Time Warner Cable shows customers how to get TV for free
Time Warner Cable CEO Glenn Britt has been an outspoken critic of the networks' online efforts, arguing that free, ad-supported TV sites such as Hulu undermine the subscription-TV revenues that the industry depends on. Recently, however, Time Warner Cable has been urging its customers to use those very sites -- and to watch them on their TV sets, no less. Among other things, the company is offering a quick video tutorial on how to connect a PC or laptop to a TV set. And if customers can't figure out how to make the connections on their own, Time Warner employees will provide the necessary cables and help with the installation. Schweet!
You might leap to the conclusion that Time Warner recognized how good online TV was for its cable modem business, which recently ranked third among U.S. broadband suppliers. With broadband growth slowing -- there's only so many homes to convert, after all -- revenue growth will have to come from customers upgrading to higher speeds and premium services (or converting from DSL services that don't offer as much capacity). And high-quality free TV is a pretty good incentive to upgrade. But that's not what's motivating the cable operator, I don't think.
Instead, what's behind the latest move is a dispute between the LIN TV group and Time Warner over "retransmission consent," or the fees cable operators pay for the right to carry local stations' broadcasts. LIN owns 15 stations that are affiliated with various broadcast networks, all of which have made programs available for free through the Internet. The main drawback is that most programs aren't available live; instead, they reach the Web a few hours after they're broadcast. (That's the legal versions, of course; bootlegged copies may show up on the Web sooner.) Anyway, by helping customers get much of LIN's prime-time programming from the Web (including the sites LIN's stations provide), Time Warner is hoping to drive down the price LIN can command for retransmission rights. Meanwhile, LIN's website is telling viewers about the alternatives offered by satellite and phone-based TV services. And don't forget, the site concludes, "you can always use an antenna."
By the way, I don't think Britt's had a change of heart about the effect of the Net on the TV industry. When he visited The Times' editorial board a few weeks ago, he conceded that the free online streams help promote shows, but he added, "I think it's really dangerous what they're doing." It's a mistake to assume that the online audience is separate from the broadcast audience, Britt said, especially with the growing number of people displaying Web content on their TVs. "If people keep putting content onto the Net for free, pretty soon it's all going to be available for free," Britt said. That would leave only advertising revenue, and in Britt's view, advertisers are flocking to the Web in order to spend less, not more.
It's funny that Britt should be the one sounding this note of caution. I think the audience for online TV today is largely distinct from the audience for broadcast programming, and that networks are generally gaining viewers by making their shows available online. But I also suspect that Britt's right that the distinction will disappear once the masses can get Web programming through the big flat screens in their living rooms. That's not necessarily doom for the TV industry; networks will almost certainly ramp up the number of ads shown online at that point, and they'll probably be able to collect more per ad because the messages are targeted. But it's not such good news for cable operators.
-- Jon Healey