The availability of free pornography on the Internet has hurt Time Warner Cable’s VOD sales, a drop that contributed to the company’s largely flat Q2 video revenue compared to a year earlier, company executives said during an earnings teleconference Thursday. About a third of the year-over-year drop in VOD sales was due to lower adult title revenue, said Rob Marcus, chief financial officer. The phenomenon isn’t new, said CEO Glenn Britt. “There has been a fairly steady trend on VOD for some time now for adult to go down, largely because there is that kind of material available on the Internet for free,” he said. Adult VOD is a “pretty high margin” business, Britt said, and the decline hasn’t been isolated to the second quarter.

Sprint Nextel, whose Q2 loss was $847 million, entered into a 15-year spectrum hosting and networking service deal with LightSquared. The deal, which contains protection contingency, is subject to LightSquared’s obtaining resolution and FCC approval of certain interference issues involving terrestrial use of the L-Band spectrum. Though Sprint said the deal won’t change its relationship with Clearwire, the WiMAX operator didn’t seem pleased with the agreement. Sprint’s loss widened from $760 million in the year-ago quarter.

The three largest rural telecom associations defended their decision to engage in the USTelecom-led talks on universal service and intercarrier compensation revisions, but told their members to brace themselves for “give-and-take” on rate-of-return cuts and “deeper” cuts in intercarrier compensation. “We understand that many of you may see it as hard to work with carriers and other companies who often look to undermine the support networks that are essential to operation in rural areas,” said NTCA CEO Shirley Bloomfield, OPASTCO President John Rose and Western Telecom Alliance Vice President Kelly Worthington in a mass email to their members.

With several TV stations and groups potentially for sale, a batch of transactions (CD July 19 p9) could provide investors with a better sense of what LIN Media’s assets are worth and boost its share price, CEO Vincent Sadusky said on the company’s Q2 earnings teleconference. “It’s terrific for everyone associated with the industry that we're going to have some competitive valuation marks, hopefully, as some of these transactions are consummated.” Valuations could be higher than in recent years, he said: “Whether we're a buyer or seller is just going to take place on deal by deal basis.” Even if LIN doesn’t buy or sell any station, it will benefit as stations are sold at higher valuations, he said. “If it doesn’t work for us, we're OK with that. That means these assets will be selling for a premium to our public market value, and that’s a very good thing."

An interim report by a Commerce Spectrum Management Advisory Committee working group identified a series of possible bands to which government operations now at 1755-1780 MHz could be relocated. The report, by the group’s Search for 500 MHz Working Group, was unveiled at CSMAC’s meeting in Boulder, Colo., for an initial discussion (http://xrl.us/bk3c85).

The General Service Administration seeks to address federal agencies’ slowness in transitioning to Networx, the largest government telecom program, said Karl Krumbholz, director of the network service program. The delay has frustrated vendors like Level 3. Federal agencies’ $1.2 billion in annual telecom spending should have been moved to the $68 billion Networx program by June 2010 from the former FTS2001 contract. Instead, they have spent $290 million on “bridge” and “crossover” contracts since the GSA named the primary Networx contractors in 2007 to maintain services during the transition process.

Broadcasters may be limited in the amount of leverage they can apply on Capitol Hill to stop the FCC’s quest to auction TV channels in a way the industry contends will harm almost all stations (CD July 26 p4), some executives said Wednesday. They told us it will be challenging for broadcasters, or any industry, to successfully exert much influence over how legislators deal with the debt ceiling and deficit reduction before Tuesday’s deadline to raise the cap. Spectrum is likely to be part of any long-term solution to cut the U.S. deficit and to let the country issue more IOUs, executives said: If there’s a short-term solution, which right now seems more likely than a longer-term plan, spectrum may not be part of the immediate fix. That would give TV stations more time to get the interference and other protections they seek.

SAN FRANCISCO -- Smaller cable companies are succeeding with strategies to dissuade customers from using enormous amounts of data and to upsell to more expensive service tiers those determined to continue, executives said Wednesday. The approach requires heavy investments in planning and in technology or labor, they said, but it avoids the customer backlash and harmful publicity that some larger providers have bought themselves with data caps and service cutoffs. “Little Windjammer is able to come up with a creative solution and big Comcast can’t,” Kyle Johnson, the product-strategies director of IBBS, said after hearing sharply contrasting stories about the operators. IBBS provides technology-support to cable companies.

More video device manufacturers could introduce retail digital cable-ready products if the FCC crafts a broad waiver in response to TiVo’s petition to be let out of requirements to include an analog tuner in such devices, said comments filed in response to TiVo’s request. TiVo sought the waiver so it can sell a version of its TiVo Premiere Elite box at retail in addition to leasing it through MVPDs (CD June 9 p12).

Congress should reallocate the 700 MHz D-block to public safety as part of a debt limit agreement next week, said Senate Homeland Security Committee Chairman Joe Lieberman, I-Conn. He spoke Wednesday at a committee hearing on emergency communications, as Congress continued to wrangle over reducing the deficit and raising the debt ceiling. Senate Majority Leader Harry Reid, D-Nev., proposed giving public safety $7 billion and the D-block in a debt proposal earlier this week (CD July 27 p2). The Congressional Budget Office said Wednesday that the Reid plan would cost much less than the Senate Commerce Committee’s proposed Spectrum Act (S-911).