Viacom-Sony Revelation Reeks of Hidden Agendas

Sumner Redstone

Sumner Redstone's timing seems awfully suspicious

If the pay-TV universe can be thought of in terms of world wars, we may have just witnessed the assassination of Archduke Franz Ferdinand of Austria. The planet didn’t know it at the time, but that 1914 shooting essentially precipitated World War I.

Standing in for the archduke almost a century later is a reported pact that will see Sony Corp. license the collective cable channels of Viacom for a new broadband-delivered TV service expected to launch by the end of the year. If this deal is real, the entrenched triumvirate of cable, satellite and telco distributors have essentially received a declaration of war from what may be just the first of a new breed of challengers that could include Intel, Google and Apple.

But it’s a big “if.” Not only are neither Sony nor Viacom officially acknowledging the pact, but Sony has yet to utter a word of confirmation that its virtual-MSO service even exists. Google and Apple’s own TV plans are far from concrete; only Intel has been public about its intent, which hasn’t scotched doubts that the chipmaker will actually make it to market.

However, the vaporousness of this long anticipated challenge to pay-TV hegemony may mean there’s ulterior motives behind why we are seeing the Sony-Viacom deal floated at this time.

Consider the common corporate parentage of Viacom and CBS Corp., which both count Sumner Redstone as the chairman of their respective boards. CBS is currently embroiled in a nasty multi-week standoff with Time Warner Cable over the terms of their affiliate deal.

What better way for Redstone to remind TW Cable that MSOs aren’t the only game in town than for one of the biggest content companies to throw some weight behind a new market entrant. By giving just a whiff of substance to the possibility that Sony could get in the game, Redstone is warning TW Cable that it has the power to create a new competitor for them.

The cable operator probably isn’t even the only negotiator Redstone is sending a message. Consider Intel, which has seen its own vow to bring its OnCue service to market by year-end compromised by an inability to lock down a single programming deal.

Of course, Viacom is going to do everything it can to squeeze every dollar it can out of Intel for the rights to its channels. And what better way to put some pressure on Intel than to make it seem like another company with a similar service is making headway.

All this maneuvering and breathless anticipation might lead one to believe that Sony or Intel or whoever is going to launch something so revolutionary that incumbents like TW Cable will instantly crumble to dust. Hardly.

For one thing, there’s plenty of other programming companies beyond Viacom that Sony will need to get on board. And even if that happens, the basic “bundle” structure of pay TV will remain intact, though it’s a good bet you will see more options as to what packages of channels can be bought. But a la carte simply isn’t going to happen anytime soon.

And if you’re hoping Sony or Intel will be able to undercut the incumbents on price, that’s also highly unlikely. The price to get into the game with premium programming is going to be so exorbitant that there is no way those costs won’t be passed on to consumers.

So before saluting the dawn of a new era in pay TV, consider that a Sony-Viacom deal may not really be an opening salvo. What may seem like a wake-up call could really be a false alarm.

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  1. mcowder says:

    What seems like hidden agendas is your article. As far as there being no a la carte, I agree, but I don’t see where anything you said speaks to a hidden agenda, and I certainly disagree that this wouldn’t be great for the consumer. I can think of at least four reasons right off the bat:
    1.) Cord-cutting: Even if the end game is to have cable exactly reassembled at the end, you’re going to have a smaller cheaper service at the start, which is what cord cutters want anyways.
    2.) Infrastructure: The internet is unquestionably where the future of television belongs. Will it be perfect at the start? Of course not, but no new technology ever is. No one is expecting an iPhone 5-like quality in inception. But when you look at what it can do, I mean, why be confined to your house to watch television when you can watch it at least limitedly on your laptop or on your phone on the go and at your leisure? Additionally, Sony “could” be a few steps ahead of MS, Apple, et al. in this field after the acquisition of Gaikai. We don’t know yet what Gaikai is capable of and it really wouldn’t be surprising if Viacom was shown some Gaikai tech in the sales pitch.
    3.) Less overhead: No need to worry about the overhead of running cables to people’s houses. This may be moot to the consumer, but it’s a big advantage for Sony in getting started. The server technology will be expensive no doubt, and they already have this started with Gaikai’s servers, but this is likely going to be available in limited areas anyhow.
    4.) Competition: Cable-companies are infamous for their monopolistic policies. And while, yes, many of these services will still be run through the cable companies anyways since they often are the best (or only) ISP’s in a given region, it will add competition in negotiations with content providers. What’s still lacking is enough ISP’s to challenge the cable companies, but this should hopefully help out at least. And with even more importance placed on ISP’s you may find that competition go up indirectly as a result.

  2. Tony Filson says:

    That was the case in the 1980′ s.

  3. Will Sony or OnCue roll a truck to my house when channels are interrupted? No. And therein lies the problem for unbundling content from distribution. The other issue is that streaming only works without broadband caps.

  4. Tony Filson says:

    I’d like to see Sumner and Les get some pipe!

    The affiliate business model is dead and the only thing moving is a twitch from a cold, decaying modality that has the MSO’s holding all the cards.

    We need to put CRO/CSO types in the Affiliate Relations, Affiliate Marketing and Affiliate Sales roles at 1515 and 51 W 52nd.

    Time Warner has pipe and content and VIACOM/CBS/Showtime/MTVN/BET need to compete with multiplex, multiplatform NOW on “their own terms”.

    Entry for CAPEX is small as is OPEX and they could be up and running in a month or two for all U.S. and International Markets. The agencies, advertisers and consumers will welcome the change. From a B2B, B2C and C2C perspective it all works.

    Why Sumner and Les don’t change the game and hold ALL the cards is beyond me. As the President of Filcro Media Staffing I can state that we have started new TV Networks and Entertainment Programming using the same method and there is no reason why Sumner and Les can’t enjoy the same thing.

    Philippe Dauman should take the lead here as I’ve always known him to have intimate relationships with the individual MTVN brands. At every upfront he’s there participating not just showing up. Philippe knows each head of ad sales and head of programming. To make this push and show COMCAST, DIRECTV, Time Warner, Hearst, Verizon and a number of others the “true value” of 51 W 52nd and 1515 Broadway, I think Philippe can do this best.

    And…… I know Les will welcome Philippe’s leadership in this vital area to everyone’s interests… Including shareholders of CBS and VIACOM Stock!

    Tony Filson
    President & CEO
    Filcro Media Staffing
    http://www.ExecutiveSearch.TV

  5. Ted Trent says:

    All I can say is, “It’s about time America has some real options.” I’m looking forward to traditional cable television to go away. When they did the, “Everyone has to go cable and lost the regular TV Antenna ears, I knew we were all in trouble.” Cable did all they could to control each and every market around the country. Payback is a bitch. Television killed the radio star? Well, the Internet is about to kill the TV star. Get ready ComputerWood.com

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