In the latest round of chicken between content owners and TV service providers, Viacom is threatening to pull all of its programming from Time Warner Cable (TWC) at midnight tonight unless it gets a January 1 pay increase. That includes Comedy Central, Nickelodeon, MTV, and VH1 content.
I find the scenario a lot more interesting today than it would have been a few years ago. First, telco video is now a viable cable competitor in certain areas, meaning Viacom can use the lure of its content to drive subscribers to other pay TV services (satellite and/or telco), potentially hurting TWC if a deal isn’t worked out. Second, Viacom (and everyone else) now has the Internet as a distribution vehicle. While it’s hard for a newcomer to get noticed online, Viacom already has established brands that draw in an audience on the Net.
What about making money online you say? Yup, that’s a valid point. Content providers rely on the revenue they get from service providers like Time Warner, and cable companies will continue to have a lot of power in these relationships. However, I would argue that if a big company like Viacom wanted to build out a business model for the Web, it could do it. More people are watching video online, and there are more ways than ever to get online content to the big screen. It would be a difficult and probably painful route for Viacom to take, but the company could do it. With the promise of an established audience, Viacom could bring in a few big sponsors at a discount rate, build its online viewership through programming like The Daily Show (especially by offering exclusive access to the content), and slowly build up revenue from sponsorships and clever promotions.
I don’t believe Viacom will take the online-only option now, particularly given the woes of the advertising industry today. However, we’ve hit a point where I’d argue it’s not inconceivable. Interesting times.
UPDATE: TWC has apparently caved, and Viacom programming will remain on Time Warner’s lineup. Good news. Unfortunately,
Some or all of that fee increase is likely to be passed on to Time Warner Cable subscribers.
“The system will eat itself.”
:)
I’d be willing to bet that Viacom’s cable nets receive 70% of their revenue from cable subscriber fees. That said, until they can replace that money with something else, eventually they’ll have to go back to TWC or face shuttering operations. Online won’t be an option until 80% of the US has high-speed non-dsl internet capability.
Saw the tail end of the warning scrolling along the bottom on the screen and started to panic a little. I have Cabelvision, the next town over from me is TWC. In TWC defense MTV does suck, yank it ;).
I’ve read Viacom’s press statement about their plans to pull the MTV/Nickelodeon/Comedy Central networks from the air if Time Warner Cable does not meet their demands for increased fees/revenue. Viacom’s sense of corporate responsibility, trying to lay the blame on Time Warner Cable, is shameful and atrocious. They’ve stated that they expect cable customers to find TWC’s resistance to your demands “outrageous.” No, it is Viacom that I find outrageous. CHARGE THE ADVERTISERS MORE, not the viewer. The consumers and viewers of Viacom’s shows are not commodities with whom they can trade on the value of their company. We should not be the ones who add value to Viacom’s bottom line. Too bad if their sales margins are declining. I for one would rather loose their networks forever than have to pay a higher cable bill. If Viacom can’t agree to TWC’s terms… I say good riddance.
@FMS NYC
“…No, it is Viacom that I find outrageous. CHARGE THE ADVERTISERS MORE, not the viewer. The consumers and viewers of Viacom’s shows are not commodities with whom they can trade on the value of their company. We should not be the ones who add value to Viacom’s bottom line.”
Oh yes, I agree!
I’d love to see MTV (formerly known as Music TV and not Mush TV) leave my Guide. Now that I think about it I think I’ll make that happen myself…
I could live without all of the Viacom offerings with the exception of Sponge Bob. Luckily, I have about 25-30 already on TiVo for the grand kids.
Bill
Brent, I do that with my TiVo. We have a bunch of channels that I just unchecked and get rid of. I do still have MTV on there, but maybe it should go as well.