Cable’s Big iPad Fight: It’s All About Control

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Time Warner Cable (s TWC) and Viacom (s VIA) took to the courts Thursday, both seeking declaratory judgment on whether or not live cable companies have the right to deliver live video streams to apps on the iPad and other mobile tablets. Through the filings, it becomes clear that the fight is not so much about whether or not Time Warner Cable should have to pay for broadband streaming rights to reach the iPad, but who has the right to control and decide how a cable network’s content is distributed.

Time Warner Cable’s argument is pretty simple: It pays content providers for the ability to deliver their programming, via coax, into customers homes. To its subscribers, that means they should be able to watch that content on whatever screen they want. And to content owners, it shouldn’t really matter whether those feeds are delivered as analog, digital or IP-based signals — they’re all fed through the same Time Warner Cable pipes.

For Viacom, the arguments are a little more complex. In addition to making the case that Time Warner Cable hadn’t negotiated for the rights to deliver its live programming via broadband, Viacom also notes that viewership on the iPad isn’t counted as part of Nielsen’s ratings of TV programming. Viacom also said it wouldn’t be able to control the quality of iPad streams, which could be affected by IP network congestion, or even usage of the wireless home network by other devices.

These are all valid complaints, but the bigger issue is over Viacom’s ability to control how its content is being consumed by viewers. Most importantly, distribution over the Time Warner Cable and other iPad apps would impinge on Viacom’s ability to license its programming to other broadband and mobile distributors, as well as its ability to build and monetize its content through distribution of its own websites and mobile apps. As Viacom wrote in its legal complaint:

Among other things, TWC’s actions will interfere with Viacom’s opportunities to license content to third-party broadband providers and to successfully distribute programming on its own broadband delivery sites. Viacom also will be deprived of control over the broadband distribution of its video programming signals, copyrighted programming and related trademarks, opportunities to license content over new media, the ability to track new viewership of its entertainment programming by TWC iPad App users, and the ability to ensure the quality of the signal relaying its entertainment programing to users of the iPad app.

Viacom isn’t the only cable network affected by these new apps; ESPN released its own live streaming app Thursday, providing live streams of four cable networks to cable subscribers on Time Warner Cable, Bright House Networks and Verizon FiOS (s VZ) pay TV services. The app will have one advantage over the Time Warner Cable, Cablevision (s cvc) and in-home streaming apps from other pay TV operators — the ESPN (s dis) app will give viewers access wherever they are, at home or not.

In a phone conversation yesterday, ESPN SVP of digital video distribution Matt Murphy said the sports network’s interest in building mobile applications comes from the recognition that it needs to be on whatever platform the consumer wants it on. “Thirty years ago, there was only one way to reach people, and that was the TV,” Murphy said. Now there are multiple devices the viewer might use to try to view ESPN.

But if a viewer is at home, with only a passing interest in whatever game is on, will he check out the ESPN app first, or tune in his cable provider’s app to browse through hundreds of potential channels? That’s what ESPN, Viacom and others are up against.

Cable viewers will be less inclined to download or pay for Viacom-owned or branded mobile apps if they can log in and view live streams through a Time Warner Cable app. And broadband licensees — the Netflixes (s NFLX) and the Hulus of the world — will be less likely to pay as much for broadband or mobile rights to programming that viewers can already stream through to the iPad. In other words, Viacom can’t sell what others are giving away for free.

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Len Grace

As long as consumers are viewing Viacom programming through the Time Warner Cable network, in my opinion; it should fall under current agreements for distribution, which would include TV Everywhere or an App the cable company has attached to their network. After all, viewing takes place in the home.

Or, both companies should re-negotiate current agreements to include such activity to include viewing programming anywhere on any device.

There is a lot of money at stake concerning distribution rights including how and where that takes place. Maybe Time Warner Cable can argue to the courts that TV Everywhere means just that, every device and everywhere. If that language is in the original contract, they may have an argument.

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