August 17, 2017

Bold Play by CBS Fortifies Broadcasters

But in one area, CBS and Mr. Moonves have led to a shake-up in the broadcast world that could be labeled revolutionary: the issue of compensation for retransmission rights. Before almost anyone else in the business, Mr. Moonves effectively pushed for distributors to pay fees to the broadcast channels just as they do to cable networks.

The result has been a windfall for all the broadcasters and a crucial lifeline as audiences continue to shrink.

“One of the things people misjudged about CBS was the growth potential,” Mr. Moonves said in an interview. “We were considered a low-growth company: how are they going to grow this business? This was one of our keys. We were going to get paid for retransmission, and that’s how we were going to grow.”

The most recent fight — a high-noon showdown between CBS and Time Warner Cable — ended this week the way all recent confrontations between big broadcasters and cable operators have ended, with the cable operator pulling out a checkbook instead of a gun.

The fight was longer — 32 days — and nastier than either side expected. The network had never before seen its stations go dark in a fee dispute. The two sides traded blows in full-page newspaper ads, and Time Warner Cable even offered some subscribers free antennas. (Time Warner Cable executives declined to comment.)

In the final deal, the cable provider will pay CBS a hefty increase in fees for the right to retransmit the signals of its stations in big cities like New York, Los Angeles and Dallas — a reported rise to $2 per subscriber over the next five years, more than double the network’s previous deal with Time Warner Cable.

At the same time, CBS rejected demands that it give up the opportunity to sell separately its content to digital outlets like Amazon and Netflix, insuring another bountiful revenue stream, likely to be worth hundreds of millions a year.

CBS projects that by 2017 it will take in $1 billion annually in retransmission payments. David Bank, an analyst with RBC Capital markets, said that the figure could easily go to $2 billion.

To further underscore the advantage for CBS, the company’s stock price shot up 6 percent in the first two days after the settlement. (The CBS network, along with the company’s television production arm, interactive division and a half-share of the CW network, made up about 55 percent of total revenue.)

“I just knew how valuable our content would be,” said Mr. Moonves, who last year received total compensation of $62.2 million, making him the country’s highest-paid media executive. “People kept saying cable is a better business because they have a dual revenue stream. I felt strongly we should be as well.”

Mr. Moonves credits Chase Carey, the chief operating officer from News Corporation, and the acquisition of NBC by Comcast, the nation’s biggest cable operator, for the move toward big fee increases for broadcasters. But Mr. Banks says that CBS has been the unquestioned leader.

“I do think the other broadcasters have a pretty big debt to pay to Les,” he said.

One longtime rival network executive, who asked not to be named, said, “If anyone was going to break the code on retransmission it was going to be Les and CBS.”

Their success is a culmination of a long campaign, which Mr. Moonves began in 2005. At that point, CBS had no cash compensation from cable operators. Viacom, then CBS’s corporate owner, had decided to split its television assets, sequestering its lucrative cable networks, like MTV and Nickelodeon, from CBS, then considered a low-to-no-growth burden on its stock price.

The plan to demand cash won Mr. Moonves a chorus of derision from cable executives, who had long pledged almost a blood oath never to pay broadcasters cash as compensation for retransmission rights. At one industry gathering, a senior cable executive, whom Mr. Moonves preferred not to name, approached him, angry, shaking his finger at him, telling him he would never get a penny for retransmission rights.

“They resisted it,” Mr. Moonves said. “There were a lot of people saying the same old thing: you’re a network, you should not get paid.”

Article source: http://www.nytimes.com/2013/09/07/business/media/bold-play-by-cbs-fortifies-broadcasters.html?partner=rss&emc=rss

CBS Returns, Triumphant, to Cable Box

The agreement between the two sides restored the CBS network and its related channels, including Showtime, to millions of cable subscribers largely in three major cities: New York, Los Angeles and Dallas. The outcome underscored the leverage that the owners of important television content, especially sports like N.F.L. football, retain over distributors like cable systems. The looming National Football League season, which starts this week, includes key games every week on CBS.

“It was hugely important,” an executive involved in the negotiation said Monday night. (The executive asked not to be identified because the participants agreed not to offer details on the agreement beyond the official announcement.) Indeed, Time Warner Cable executives had said earlier that a reason the company decided to remove the CBS stations in early August was because of the recognition that it would lose leverage the closer it got to the N.F.L. season.

David Bank, a media analyst for RBC Capital Markets said, “With the content, especially the N.F.L. and CBS being the No. 1 network in the ratings, you just have to believe they are going to win every time.”

The two sides did not release any specific information on the terms of the agreement. They had battled for exactly a month over an increase in fees CBS was seeking for the right to retransmit CBS stations in the three major cities and some other locations on Time Warner Cable systems. Another crucial issue was whether CBS would retain the digital rights to its content, which it wanted to sell to Web-based distributors like Netflix and Amazon.

Executives on both sides acknowledged early in the talks that CBS was seeking an increase to about $2 per subscriber, up from about $1. Separate statements from the chief executives of each company indicated that the outcome apparently tipped heavily toward CBS. Its president, Leslie Moonves, said in a memo to the company staff that the network had secured virtually all of what it was seeking.

“We are receiving fair compensation for CBS content,” Mr. Moonves said. He specifically included not only additional fees for CBS content, but also the retention of the digital rights.

Glenn A. Britt, Time Warner Cable’s chairman and chief executive, conceded that “we certainly didn’t get everything we wanted.”

CBS did make “some minor concessions” to get the deal settled, the executive involved in the negotiation said. The talks extended until 3 a.m. Monday.

In his statement, Mr. Britt said Time Warner Cable ultimately “ended up in a much better place than when we started,” though he did not specify how. He also again pushed for some kind of change in the rule that granted networks the rights to compensation from cable companies for their programming

“The rules are woefully out of date, are the primary reason cable bills are rising,” Mr. Britt said. “We sincerely hope that policy makers heed that call and take action to prevent these unfortunate blackouts soon.”

Time Warner Cable pressed throughout the monthlong impasse after it removed CBS’s stations from its systems for some form of government intervention, from either the Federal Communications Commission or Congress, but none materialized.

While the acting F.C.C. chairwoman, Mignon L. Clyburn, said on Aug. 9 that she was distressed at the standoff and was “ready to consider appropriate action if this dispute continues,” it continued for another three weeks without her intervening. Several media analysts said early in the dispute that the commission’s options were limited because the right of a station owner to seek retransmission compensation was granted in a law passed by Congress in 1992.

Monday evening, Ms. Clyburn issued a statement saying: “I am pleased CBS and Time Warner Cable have resolved their retransmission consent negotiations, which for too long have deprived millions of consumers of access to CBS programming. At the end of the day, media companies should accept shared responsibility for putting their audience’s interests above other interests and do all they can to avoid these kinds of disputes in the future.”

Both sides hurled accusations during the standoff. CBS executives said Time Warner Cable removed their stations unnecessarily (including Showtime, which requires a separate fee from subscribers) and negotiated in a dysfunctional manner, and Time Warner Cable accused CBS of making exorbitant demands and performing a disservice to all Time Warner Cable subscribers by blocking the CBS.com Web site. But the settlement was ultimately a financial arrangement between two partners, one of which had content the other needed to satisfy its customers.

Mr. Bank said that, if anything, the deal may make it easier for networks to press cable and other distributors like satellite systems to squeeze out more favorable fees, without all the noise and recriminations this dispute inspired. CBS quietly renegotiated a deal with the FiOS bundled Internet phone and television service owned by Verizon in the midst of its conflict with Time Warner Cable.

“I think the Verizon deal happening when it did was not helpful to Time Warner,” Mr. Bank said. “It was probably really damaging.”

Article source: http://www.nytimes.com/2013/09/03/business/media/cbs-and-time-warner-cable-end-contract-dispute.html?partner=rss&emc=rss

CBS Trumpets Deal With FiOS TV in Jab at Time Warner Cable

Leslie Moonves, the CBS president, underscored the contrast in the negotiations in a memo he sent to CBS employees noting that the deal with FiOS was “reached swiftly and amicably in just a few days.” The battle with Time Warner Cable began Aug. 2 with no end in sight. CBS programs are blacked out in more than three million homes.

Coincidentally, the coverage areas for Time Warner Cable and FiOS overlap in this case. The major areas of FiOS covered under the new agreement are in the metropolitan regions of New York, Los Angeles and Dallas.

In his memo, Mr. Moonves made a point of emphasizing that this deal included only what are known as over-the-air rights — that is, permission to retransmit the signals of CBS stations in those areas. That means all of CBS’s programming would be available.

What it does not cover are digital rights to CBS programs, which are now at the heart of the stalled negotiations with Time Warner Cable. CBS wants to retain those rights, which include the ability to sell libraries of CBS programming to digital outlets like Netflix and Amazon. The cable company wants to gain access to those rights in any fee increase it pays CBS for retransmission rights.

FiOS actually has slightly more subscribers in the covered areas than Time Warner Cable, about 3.5 million compared with 3.2 million. One difference with the FiOS negotiation is that it did not include CBS’s sister premium cable channel, Showtime.

No financial terms were disclosed, though a CBS executive aware of the terms said that the deal included a substantial increase for CBS. In his memo, Mr. Moonves said CBS achieved “fair value.”

The negotiations with FiOS were conducted quietly and early — the previous deal was not set to conclude until the end of the year.

FiOS could play another role in the dispute with Time Warner Cable, besides being a flag that CBS will wave to underscore its ability to make agreements with other distributors. FiOS is generally available as an alternative to subscribers affected by the blackout of CBS stations on Time Warner Cable.

Article source: http://www.nytimes.com/2013/08/23/business/media/cbs-trumpets-deal-with-fios-tv-in-jab-at-time-warner-cable.html?partner=rss&emc=rss

A Wait for CBS and Time Warner Cable to Make Up

As a result, CBS’s stations, and cable networks owned by CBS, remained blacked out in many areas, including large parts of New York, Los Angeles and Dallas.

The continuing impasse resulted in two popular shows on the pay cable channel Showtime, “Dexter” and “Ray Donovan,” being unavailable to fans in those areas on Sunday night. And it means that the most popular drama of the summer, CBS’s “Under the Dome,” is likely to be blocked to millions of viewers on Monday night.

CBS released a statement on Sunday saying no negotiations were taking place and it stressed its willingness to continue talking. A Time Warner Cable spokeswoman, Maureen Huff, said in an e-mail message: “We’re ready and willing to talk at any point. We want to resolve this, and are absolutely negotiating in good faith.”

The cable company said in a statement that it regretted “the inconvenience to our customers (and their viewers) and look forward to resolving the situation as soon as possible.”

But several media analysts suggested the standoff might be protracted, with predictions ranging from about 10 days to as long as six weeks. The later date is associated with the start of the N.F.L. season, a package of programming that everyone involved agrees cannot be denied to subscribers.

Indeed, timing seems to be the dominant factor driving the dispute. CBS has continued to insist that it would make its programs available to the cable company throughout the negotiations and that the cable company acted now to remove them from its service because Time Warner Cable would lose leverage as the football season got closer — a point the cable executives do not dispute. They acknowledge they need to push the issue now.

Time Warner Cable has also acted at a time when similar showdowns are increasingly common across the country. The impasse in almost all the disputes centers on what are known as retransmission fees — compensation for putting broadcast stations on cable systems. In this case CBS, according to several analysts following the situation, has asked for an increase from about $1 per subscriber to about $2.

The cable company initially labeled the demand exorbitant, and said the costs would have to be passed on to customers. (Cable prices have increased recently to an average of $60 to $70 a month, though analysts point out that the per-channel price has actually dropped because so many new channels have been added.)

More recently the two sides have suggested that the fee issue is either close to being resolved or that the differences are not insurmountable. But there is deep disagreement over concessions Time Warner Cable wants from CBS related to programming — mostly its catalog of older shows, which CBS sells to digital distributors like Netflix and Amazon. Time Warner Cable wants access to those programs on terms it says are fair and reasonable; CBS says that the company is essentially seeking something free, and that these deals have nothing to do with the retransmission negotiation anyway.

Broadcast networks like CBS, ABC, NBC and Fox gained the right in 1992 to demand compensation for allowing their stations’ signals to be carried on cable systems. At first deals were made for cable channels owned by the network, but more recently the broadcasters began demanding cash, seeking to pay for increased program costs by gaining the same dual revenue stream, along with advertising, that cable networks enjoyed. The fees have been steadily increasing. SNL Kagan, a research company, estimated that revenue from retransmission fees will increase to $4.3 billion in 2015, from about $2.4 billion last year.

CBS executives have cited the popularity of their network’s shows to justify a fee price closer to what successful cable networks get from cable operators. ESPN, for example, gets the top price of any network, $5.54 monthly per subscriber, according to SNL Kagan.

Article source: http://www.nytimes.com/2013/08/05/business/media/viewers-wait-for-cbs-and-time-warner-to-make-up.html?partner=rss&emc=rss

Hulu Faces a Nebulous Future as It Seeks a New Owner

But the valedictory lap did not last long. Even as the number of views were adding up, so were concerns within the company about the site’s future.

That’s because Hulu, the Web streaming service that is jointly owned by the Walt Disney Company, NBCUniversal, and News Corporation, is up for sale. And each of the potential buyers brings with it a different vision of what Hulu should become.

The interested parties include Time Warner Cable, DirecTV, the Chernin Group — an investment firm owned by the former News Corporation president Peter Chernin — and two private equity firms, Guggenheim Digital Media and Kohlberg Kravis Roberts.

Yahoo, which completed its $1.1 billion acquisition of Tumblr on Thursday, had also expressed interest with an exploratory offer of $600 million to $800 million, according to several people briefed on the sale, who, like several others in this article, spoke on the condition of anonymity because negotiations for the sale were continuing.

The eventual value of Hulu (which would include the brand, its accessible interface and the rights to many of the television shows it offers) is expected to be roughly $1 billion. Binding bids are due by Friday, though one person familiar with the process said the deadline could be delayed until next month.

Web sites change hands all the time, but Hulu’s sale could signal something more fundamental: the end — at least in its current form — of one of the pioneers of online streaming, which in recent years has become an increasingly popular way to view content.

Hulu has a free Web site, with streams of TV episodes supported by ads, and a subscriber-only section, called Hulu Plus,which offers additional episodes at a cost. In 2012, Hulu had $695 million in revenue and the Hulu Plus service had four million paying users, according to the company.

Depending on the buyer, Hulu could be used to foster the further growth of online streaming as an alternative to the cable TV bundle. Or the site could be kept under lock and key, exclusively for the use of cable subscribers.

Time Warner Cable, for instance, would like to use Hulu to create an industrywide “TV Everywhere” hub in which subscribers could have access to network and cable shows on-demand. A distributor like DirecTV could use Hulu — both its brand name and its technology — to sell a new service that streams a bundle of television channels to subscribers over the Internet. Intel is trying to create a similar type of service; if it succeeds, then traditional distributors may feel the need to sell something similar.

For cable or satellite distributors, Hulu is also a prize for an existential reason: as an executive at one distributor put it, “It’ll make us look like we’re ready for the future.”

But that option concerns some Hulu employees who are fond of the company’s quirky Silicon Valley-meets-Hollywood culture. They see the site as an innovative service that untethers shows from the television, not as another piece of a costly cable bill.

“Can Hulu remain Hulu if a cable company buys it?” asked one person close to the company.

Several Hulu executives have already left the company, amid worries about the future, and it is possible there could be an exodus of creative and engineering employees if a cable operator wins the auction and the site loses its start-up identity.

Jason Kilar, the founding chief executive of Hulu, left in March and was temporarily replaced by Andy Forssell, the senior vice president for content and now the acting chief executive. Richard Tom, the former chief technology officer at Hulu, left after Mr. Kilar, as did Johannes Larcher, the former senior vice president for international operations. Later this summer, Pete Distad, Hulu’s senior vice president for marketing and distribution, also plans to depart. A spokeswoman for Hulu declined to comment.

Mr. Chernin has the most personal connection to Hulu, as he championed the start-up from its inception when he was still at News Corporation. This year, Mr. Chernin reportedly bid about $500 million for the company. The Chernin Group receives financial backing from Providence Equity Partners, which until October owned a 10 percent stake in Hulu. (Providence is not directly involved in the bid.)

Now, ATT is in talks to join the Chernin Group in a bid for Hulu, a pairing that would give Mr. Chernin’s media, technology and entertainment investment group the financial heft to go up against major corporations. (The technology Web site AllThingsD first reported on the partnership. An ATT spokesman declined to comment.)

For ATT, Hulu could present the opportunity to expand its “U-verse Screen Pack,” a $5-a-month option that lets U-verse TV subscribers stream videos.

Michael J. de la Merced contributed reporting.

Article source: http://www.nytimes.com/2013/06/24/business/media/hulu-seeking-a-buyer-may-shift-course.html?partner=rss&emc=rss

Cable Channels Like Current and Ovation Feeling Heat

The outlets in the second group, the independent channels, are feeling threatened these days. Some of the distributors they depend on — Time Warner Cable, DirecTV, Verizon FiOS — are talking about dropping underperforming channels from their lineups, or at least paying them less. Al Gore’s low-rated Current TV, for example, was at risk of being dropped when it decided to sell to Al Jazeera last week and was, in fact, dropped by Time Warner on New Year’s Day.

Distributors have talked for years about belt-tightening, but two things are different now: potential Web competitors are creeping up and programming costs are soaring, particularly for sports channels and broadcasters.

“We are having to take a very hard look at our lineup, not unlike a network that takes a hard look at its lineup when deciding what shows it will put on the air,” said Melinda Witmer, who oversees Time Warner Cable’s negotiations with channel owners. She predicted more changes in the future that would “enable us to buy the stuff that we’ve really got to have, and let go of stuff that’s not really moving the dial.”

In practice, independently owned channels are more imperiled than those owned by media conglomerates like the Walt Disney Company and Viacom. “Many lesser networks owned by the large content companies are tied to carriage of their more valuable services,” said Dan York, who oversees programming deals for DirecTV.

VH1 Classic and ESPNU aren’t going away anytime soon. But on New Year’s Day, Verizon FiOS withdrew Youtoo TV, a fledgling channel that features videos submitted by viewers, and Time Warner Cable dropped Ovation, which bills itself as an arts and culture channel. Ovation “is viewed by less than 1 percent of our customers on any given day,” the distributor said in December when it announced the change, adding, “They’ve had ample opportunity to improve the ratings and the content, and have failed to deliver.”

Even if obscure channels like Ovation receive only a nickel a month for every customer, those nickels still add up to tens of millions of dollars in costs incurred by distributors and, indirectly, their subscribers. Of the 10 distributors that together account for 90 percent of TV subscriptions in the United States, Time Warner Cable is taking the most aggressive public stance against low-rated channels like Ovation. Programming costs in general are “out of whack,” the distributor’s chief executive, Glenn Britt, told investors last month, citing a 30 percent increase in the subscriber fees paid to channel owners since 2008.

Mr. Britt has been outspoken about limiting price increases to retain customers who otherwise might eliminate cable. When Time Warner Cable warned that it might drop Current last month, it also singled out low-rated channels like Hallmark, IFC, Lifetime, NHL Network, the Style Network and WE tv.

But to date, none except for Current and Ovation have been dropped by Time Warner. And new channels continue to be given a chance: Time Warner Cable started to carry BBC World News and RLTV, formerly called Retirement Living TV, in the last few months. Some programmers say that’s proof that the distributors are just making empty gestures to Wall Street, talking tough about programming costs but not following through.

Chad Gutstein, the chief operating officer of Ovation, said he did not know why his channel was dropped, “but I do know this: What they say they’re doing, they’re clearly not doing.”

“They’re actually doing things to increase their programming cost growth, to drive those costs up for all the other distributors in the marketplace,” Mr. Gutstein said, by starting an expensive regional sports channel in Southern California, for instance.

But channels with exclusive sports rights are crucial, even though they may make profitable distributors feel impoverished. “Any given one may not have a huge amount of viewership relative to a national service, but if you lose that team, you’re losing subscribers,” said Ms. Witmer of Time Warner Cable.

Dave Shull, who oversees Dish Network’s programming deals, said that “with sports costs increasing so much, including the Time Warner products, I think everyone’s aware that they have to cut costs elsewhere to be able to afford those sports products.”

So what’s a tiny channel to do? Some analysts have suggested that low-rated cable channels should remake themselves as freely available channels on the Web, modeled after channels that YouTube is financing. YouTube channel owners make money from advertising but not subscriber fees.

Another model may entail Web subscriptions, something Glenn Beck pioneered with an online channel called TheBlaze. The owner of the Hallmark Channel recently started an online subscription service like Netflix for its library of Hallmark Hall of Fame movies. But at the same time, many online channels, TheBlaze included, are trying to squeeze onto cable and satellite systems, since the vast majority of video viewing still happens on the TV set, not the Web.

Over all, little has changed in the last few years: no major content player has gone “a la carte” and let subscribers choose only the channels they want to have and no one has started a virtual cable company on the Internet, despite efforts by Intel, Sony and other technology companies to do so. The television ecosystem, which at times has seemed close to its breaking point, has not broken. Both programmers and distributors have found it in their best interests to keep it intact.

Last week, for instance, the 11th-biggest distributor in the country, Suddenlink, was caught up in a fee fight with Fox Networks, the cable unit of the News Corporation. Suddenlink proposed that Fox could set prices for each of its channels, big ones like FX and tiny ones like Fox Soccer and Fuel, and then customers could choose to pay for only the ones they wanted.

Suddenlink publicized the offer, calling it “an attempt to respond to what our customers have said they wanted.” But Fox refused the offer. Four hours later, the companies said they had reached an agreement in principle to keep all the channels — and thus keep the system intact.

Article source: http://www.nytimes.com/2013/01/07/business/media/cable-channels-like-current-and-ovation-feeling-heat.html?partner=rss&emc=rss

Media Decoder Blog: With Verizon’s $3.6 Billion Spectrum Deal, Cable and Wireless Inch Closer

2:15 p.m. | Updated Verizon Wireless said Friday that it had agreed to acquire wireless spectrum from three cable companies — Comcast, Time Warner Cable and Bright House Networks — at a cost of $3.6 billion.

The spectrum transfer, if approved by the government, will allow Verizon to further grow its wireless data networks, an important advantage against its main competitor, ATT.

Crucially, Verizon also agreed to market the cable companies’ services and vice versa, foreshadowing the possibility of cable television, broadband, home phone, and cellphone service someday appearing on a single monthly bill.

The spectrum sale is part of a “complete reordering of the competitive universe as we know it today,” the cable analyst Craig Moffett of Sanford Bernstein Co. wrote in an analyst report. The marketing agreements between Verizon and cable, he wrote, amount to “a partnership between formerly mortal enemies.”

In an e-mail message from an airport runway in Germany, as he was about to take off for the U.S., Mr. Moffett reiterated, “This is a REALLY big deal. Maybe the most significant deal the industry has ever seen. And that’s a pretty amazing thing to say for a deal where less than $4 billion changes hands.”

The spectrum transfer part of the deal will require approval by the Federal Communications Commission and an antitrust review by the Justice Department. The agencies have strongly objected to ATT’s proposed acquisition of T-Mobile. Verizon said it is seeking approval of the spectrum transfer by the middle of 2012.

The agreements announced Friday reflect the cable industry’s recognition that it must have a hand in the wireless marketplace, but also a recognition of how impractical it would be to build out its own networks and provide phones to customers.

Last month, the first big cable company that had acquired spectrum and sold its own wireless service, Cox, abandoned the venture, citing in a statement “the lack of wireless scale necessary to compete in the marketplace” among other factors.

Instead of creating its own wireless services, Comcast, Time Warner Cable and Bright House will market Verizon’s service, and in turn Verizon will market the cable companies in their respective local markets.

“We’ll be joined at the hip going after new customers,” a Comcast executive said Friday in describing the deal. The executive spoke on condition of anonymity in deference to the company’s president of cable, Neal Smit, who wrote a blog post Friday about the significance of the deal.

“Mobility is an important part of the experience that we deliver to our customers today and will be an increasingly important part of Comcast’s future product road map,” Mr. Smit wrote in his blog post.

The marketing arrangements will occur first in four test markets, then be expanded to other markets. In four years, the cable companies will have the right to start reselling Verizon Wireless service under their own brand names.

The spectrum licenses that Verizon is seeking to acquire were picked up by the three cable companies as well as Cox and Sprint Nextel at auction in 2006 for a total of $2.37 billion. Comcast, the biggest cable company by far, held most of the licenses; the rest were split among the three others.

The license transfer, if approved, will be a financial windfall for the cable companies. Comcast will receive $2.3 billion for its portion, a gain of more than $1 billion over what it paid in 2006.

Verizon, meanwhile, will gain a substantial amount of new spectrum at a time when it and its smaller competitors, like ATT, are striving to keep up with growing demand.

Daniel S. Mead, the president and chief executive of Verizon Wireless, said in an interview that the $3.6 billion of spectrum would be a “critical mechanism” for delivering wireless service in the future.

Verizon and the cable companies, led by Comcast, will also form a joint venture for what they call “innovation technology.” Under the venture, the companies will devise new products that integrate cable technology and wireless technology.

Theoretically, the products could make it possible for home devices like a TV set, and mobile devices like an iPhone, to talk to each other digitally. If a customer of both Comcast and Verizon were watching a football game on a bus, say, via a cellphone, that game could seamlessly show up on a TV screen when the customer arrived home.

But those connections won’t be available right away. Initially, if a new customer walks into a Verizon Wireless store and orders both mobile phone service and Time Warner Cable television service, they will still receive two separate bills.

The cable companies’ right to sell their own branded wireless service — thereby having it on a single bill and in a single-price bundle — only takes effect four years after the initial deal is formally signed.

Time Warner Cable and Bright House already resell another wireless data service, Clearwire, to a limited number of customers. But they are likely to stop doing so, possibly to the detriment of Clearwire, which is already struggling financially, and its backer, Sprint Nextel.

Mr. Moffett said that the agreements would also increase pressure on Deutsche Telekom, which controls T-Mobile, “to find a way to close a deal with ATT,” because it all but rules out a joint venture between T-Mobile and the cable industry.

The analysts Vijay Jayant of Judah Rifkin, of ISI Group, wrote Friday, “For Verizon, this appears to be a victory.”

It is unclear what the agreements will mean for Verizon FiOS, the fiber-optic television service. FiOS has been responsible for some of the subscriber losses reported in recent years by the cable companies, but all told it has about four million subscribers, far fewer than Comcast or Time Warner Cable.

FiOS has stopped building out beyond the areas in which it already is available. Verizon and another fiber-optic television service company, ATT U-verse, already sell a bundle, colloquially called a quad-play, of television, Internet, home and mobile phone service.

On Friday, Mr. Smit said that Comcast and Verizon Wireless hope to be able to sell the same bundle, with one single bill, “over time.”

Mr. Mead concurred, though he cautioned, “We have got to crawl before we run here.”

Article source: http://mediadecoder.blogs.nytimes.com/2011/12/02/with-verizons-3-6-billion-spectrum-deal-cable-and-wireless-inch-closer/?partner=rss&emc=rss

Cable TV Holding Web Rivals at Bay, Earnings Show

But for the most part, the cords remain intact, the latest crop of earnings reports indicate. Considering the fragile economy, cable and satellite subscriptions seem to be faring better than the industry had feared and its Internet rivals had hoped.

Even as Internet video viewing increases, the vast majority of American households are still paying for television subscriptions and watching most video that way. Those who are canceling are doing so, it seems, because of poverty, not improved technology.

“Overwhelmingly, the losses are coming at the low end of the income spectrum,” said Craig Moffett, an analyst for Sanford C. Bernstein. Most such cord-cutters do not have a broadband Internet connection, he said.

Although cord-cutting losses adversely affect distributors, they have to date been largely offset by increases in broadband subscriptions and business services. Business clients are the single biggest area of growth for Comcast and Time Warner Cable, the country’s top two cable distributors. That is one of the reasons why analysts say the companies are stable despite pressure on the television subscription front.

Speaking to investors last week, Glenn A. Britt, the chief executive of Time Warner Cable, called residential broadband and business services “our two most promising areas.”

The ripple effects of hard times for American households are evident in the revenue and subscriber figures recently shared by Mr. Britt and others. Some cable subscribers are cutting back on premium channels like HBO or Showtime and are dropping the digital video recorders and landline telephones that they signed up for a few years ago.

Meanwhile, because fewer people are moving into new homes or starting families, there are fewer new households for distributors to sign up for TV and broadband service.

When it reported earnings on Friday, Cablevision, which mostly serves subscribers in the New York metropolitan area, said it believed that the number of occupied homes in its service area had declined in the last 12 months, putting additional pressure on the company.

Vijay Jayant, a senior managing director for the ISI Group, said he anticipated an overall dip in TV subscribers for the quarter, just as in the second quarter, when the top publicly traded distributors lost about 450,000 subscribers in total. (Each year the second quarter is affected by seasonal factors like the departure of college students; in the 2010 period, distributors lost 200,000 subscribers.)

But Mr. Jayant and other analysts remain bullish. Right now, he said, “it’s a housing issue, more than anything else.”

The lack of new housing, of course, is tied to the broader economy. When Time Warner Cable, which has been losing TV subscribers to competitors for years, reported a net loss of 128,000 in the quarter that ended Sept. 30, it noted that fully half were analog subscribers, who generally pay less and get fewer channels than digital subscribers. Analog subscribers represent about 25 percent of Time Warner Cable’s subscriber base.

“These are families that are struggling to make ends meet,” Mr. Moffett surmised.

Over all, it is striking how steady the levels of subscriptions have been. About 100 million households pay for TV subscriptions. “When you think about it, nearly everyone watches TV, and they watch a lot of it,” Mr. Britt said on Thursday.

The Cablevision chief operating officer, Tom Rutledge, struck a similarly optimistic note a day later. “Over the long term,” he said, “I think the business has a lot of growth to it.”

In some areas, Time Warner Cable has been marketing what it calls “TV Essentials,” a less expensive monthly package that lacks ESPN and other channels. Other distributors have shown interest in less costly tiers of service, too.

Mr. Britt told investors last week that although “TV Essentials” generated “lots of interest, the vast majority of customers who call about the offering end up taking a more robust video package.”

This article has been revised to reflect the following correction:

Correction: October 30, 2011

An earlier version of this article incorrectly identified Tom Rutledge as Cablevision’s chief executive. He is the company’s chief operating officer.

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Media Decoder: Viacom Sues Cablevision Over iPad App

3:57 p.m. | Updated While it tries to resolve a dispute with Time Warner Cable over the iPad, the cable channel owner Viacom is suing another cable operator, Cablevision, over the same issue.

Viacom said Thursday it was taking the action because its discussions with Cablevision about licensing MTV, Nickelodeon and its other channels for iPad streaming have been “limited and unproductive.”

Cablevision said in a statement that its app “falls within our existing cable television licensing agreements with programmers – including Viacom.” The company continued, “It is cable television service on the iPad, which functions as a television, and is delivered securely to our customers in the home on Cablevision’s own proprietary network.”

At issue are the rights of cable operators like Time Warner Cable and Cablevision to transmit cable channels in new ways. The two companies released popular apps last spring that allowed subscribers to replicate the live-TV experience of a living room television on the iPad, effectively turning it — and conceivably other tablet computers like it — into TV screens.

Some channel owners cried foul, saying that their existing contracts with the operators did not cover new screens like the iPad. Viacom was louder than any other channel owner, and in April it sued Time Warner Cable claiming breach of contract and copyright violations. The same day, Time Warner Cable sued Viacom to seek a judge’s ruling that it has the right to stream live channels to iPads.

Conceivably, channel owners like Viacom could demand more money for the right of cable operators to stream channels over the Internet to tablet computers, creating a new revenue stream for the owners — and perhaps a new cost for consumers.

Earlier this week, amid behind-the-scenes discussions, Viacom and Time Warner Cable agreed to suspend their lawsuits temporarily. Viacom’s decision on Thursday to sue Cablevision implies that the discussions with that cable operator have been less satisfactory.

“We have taken this action to protect our valuable content,” Viacom said in a statement Thursday afternoon. “Over the last few months, we have had limited and unproductive discussions with Cablevision about licensing iPad rights. We remain open to productive discussions, but we cannot wait indefinitely while our networks are being distributed without permission.”

The company declined to comment on the discussions with Time Warner Cable.

The apps have proven to be popular among Time Warner Cable and Cablevision customers. Other cable operators are developing similar apps, but have not made them available to customers yet.

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