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

Healey writes editorials for The Times' Opinion Manufacturing Division.

Comments

[DigitalNick]

I'm a Time Warner Cable subscriber and a Hulu fan. I don't think of them as competing options; rather, they're part of a variety of entertainment choices. I check out Hulu for can't miss clips and episodes I didn't TiVo, but always try to watch my favorite shows and sports in HD on the big screen (in fact, I often have both TWC and Hulu going at the same time).

[David Guetta]

Being honest it's a stupid move on their part. They are killing their market shares in subscription based television cable. The people who go online to watch shows are already going to seek out such sites, and sometimes will go the illegal route losing them money, but with sites like Hulu they can claim some money back so that's a good thing. But the problem is that Hulu only houses the most recent episodes, so people looking for older episodes will get pushed to the illegal sites losing them money.

What's worse though is that by making people who otherwise didn't know they could do this to go online to watch, those people will move away from their cable subscriptions and go to hulu. With an on-coming recession, people will definitely start cutting their cable and going towards these services. That means they lose out on subscriptions and only take in whatever comes through Hulu and again since hulu only shows the 5 most recent episodes they will lose out on dvd sales which were already on the decrease as people go towards pirate sites.

Time Warner doesn't really care about people, so they should have just stuck with having both slices of the pie - having their cable customers who pay exorbitant amounts for service, and getting a share of the profits from Hulu. Win-Win for them, but now they're going to cut into their own business model and when the losses start to show, they're going to get mad and take it out on both Hulu and pirate sites, which isn't really warranted since they brought it upon themselves.

[trai_dep]

Wait.
So the same guys that are saying evil customers downloading "too much" content and are bankrupting the cablers - thus forcing them, regrettably, to initiate caps on bandwidth which never existed before - are now showing us how to download exponentially more?
They can't have it both ways.
It would be like a water utility raising water to whatever the price would bear (free market! For a quasi-monopoly!!) then sending out lush, how-to brochures on how to over-water our lawns, hose our driveways and buying swimming pools.

[Brian Bock]

My Time Warner Cable in Downey has been unwatchable for three days. Lots of blocks on screen. I'm trying to figure out if I can watch ALL of my TV programming without Time Warner Cable. I can get the locals on rabit ears and it looks better on the digital channels then when TWC is working. I can't really get food network on line. And I can't get a live stream for MSNBC or CNN, or some of the content from HBO, TCM or FMC. But all of the programs I watch are available on ABC.com or Hulu or CBS.com or through iTunes. Screw cable!

[Jon Healey]

Hey Brian -- I'm a rabbit-ears guy myself. The main things I can't get online are subscription networks and major sports events, although the latter is changing -- TBS offered simulcasts of NBA playoff games. But I think Britt raises a good point when he asks whether it's in the long-term interests of Hollywood and other content providers to undermine the revenue they get from cable.

[SteveTV]

What the cable companies should be doing is offering a free online site that shows older episodes, therefore solving the problem