Another war over Apple

Brian Stelter has an article in The New York Times about TimeWarner and the iPad:

When companies like TimeWarner Cable and Cablevision buy the rights to beam channels to customers’ television sets, do those rights extend to iPads? That question has divided the television industry in recent weeks, ever since TimeWarner Cable started streaming several dozen television channels to customers’ iPads. Immediately, channel owners like Viacom and Scripps Networks seized on the streaming capability as a contract violation, in part because they want cable companies to pay them more for the privilege to stream.
Legal threats were made last week, and the dispute was brought into public view when TimeWarner Cable introduced a web campaign that promoted “more freedom to watch on more screens” and asked: “Why do some television networks want to take it away?” The television industry is, in effect, joining book publishers in being unsettled by the iPad and the new era of tablets. There is little doubt that people will be watching more television on tablets in the future. (Imagine a son watching SpongeBob SquarePants on an iPad while his father watches basketball on the big-screen television.) What is undetermined is whether people will be watching through an application provided by their cable company, an individual channel’s app, or through a paid service like Netflix.
To stream programs from TimeWarner Cable, customers download an iPad app through the Apple iTunes store, log in to verify their account, and choose from a selection of live channels like CNN and Comedy Central. The iPad app only works inside the home, and only for customers who receive both television and Internet from the operator.
Other cable television operators say they are coming out with their own streaming apps soon. Cablevision’s app could come out this week.
But some channel owners say that companies like TimeWarner Cable should be consulting with them more closely before introducing new products. “Portability is a different business proposition,” said an executive at one of the major channel owners, suggesting that there should be a premium paid for the ability to take a television show into bed or into the bathtub. (One commercial for TimeWarner Cable’s app actually shows a person watching television on a tablet while taking a bath.) The executive said TimeWarner Cable should have “worked out the business issues” with channel owners before coming out with the app. The chief issue is counting the audience: another executive said there had been a “stampede” of channel owners asking the Nielsen Company to include iPad streaming in its ratings of programs. The channel executives spoke only on condition of anonymity because their parent companies had refused to comment on the dispute. But Scripps, the owner of HGTV and the Food Network, said earlier this month that it “has not granted iPad video streaming rights to any distributor and is actively addressing any misunderstandings on this issue.”
Melinda Witmer, an executive vice president at TimeWarner Cable, said in an interview last week that she thought the current dispute was “fundamentally about money and leverage”, not about the language of contracts. “I already bought these rights,” she said. Ms. Witmer compared the complaints of channel owners to a person who waves a gun around and winds up shooting themselves in the foot. For distributors that depend on monthly subscription checks from customers, new products like iPad apps are ways to keep the payments coming and that revenue, of course, is ultimately shared with the channel owners.
Some channel executives said Viacom, the owner of MTV, VH1, and other channels, is taking the most aggressive stance against the streaming app. One of the complaints is that the app now includes only a portion of all the channels that are available through the traditional set-top box. TimeWarner Cable is offering 32 channels for the iPad.
Cablevision is expected to change that. Its app will transplant every existing channel and video-on-demand option to the iPad, literally making it into a television set. The company declined to comment.
Verizon and Comcast have said that they were also working on streaming apps for iPads. But, for now, the TimeWarner Cable skirmish may make other cable companies or distributors think twice about replicating television on tablets. Comcast, for instance, has not added live streaming to its iPad app yet; instead, it has focused on adding on-demand programming.
Comcast is the nation’s largest cable company; TimeWarner Cable is No. 2. The cable distributors have trod lightly into an area that will most likely prompt more fighting with channel owners: out-of-home viewing by customers.
Not every channel owner is arguing against the streaming notion, however. TimeWarner, which was separated from TimeWarner Cable two years ago, is comfortable with the current app, and its recent contract renegotiation with Comcast specifically included tablet streaming rights.
Ms. Witmer of TimeWarner Cable said she thought some of the resistance by channel owners stemmed from a lack of understanding of the technology: “In fairness, truthfully, to all the executives in this industry that are trying to run businesses that are part of this ecosystem, it is exhausting keeping up with everything that is changing rapidly,” she said.