CTAM Live: TWC’s Stern Urges Exclusive Web-Video Deals

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BOSTON -- Programmers should work with cable operators to distribute TV content to paying customers over the Internet -- instead of throwing it up online for free and undermining cable’s existing business model, said Peter Stern, executive vice president and chief strategy officer at Time Warner Cable.

“The question of whether broadband video upends the cable business lies with the programmers,” said Stern, speaking on the Monday panel “How to Profit from Broadband Video's Disruptive Impact” at the CTAM Summit ’08

If consumers can get the shows they want to watch for free, they will do that, he said: “Free is a very good deal.”

Stern said there’s a sustainable solution to the issue: For programmers to deliver “all your Web content to your paying customers, and just your promotional content to nonpaying customers.”

“The notion should be that consumers who want to pay for great brands and great content should be able to access that on any platform,” he said.

There should be defined windows for cable TV distribution, Stern added. “What we’re not comfortable with is putting content online for free that we’re offering to customers because at the end of the day, it’s the same screen,” he said. “That makes no sense and ultimately will undermine the affiliate fees that are critical to create that great content.”

For cable programmers, distributing ad-supported content online simply doesn’t provide the same level of return on investment, Scripps Networks Digital president Deanna Brown.

“When the Internet is able to provide us with that same economic value [as affiliate fees], we’ll probably shift our activities accordingly,” Brown said.

But rather than trying to replicate cable TV experience online, the Internet provides the opportunity to present content in a new context, said David Eun, vice president of content partnerships for Google and YouTube.

“We should be thinking less about cutting and pasting and more about creating new experiences,” he said.

And traditional TV content is just one part of the vast and growing pool of video available online, accordin to Eun.. He said consumers upload hundreds of hours of video content -- the equivalent of 57,000 movies per week -- to his company’s sites.

“People are taking advantage of this as an interactive medium,” Eun said.

Brown said HGTV launched a site last year, Rate My Space, for people to post pictures of their homes and allow other members to comment on those and rate them. After seeing a big response, HGTV decided to develop a show around the site and within 12 weeks had it on air.

“That’s a good example of when the consumer started the conversation and it grew up and became a television show,” Brown said.

Fred Seibert, creative director and co-founder of Next New Networks, an online content-production startup, disputed the idea that new Web content or distribution models will displace the existing pay-TV business.

“Nothing ever goes away,” said Seibert, the original creative director of MTV, noting that pundits predicted the death of broadcast TV during the cable industry’s early growth phase. “Well, maybe vaudeville, but nothing else.”

On the other hand, Seibert said, “The model that has made cable a success isn’t going away, but it’s going to go under an incredible adjustment.”

Stern said the challenge for the cable industry is to get content to consumers “on that high-def, communal television when they want it -- and that means we need to aggressively embrace time-shifting… but we need to do that in a way that grows the pie.”

The panel was moderated by Will Richmond, editor and publisher of VideoNuze and an industry consultant.

For more CTAM Summit '08 click here.