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NCTA: Cable Executives: Tread Carefully on Digital

Cable programmers should experiment with new media, but remember that doing so makes little money and threatens to upset crucial business partnerships with operators. Those were the words of advice from representatives of both sides on a digital programming-focused panel during today’s National Cable & Telecommunications Association's annual trade show in Las Vegas.
“In our view, the Internet, while it should be available and open to the networks and [is] not a totally inappropriate avenue, should be supportive and promotional to the core linear networks,” said Comcast Executive VP of Content Acquisition Matt Bond.

Bond, while citing the “tantalizing revenue opportunity” in networks putting their content online, reminded programmers that operators still pay cable networks a collective $20 billion in license fees to carry their channels; cable networks, unlike broadcast, have a dual revenue source – advertising and license fees.
Putting entire episodes of series online, as broadcast networks have done, is tricky for cable networks since it undermines the relationships they have with cable operators who pay them for carriage on their systems.
Operators say that if cable networks offer episodes online, they devalue their TV networks’ worth, and lower the amount of money they can justifiably command in license fees. As operators and programmers negotiate new carriage agreements, they are sorting out these issues by placing limits on the amount and timing of content that networks can put online.
The broadcast networks have seen TV viewing grow when they put episodes online, said NBC U’s president of TV Networks Distribution Bridget Baker, who talked up the online video the company plans to launch September 1 with News Corp.
Still, Baker and the other executives on the panel all admitted there is still little revenue to be had right now in online streaming of content.
“The idea that people are going to stop watching television and sit in front of their computers is a little bit more of a Wall Street Journal front-page race than a reality,” she said.
Comcast’s Bond agreed about some comapnies launching new media products in part for media hype.
“So much of what is going on now in the Internet space is that people want an announcement,” he said. “It’s all very last century. You have to look at where you’re really going to make money and where your cash value is going to truly lie.”
The panel, “Screen Test: Programming for the New, the Old and the In-Between” was moderated by Discovery’s Bill Goodwyn and also included Insight Communications’ Melani Griffith, Fox Cable Networks’ Mike Hopkins, Turner Network Sales’ Coleman Breland and Cox Communications’ Robert Wilson.