How Online Video Affects the Time Warner Cable-Disney Retrans Spat

Written on:July 30, 2010
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The battle between Time Warner Cable and Disney over the retransmission fees required to carry ABC and ESPN channels on the MSO’s cable systems is heating up, with both companies already appealing to the public through websites designed to sway opinion in their favor. But as I write in my latest piece on GigaOM Pro (subscription required), the availability of that content online could be one reason that both Time Warner Cable and Disney have taken the fight public so early.

Time Warner Cable has brought back its “Roll Over or Get Tough” marketing campaign, which it originally launched during its retrans spat with Fox at the end of last year. Disney, meanwhile, is reminding consumers they could always switch providers with its own newly launched “I Have Choices” campaign.

While Time Warner Cable is trying to woo the public by showing how increases in retransmission fees eventually get passed on to the consumer, Disney is urging consumers on Time Warner Cable systems to find alternative service providers if they are afraid of losing access to ABC content. On its “I Have Choices” page, Disney suggests viewers tune into its programming on AT&T, Verizon or DirecTV in affected markets.

But how does online video affect the current retransmission debates? Well, consumers can find more content than ever before free online, with more than 90 percent of broadcast television shows over the last two seasons made available online, according to a study by Clicker released earlier this month. And it’s difficult to see Time Warner Cable — or any cable company — wanting to pay more for content that is made available for free through another distribution channel.

So far, the networks have argued that online video is complementary, not cannibalistic, to their broadcast properties. And to this point, short-term worries over the possibility of consumers “cutting the cord,” or even canceling their cable subscriptions, seem overblown. After all, more consumers in the U.S. pay for subscription TV services than ever before.

Networks are cautious about proposing online video as a substitute for the broadcast content. Even in its marketing campaign to let users know that they “have choices,” the one place that Disney is not telling users to go is online, where much of its programming is available for free on or Hulu.

Even so, if Time Warner Cable does stop carrying ABC, users may take to watching their favorite shows online rather than switching providers, which is a precarious situation for both companies. Time Warner Cable would still make money from broadband subscribers, but those users won’t carry the same value as those that subscribe to higher-priced cable packages. And Disney would still make advertising revenue from its web video business, but not nearly as much as it does off the broadcast.

Both companies should tread carefully as their Sept. 2 deadline approaches to reach an agreement on keeping Disney’s content on Time Warner Cable. If the fight eventually drives users to watch more content online, Time Warner Cable and Disney could both lose out.

To read the full piece on GigaOM Pro, click here. (subscription required)

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