DirecTV is reportedly negotiating a revenue-sharing deal with at least 12 cable TV networks to deliver their programming on the Internet. DirecTV and other service providers are aiming to develop a business model that lets them meet consumer demand for anytime, anywhere access to TV shows while preserving their subscription models.
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DirecTV (Nasdaq: DTV) is in talks with the TBS and TNT cable networks to offer their shows online, according to two people familiar with the discussions.
If a deal is reached, DirecTV subscribers would be able to watch shows from those cable networks on the Internet, the people said on condition of anonymity because the talks still are ongoing. DirecTV, the nation's largest satellite TV operator, previously said it was considering such deals but did not specify the networks.
DirecTV joins a growing list of cable, satellite and phone companies that are offering consumers a "multiscreen" experience: the ability to watch shows on TV, computers and mobile devices like cellphones.
As online video grows in popularity, pay-TV operators and cable networks are under pressure to offer a service that consumers want while still protecting lucrative subscription fees that operators are paying to the networks. The two sides are expected to share in any advertising revenue generated from online videos.
On Thursday, Time Warner (NYSE: TWX) Cable said it has deals with at least 12 cable networks that would allow the cable operator to put their content on the Internet: Time Warner's TBS, TNT and HBO; the CBS network; Syfy from General Electric's (NYSE: GE) NBC Universal; BBC America; Cablevision's AMC; WE tv; IFC; Sundance; Discovery; and the Smithsonian Channel, a joint venture between CBS's Showtime Networks and the Smithsonian Institution.
Time Warner Cable will begin testing the service in 5,000 households nationally over the next few months. Subscribers will be able to access many shows on the cable networks' Web sites or on Time Warner Cable's sites.
Verizon Trial Under Way
Verizon Communications (NYSE: VZ), which offers television through its ultra-high-speed FiOS service, also unveiled its own online video trial Thursday. It currently has deals with TNT and TBS, but expects to add other networks soon. The phone company started its trial last week with 500 households and plans to expand.
Verizon will allow up to nine people in a household to sign up, and five can watch shows at the same time, spokesperson Heather Wilner said.
Wilner said that Verizon also plans eventually to bring cable content to mobile devices, noting that it already offers shows through Verizon Wireless' VCast.
She said Verizon began online access to movies from Liberty Media's Starz movies; Walt Disney's (NYSE: DIS) ESPN360 and Disney Connection; YES Network and NFL Game Extra as early as 2005, some for a fee.
New Protocols
Comcast (Nasdaq: CMCSK) and Time Warner announced in June that they were collaborating on a set of protocols for online access to cable shows.
Comcast, the nation's largest cable TV operator, has signed up 24 cable and broadcast networks to participate in its online video trial of 5,000 householders, including Time Warner's HBO and Cinemax, as well as Starz and CBS.
The concept is dubbed "TV Everywhere" by New York-based Time Warner and branded "On Demand Online" by Philadelphia-based Comcast.
DirecTV, based in El Segundo, Calif., did not disclose the name of its online video service.
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"Everyone has limited bandwidth available, and I don't know how much bandwidth [DirecTV is] going to have," said Jack Gold, principal analyst with J. Gold Associates. "Links are links, and there's only so much available. Cable companies can at least drop stage servers in different places. So, I honestly don't know how well it's going to work for them."
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is reached, DirecTV subscribers would be able to watch shows from those cable networks on the Internet, the people said on condition of anonymity because the talks still are ongoing. DirecTV, the nation's largest satellite TV operator, previously said it was considering such deals but did not specify the networks.
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