are double dipping.
It's no surprise that the programmers who pulled their content from the iPad app are not also distributors, while distributors such as Comcast Corp. and Cablevision, who also own content, are not making a stink about the app. Disney, which is not a distributor of content, is also staying on the sidelines in this fight. Of course, Apple chief Steve Jobs is on the company's board of directors, so in this case its cable networks may be taking one for the corporate team.
These spats are going to become increasingly common as distributors try to keep their platforms relevant and programmers make sure they are being compensated. The usual solution to these disputes is to stick it to the consumer.
-- Joe Flint
Photo: An iPad. Credit: Marcio Jose Sanchez / Associated Press.