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Kellner: It’s ads or cash

Consumers will pay if TiVo ruins TV commercials

Every U.S. television household ultimately may have to pony up roughly $250 annually — in addition to what they pay for cable or satellite delivery — to support their viewing habits, according to Turner Broadcasting topper Jamie Kellner.

That’s because digital video recorders like TiVo may eventually render TV commercials as we know them useless, he said.

“Before American people go on not watching commercials, they have to understand what will happen,” Kellner said during Turner’s session at the Television Critics Assn. press tour.

“On top of your cable bill, you will have to pay for programming. Don’t think for a second there’s a free lunch.”

Kellner said the “very rough” $250 estimate is what he figured it would cost to pay for programming if advertising on television became obsolete. He was responding, in part, to research indicating that more than 70% of people who have digital video recorders zap past ads.

Other execs, however, point out that digital video recorders are still in few households and that it’s too soon to predict their ultimate impact.

“Unlike Jamie Kellner, I’m not going to declare it’s the death of TV,” said CBS topper Leslie Moonves. “Like the VCR, it may not have quite the effect people expect.”

In the event that DVR usage, however, increases dramatically — perhaps via set-top boxes equipped with TiVo-like tech — the industry and its consumers must be prepared for the probability that advertisers won’t pay for eyeballs they don’t get, Kellner warned.

“Billions of dollars in revenue flows through this industry, supports this business,” he said. “Where is it going to come from? I’m just trying to make sure everyone understands, and we know how we’ll watch TV in five to 10 years. We have to decide whether to pay for it personally or by watching commercials. … Product placement “could not put a drip in the tank of what the industry needs.”

He added that he could make a living in TV either way but wanted viewers to be aware of the part they play in TV’s economic model.

“I would rather not be a pitch person for this, but let’s be futurists,” Kellner said.

AOL Time Warner is one of a number of media giants suing ReplayTV and parent SonicBlue, arguing that the unit’s ability to skip ads and email previously recorded programs constitutes copyright infringement. AOL was an early investor in TiVo, while Time Warner played a role in Replay’s development.

(Michael Schneider contributed to this report.)

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