Big Cable Offering Producers Incentives to Stay Off the Web

Include higher fees as well as threats to drop programming

Time Warner Cable and other pay-TV operators are offering incentives to producers to withhold content from Internet services, Bloomberg reported. Bloomberg's unnamed sources said the incentives take the form of higher payments or threats to drop programming.

Though the controversy goes back to June 2012 when the Justice Department announced it would investigate whether cable companies violate antitrust laws by shutting out online video competitors, the issue has gained renewed attention this week during the industry's Cable Show summit in Washington, D.C. During one meeting with analysts, Time Warner Cable CEO Glenn Britt indicated that the cable provider has programming contracts in place that prevent media outlets from licensing content to online pay-TV services.

Time Warner has rebuffed any accusations of anticompetitive practices.

“The amount and scope of exclusivity and windowing in Time Warner Cable’s arrangements with programmers pales by comparison to that found between other players in the entertainment ecosystem,” a representative of the company told Variety.

Maureen Huff, a Time Warner spokesperson, told Bloomberg, “It’s absurd to suggest that in today’s highly competitive video marketplace obtaining some level of exclusivity is anticompetitive.”

Time Warner compared its practices to NFL's exclusive deal with DirecTV and the Netflix distribution of Arrested Development.

Variety reported that DirecTV, Dish Network and Cablevision Systems may have similar, contractually mandated provisions to discourage cable networks from distributing to Web services. Many news outlets cited a report from BTIG analyst Richard Greenfield, who wrote that the provisions "most certainly [are] bad for consumers" and thinks that the cable companies should be investigated by the FTC.

“Virtual cable systems, or over-the-top providers, would be wonderful for consumers,” Greenfield told Bloomberg. “It appears certain pay-TV operators don’t want that to happen.”

Greenfield rejected the cable companies' argument that they are simply providing exclusivity at a premium.

“They are not paying for exclusivity,” Greenfield told The New York Times. “They are saying you can sell to X, to Y and Z, but you are forbidden from selling to this new class, called A.”

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