News Corp. Tries, Hulu As Pawn In Retrans Battle With Cablevision

Cablevision (NYSE: CVC) internet customers lost access to and Fox programming on Hulu for a time Saturday afternoon — the result of a misguided effort on News Corp.’s part to cut off online viewing as an alternative in its standoff with the cable operator over retrans fees. Fox stations in NYC, Philadelphia and New Jersey went dark at midnight Friday when negotiations between the two broke down.

Hulu’s Elisa Schreiber said late Saturday afternoon that access has been restored. She also said subscribers of premium plan Hulu Plus were unaffected. Asked if any of Hulu’s owners could pull programming in situations like this, Schreiber said the company would not comment on how it played out.

Under terms of the News Corp.-NBC (NYSE: GE) Universal-Disney (NYSE: DIS) joint venture that we’ve written about before. whatever content the programmer makes available on its own site is supposed to be on Hulu. I’ve confirmed that the reverse is also true — can’t offer programming if it is not available through the site.

The video JV already blocks access via some services — problematic enough when one of your partners is under FCC scrutiny during a merger review — but slicing off some users based on how they access the internet takes that to another level.

Fox backed off the blockade but may have started a dangerous game of dominoes when it comes to the debate over online content access and net neutrality.

Yes, as Peter Kafka mentioned when he posted about the Hulu blockage this afternoon, it is logical for News Corp (NSDQ: NWS). to use every weapon it can and, yes, Time Warner Cable (NYSE: TWC) was ready to pitch watching programs on Hulu if it couldn’t reach a deal with the programmer. But blocking access to its own network site and to a joint venture aimed at anyone interested in TV, whether or not they subscribe to multichannel plans, is a sword with two edges.

A source familiar with the situation said Fox agreed to restore the programming when it realized people who were not Cablevision video subscribers were affected and thart there was no way online to discern between the two. The network cut off access initially to avoid Cablevision offering online viewing as alternative to the TV version.

The mistake with that thinking: equating day-after VOD viewing with real time. Fox recognizes the value of live events like baseball and football but missed a chance to push home on the loss of the real-time viewing experience for some of its hit shows like Glee. Growing numbers are fine with online streaming but plenty of people still want to a show when it airs on TV — and they can complain just as loudly as football fans.