Disney, Fox Said to Consider Joining Sony's Internet TV

Momentum Gathering for Alternatives to Cable?

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'Red Band Society,' a new Fox series about teenagers living in a hospital.
'Red Band Society,' a new Fox series about teenagers living in a hospital. Credit: Fox

Walt Disney Co. and 21st Century Fox are in discussions to supply Sony with programming for its planned internet-based TV service, according to people familiar with the conversations.

Disney and Fox would join Viacom, which said yesterday it will provide 22 networks, the first time the media company, headed by Chairman Sumner Redstone, has made its shows available for a web-based service. The deal covers live and on-demand programming, Viacom and Sony said in a statement.

Sony's service will debut with "major programmers," according to yesterday's statement. The company wouldn't specify when, or identify potential partners. No deal with Disney or Fox is imminent, said the people, who asked not to be named because the talks are private.

"Sony is clearly beefing up content offerings for its growth plans for its Entertainment Network division, recently merged with its gaming unit," Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc. in Singapore, said by e-mail.

TV, telephone and technology companies are exploring cable-like packages streamed over the internet to reach younger viewers who aren't signing up for traditional cable and satellite TV. Progress has been slow. Intel has already abandoned a planned web-TV service. Dish Network secured rights to carry Disney channels like ESPN in an online package separate from its satellite-TV business. The Viacom deal took a more than a year to complete after a preliminary accord.

'Major partners'
"It'll benefit every party in the ecosystem we have all enjoyed," Viacom CEO Philippe Dauman said yesterday at the Goldman Sachs Communacopia conference in New York.

Mr. Dauman praised the "elegant consumer interface" of Sony's service and said the Tokyo-based company was a natural partner given the popularity of its gaming devices among the young viewers who watch Viacom's cable channels.

Discovery Communications, Time Warner and Starz are also among the companies discussing offering their programs through Sony, the New York Times reported earlier.

"The service will launch with numerous major network partners, but we aren't providing specifics at this time including who we are speaking to," Sean Yoneda, a spokesman for Sony in the U.S., said in an e-mail.

Sony's plan
Chris LaPlaca, a spokesman for Disney's ESPN, declined to say whether the network was speaking to Sony.

"We remain platform agnostic and are always looking for new and innovative ways to serve our fans, consistent with the approach we are taking with our current distribution partners," Mr. LaPlaca said in an e-mail.

Nathaniel Brown, a spokesman for Fox, declined to comment.

The partnership announced yesterday unites more than 75 million internet-enabled Sony devices in U.S. homes with Viacom's programming, Sony said. Viewers can watch shows such as "SpongeBob SquarePants" and "Teen Wolf" on TVs, game consoles and Blu-ray players.

Sony CEO Kazuo Hirai has boosted investment in content production and TV networks as he pushes his "One Sony" vision to unite products, including mobile devices and TVs, with games, music and films as it competes against Samsung Electronics Co., the world's biggest maker of phones and televisions.

"A good lineup is important for this service because users will choose a service with a lot of content," said Hideki Yasuda, a Tokyo-based analyst at Ace Research Institute. "It's also a way for Sony to differentiate itself from Samsung."

Viacom owns and operates the largest basic-cable portfolio in the U.S. by audience share, said Sony, citing Nielsen data. The cloud-based TV service will stream Comedy Central, VH1 and Spike, among others, as well as Viacom's full video-on-demand package.

The deal earlier this year with Disney gave Dish, Charlie Ergen's satellite-TV company, rights to carry the Disney Channel, ABC and ESPN. That put Dish ahead of Sony in the race to become the first to offer a service known as over-the-top, or OTT, because it runs over an internet connection.

Other major companies such as Intel and Apple have attempted to create similar services. But Intel sold its OnCue set-top box technology to Verizon Communications, allowing it to stream video on the web.

Over-the-top stalled
Negotiations for the right to stream popular TV channels have slowed the development of every planned OTT service, because distributors need a minimum number of channels to offer a product robust enough to compete with traditional pay-TV. Every major TV programmer has explored such deals.

"What they are trying to do is figure out a way to get younger consumers and some cohorts that are not obviously going to subscribe to big packages and bundles of channels, and give them really an on-ramp to starting in the experience of subscribing and getting something that fits them," Time Warner CEO Jeff Bewkes said at the Goldman conference.

"It's a very worthy thing to try to figure this out."

~ Bloomberg News ~

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