TV Everywhere Efforts Helped by Disney-Comcast Deal, Media Executives Say
Efforts to deliver more TV Everywhere services to pay-TV customers were given a boost by the Disney-Comcast distribution agreement announced last week, executives said Thursday at a Citigroup investor conference. Giving the largest cable operator broader rights to distribute marquee programming from Disney will raise the profile of all TV Everywhere services, said John Martin, Time Warner chief financial officer. That’s good because though Time Warner has been successful in distributing its TV Everywhere services such as HBO Go, “usage is still de minimis and awareness is very low,” Martin said. “The more programmers that embrace this and put resources behind it,” the better, he said.
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The Disney-Comcast deal is “the embodiment of a deep and broad multiplatform deal,” said Disney CFO Jay Rasulo. “This deal, if nothing else is a major reinforcement of the MVPD-content provider ecosystem and the strength of that ecosystem.” Hopefully the deal signals a new era of cooperation between programmers and distributors, said Joe NeCastro, chief financial officer of Scripps Networks Interactive. “Certainly, it makes sense that the enemy is outside our little ecosystem and we have to act together and act smartly,” he said.
The year 2012 will be big for progress on TV Everywhere, but it could be a full two years before such services are widely used, Martin said. TV Everywhere services won’t succeed if they're limited to tablets, PCs and smartphones, he said. “It’s got to be on the TV. To have the TV Everywhere experience on the TV is going to be a game changer,” he said. “It’s just going to take some time."
Part of the hold-up is that TV Everywhere rights are typically granted in concert with large distribution deals, said Discovery CFO Brad Singer. “We haven’t had any renewals, which is usually a good impetus to start a discussion,” he said. Furthermore, based on the reports about the Disney deal and others like it, the rights for TV Everywhere services are typically bundled in to the overall economics of a carriage deal, he said. “It’s a question of are there really specific economics [for TV Everywhere] or is it part of an overall package, and it appears that things are going to an overall package,” he said.
Discovery would be open to selling its networks to linear over-the-top online video distributors, if they enter the pay-TV market, Singer said. “I think the way we'd approach is not different to when you had satellite providers come into the marketplace or the telcos,” he said. “What we don’t want is to disadvantage our existing client base, and we want to make sure we maintain the integrity of their existing contracts,” he said. Furthermore, it’s unclear whether over-the-top linear video distributors will be able to realize the returns on investment they're seeking, he said. “I think they're still working through the appropriate economics for how that model can work,” he said.
As technology changes the pay-TV business, there could be a contraction in the number of pay-TV networks, said Time Warner’s Martin. “I don’t know if five years from now there are as many networks as there are today,” he said. “There probably shouldn’t be,” he said. But the networks at risk of disappearing aren’t owned by Time Warner, he said.