Time Warner Cable’s chief executive said his company may consider capturing television content from public airwaves and delivering them to customers over an Internet connection, a practice that has shaken the entertainment industry.
The idea was pioneered by a Web start-up called Aereo, whose business model sparked lawsuits from all of the nation’s broadcasters, including NBC, CBS, Fox and ABC. Their complaints in courts have failed.
The entry of Time Warner Cable into Aereo’s space would be a game changer, with broad implications for how television is created and delivered to households. Unlike Aereo, which serves only two markets, Time Warner is the country’s second-largest cable company and has broad influence over how TV content is delivered into millions of living rooms.
“What Aereo is doing to bring broadcast signals to its customers is interesting,” Time Warner Cable chief executive Glenn Britt said in an interview. “If it is found legal, we could conceivably use similar technology.”
Part of Britt’s interest in Aereo stems from his belief that the traditional model of television — in which broadcasters bundle together hundreds of channels and force cable companies to buy and distribute them to consumers as a package — is under siege.
Fed up by monthly bills that typically reach more than $100, millions of consumers have canceled their cable service and turned to Internet video where they can buy shows one at a time or pay a very low monthly subscription fee. But a major gap of the online content is that it is does not offer live programming, such as sports and local news.
Aereo fills that void, offering everything that appears on CBS, NBC, Fox, ABC, PBS and about two dozen other channels. For less than $10 a month, its customers can see the latest episodes of “Dancing With the Stars” or “NCIS” — and save those shows on digital recorders. Aereo said it is expanding its service to 22 metropolitan regions across the country, including the Washington area, this summer.
Time Warner Cable’s interest in Aereo’s technology is preliminary, Britt said. The cable giant, which serves 12 million video customers in 29 states, does not have concrete plans but is simply watching the legal battle closely.
That fight has gone in Aereo’s favor. Two judges have ruled that Aereo’s model is legal. Last month, the nation’s broadcasters asked a New York federal district court for a full review of their case.
If the courts continue to rule in Aereo’s favor, some broadcasters said they would simply take their shows off public airwaves and make them available only to cable subscribers. On Wednesday, CBS chief executive Les Moonves joined Fox and Univision in threatening to take this step.
“It’s illegal,” Moonves said of Aereo at the Milken Institute Global Conference in Beverly Hills, according to Bloomberg News. “They’re taking our signal and charging people for it.”
But Britt argued the current way most consumers pay for their cable television must change. In the interview, he joined a growing chorus of frustrated cable companies, including Verizon and Cablevision, that have been publicly blaming media companies for the unwieldy cable bundle.
Cable companies have said the technology in set-top boxes can track what consumers are watching most. So they should be able to buy cheaper and smaller packages of channels according to those interests.
“The structure needs more flexibility,” Britt said. A customer should not be required to pay for less popular channels such as VH1 Honors to get Nick Jr. and MTV. “There are fellow citizens who are struggling financially and can’t afford large programming packages. We want the ability to offer those customers smaller, more affordable packages.”
For Britt, the remarks are a departure. His business was once a part of a media conglomerate that included powerful assets such as HBO and Warner Bros. films. In 2009, the company broke off its cable and Internet business into an independent concern.
Britt said Washington should have a role in changing the TV industry. Federal officials need to repeal arcane regulations that date back two decades and check whether there has been a concentration of power among content firms, he said.
Media firms, however, have argued that their ability to create high-quality programming depends on the cable bundling model to mitigate the risks of trying out new shows. The Food Network, Bravo and AMC were all subsidized by more popular channels before they became cable channel hits, analysts say.
A broadcasting trade group said Time Warner and other cable firms share some of the blame for the high consumer bills.
“Forgive me Glenn Britt’s hypocrisy over rising cable rates. Time Warner Cable owns regional sports channels that charge viewers as much as $5 per subscriber per month,” said Dennis Wharton, an executive vice president at the National Association of Broadcasters. “The notion that Time Warner Cable has suddenly become ‘pro-consumer’ is laughable.”
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