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Cable Companies Use Payments, Threats to Slow New Web TV Services

FTC Should Scrutinize Arrangements, Analyst Says

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Time Warner Cable and other pay-TV companies are offering incentives to media companies that agree to withhold content from web-based entertainment services such as those pursued by Intel and Apple, people with knowledge of the matter said.

The incentives can take the form of higher payments, or they can include threats to drop programming, said the people, who asked not to be identified because the discussions are private.

Cable companies are seeking to keep customers by ensuring access to exclusive content while fending off competition from upstart Web providers. Favoring programming that's exclusive may not be a surprising business tactic, but could cross lines if taken too far.

The U.S. Federal Trade Commission should investigate whether such arrangements violate antitrust laws, Rich Greenfield, an analyst at BTIG, said in a report yesterday.

Intel is working on a service to rival traditional TV.
Intel is working on a service to rival traditional TV. Credit: Illustration by Athletics

"Virtual cable systems, or over-the-top providers, would be wonderful for consumers," Mr. Greenfield said in an interview. "It appears certain pay-TV operators don't want that to happen."

Time Warner Cable has more than 300 contracts, and some of them may bar media outlets from providing content to online pay-TV services, CEO Glenn Britt said yesterday in a meeting with analysts at the National Cable & Telecommunications Association show.

"We may well have ones that have that prohibition," Mr. Britt said at the conference in Washington. "This is not a cookie-cutter kind of business."

Sometimes the deals may be about simply keeping up with streaming competitors: Some agreements require media companies that license content to web-based systems to offer the same online rights to Time Warner Cable, Mr. Britt said.

There's a brewing battle being waged against incumbent cable-TV companies and telecommunications providers, which already have the rights to distribute TV and movies over their networks.

Arrayed against them are technology companies such as Intel, Apple and Google, which are eager to cut deals that would let them provide programming over the Web. These newcomers have been working for years on devices, software and services that have failed to loosen the grip of cable and satellite distributors because they haven't secured enough content to woo customers.

Charter Communications, the fourth-largest cable company, seeks to protect the existing pay-TV model, Chief Financial Officer Chris Winfrey said at the conference yesterday.

"It's in everybody's mutual interest that we are protecting the ecosystem in a way that continues to keep the value of that programming that we have and the way its delivered to our subscribers today," Mr. Winfrey said, declining to comment on specific agreements.

Maureen Huff, a spokeswoman for Time Warner Cable, declined to elaborate on Mr. Britt's remarks. Alex Dudley, a spokesman for Charter Communications, declined to say more on Mr. Winfrey's comments.

~ Bloomberg News ~

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