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Barry Diller: The internet is eating the cable company

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The wall that broadcasters and cable companies have built around their services is not long for this world, according to Barry Diller, chairman of IAC (s iaci). It’s not clear who will tear it down, and it’s not clear when it will actually happen, but the “centricity” of the video world is going to shift from cable and satellite to the internet, he said at D11 Wednesday.

Diller, of course, is doing all he can to help that along by investing in projects like Aereo, which has the established broadcasters running to the courtroom in an effort to get it shut down. Aereo allows people to purchase a digital antenna and receive over-the-air television shows, and as we’ve covered extensively, broadcasters are not happy that Aereo isn’t paying them for that right.

“Cable is a great closed system where the masses, now 100 million subscribers of cable, support ESPN that is only watched by 10 percent. That’s a great little plot so long as you can keep everybody inside the closed circle,” Diller said. “We’re out to get the centricity moved to the internet.”

Several days after Diller’s comments, an ESPN spokeswoman reached out in hopes of contradicting his statement on viewership. “Based on 4th Quarter 2012 data for five measured ESPN networks: 88% of households that can receive ESPN networks tune in to one or more of the networks. In 4th Quarter 2012, ESPN networks reached 89 million households and over 200M persons 2+ in those households – about two-thirds of the U.S. population,” the spokeswoman said in a statement, citing data from Nielsen and including viewership of ESPN, ESPN2, ESPNNEWS, ESPNU, and ESPN Deportes.

CNN’s Jeff Zucker, who was billed as a joint speaker alongside Diller but wound up playing second fiddle to questions for Diller, agreed that a shift will take place but wasn’t totally sure, as might be expected given the company that pays his bills, that it would happen all that quickly. Still, “at the end of the day we don’t care which platform you get your information from,” he said, emphasizing CNN’s digital products.

Younger folks are the ones who are going to make this happen, according to Diller. “I think that young people that don’t now subscribe to cable are maybe going to think of Aereo as an alternative because they don’t want to pay 100 bucks a month for cable,” he said.

Which tech companies will make this happen? Diller listed Apple (“I don’t think it’s some big secret that they’ve been working for years on trying to solve television”), Amazon and Microsoft.

This post was updated June 3rd after an ESPN spokeswoman sought to clarify Diller’s remarks.

14 Responses to “Barry Diller: The internet is eating the cable company”

  1. Paul Grullon

    It doesnt matter what he means of delivery are… In the future cable wil be cable nomatter if you get it from and stb or an app. Tell you the truth taking it to the net will make it a much more expensive. You will have to pay for every independent channel you want to watch. As far as cable companies, they have bandwidth for the next 100 years there fiber copper hybrids. Technicly ftth and cable are equals. Its just that ftth is whats new. Iptv pisses me sometimes. Sometimes i would like the good old analog days when cable was simpler.

  2. The question though, is just how fast this disruption will take place and what form it will take. This kind of innovation makes it easy to think that the days of cable services providers are numbered. The thinking goes that if traditional media companies don’t embrace consumer demands for unbundled content and offer direct, a-la carte pricing these new entrants will simply replace them.

  3. christobal

    If Cable Companies don’t get the revenue from the television side they will just raise the rates on the BROADBAND side which is what we currently use today to stream the so called content that is suppose to replace television.

  4. I’m well entrenched in the older generation – but just unloaded cable about 6 weeks ago. Less access to some sports, but everything else has been great!! Went from about $160/Month to about $20 per month.

  5. stewkelly

    Cable companies are their own worse enemies. In an effort to make up for declining revenues they have saturated their content offerings with so much advertising that they have become unwatchable; especially with the shorter attention spans of today.

  6. Kraston Scott

    I happen to be on the older generation, but totally agree with this article and the eventual demise of cable as we know it today. I’m ready to make the switch now! We did away with our landline phone almost 7 years ago and have not missed it one bit. The smartphones that my wife and I use take care of almost everything we need on a daily basis. All of our transactions are done online including medical records and storage of data in the cloud using SkyDrive from Microsoft. We are in our 70’s and hope that other seniors feel the way we do.

  7. This statement is silly and comes from someone with a vested interest in the very outcome he foresees. Superior content providers like ESPN are not going all web. They very much like the business model of all cable subscribers paying for their product, regardless of eyeballs. And I don’t think too many people are upset about the price of cable at this point either. As much as people make much ado about the “millenials” doing things differently, a lot of young people watch sports. Guess how they do that?

    • I am not one of the youngers but I watch baseball on the internet. Also, we dumped cable about 3 years ago. Even if i had cable, I could not have watched my team on cable.

    • Steven D'Ortone

      As a millenial, the only, and I mean only reason I have cable now is to watch the NFL. ESPN is usually watched on my xbox not on my cable box since it offers more games to view. Hopefully the NFL will follow suite at some point to offer an online option, even just the redzone online would suffice. I live in an area where my teams are not broadcast so I usually find a stream online anyway and watch it there. All other tv is downloaded and then streamed to my roku boxes via Plex Media Server.

      I am much more willing to pay for faster internet speeds with higher data caps then pay for cable where I watch maybe 5% of the channels. I have no problem waiting an hour or so to download a show online so when the time comes, I will not miss cable one bit.

  8. Ian Arnell

    I think there is a lot of truth to these statements. I feel that in the future some cable companies may still exists but it will be in a much different way than we know them now. Especially with how gaming consoles are practically their own cable box now, and they are only getting more and more like one each generation