John Skipper ESPN
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Cable television is a better product than Internet video services — but the industry still needs to improve how it delivers TV across all devices and emphasize the value of pay TV, according to John Skipper, president of ESPN and co-chairman of Disney Media Networks.

With services like Netflix touting their simplicity and content, “We are allowing them in some ways to set the tone of the conversation,” said Skipper, speaking at the Cable Show 2014 opening general session Tuesday.

“Clearly the big social and digital platforms are competing for eyeballs, and they’re competing for advertising,” the exec said. “You see Yahoo commission two comedy series; yes, they are competing in our business — but shame on us if we don’t protect our turf.”

The cable industry has to make authenticated TV services work well on every device, he said: “We have superior content. We need superior delivery systems.”

John Martin, CEO of Turner Broadcasting System, agreed that the industry is still lagging on making TV everywhere a great consumer experience. “If there is a call to action at this conference, it’s for programmers and distributors to work together” on improving the features of subscription TV services, he said. Authentication is a barrier to usage, he said, and cable operators need to improve the robustness of video-on-demand.

Time Warner Cable chairman and CEO Rob Marcus acknowledged that there’s potential competition to cable TV from online-video providers, while “clearly over-the-top video is one of the things that highlights the value of high-speed data connections.”

But Marcus bristled when panel moderator Betty Liu of Bloomberg TV suggested that the success of Netflix constituted a “failure” of the cable industry. “The fact that someone came up with an interesting technique of aggregating and reselling other people’s content over someone else’s infrastructure — that does not indicate a failure on cable’s part,” he said.

Nancy Dubuc, president-CEO of A+E Networks, said Netflix does have a “beautiful” interface: “I do wish our cable partners would take a closer look at making the consumer experience better and better,” she said.

On a separate panel, Liberty Global president and CEO Michael Fries argued that Netflix’s success did expose a failure of the cable industry: “We have a massive functionality gap…. It was easier, cooler and simpler to find things on Netflix.” Liberty Global is now offering next-generation video services that incorporate digital video services and, in fact, the company’s Virgin Media in the U.K. partnered with Netflix to provide an integrated service on TiVo DVRs.

Operators should “steal the best” ideas from others, Fries said, noting that the cable industry did not invent the DVR. “You don’t necessarily have to be first,” he said.

The issue of rising programming costs came up, which Marcus said represents “a fundamental problem with the ecosystem.”

ESPN is the most expensive channel on cable, Skipper freely admitted, but he said that’s because it is also the most valuable and is important to hold the entire pay-TV bundle together. Programmers and pay-TV operators “have to work together to sell the value to the pay-TV sub,” he said.

Jerry Kent, chairman and CEO of Suddenlink Communications, said he’s concerned that the biz will reach a tipping point where consumers abandon cable TV because of high prices. “We need flexibility of working with programmers to deliver lower-priced tiers,” he said. Otherwise, the government may step in to mandate a la carte pricing, “or we’ll have to take a hard look at what programming we want to continue carrying,” Kent said.

Separately, Los Angeles Mayor Eric Garcetti delivered a keynote address at the conference in which he urged Time Warner Cable and others to reach deals to bring the Dodgers to all pay-TV subscribers. In L.A. currently, Time Warner Cable is the only operator that carries SportsNet LA, the regional sports network that is the only place to watch many Dodgers games.

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