Stern Message on Internet Video

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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 Time Warner Cable executive vice president and chief strategy officer Peter Stern.

“The question of whether broadband video upends the cable business lies with the programmers,” said Stern, speaking last week at a session called “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 solution to the issue: For programmers to deliver “all your Web content to your paying customers, and just your promotional content to nonpaying customers.”

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. 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, said 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.

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.”