Time Warner Cable Defends Contracts That Hamper Internet Video Rivals

Operator defends CEO's comments indicating programming pacts have provisions to keep cable nets off Internet video services

A day after Time Warner Cable CEO Glenn Britt indicated the MSO has contractual provisions to keep cable networks out of the hands of over-the-top video providers, the cable operator issued a statement comparing the practice to Hollywood’s movie windowing and Netflix’s relaunch of “Arrested Development.”

“The amount and scope of exclusivity and windowing in Time Warner Cable’s arrangements with programmers pales by comparison to that found between other players in the entertainment ecosystem,” the cable operator said.

At a Tuesday session at the Cable Show in Washington, Britt said the cable operator “may well have (programming contracts) that have that prohibition” barring TV networks from distributing their services to online video providers. In addition, some carriage deals would give TWC rights to nationwide Internet-video distribution if programmers license networks to an online video provider, he said.

The exclusivity clause would effectively shut out Internet-based distributors, by forcing cable networks to choose between having their channels carried by TWC, the second-biggest cable operator in the U.S., or an upstart online service like the one Intel is developing.

Such restrictions are “anticompetitive” and should perhaps be investigated by the Federal Trade Commission, BTIG Research analyst Rich Greenfield opined in a blog post Tuesday prior to Britt’s remarks.

TWC fired back in a statement Wednesday, saying, “It is absurd to suggest that, in today’s highly competitive video marketplace, obtaining some level of exclusivity is anticompetitive.”

The cable operator continued, “Exclusivities and windows are extremely common in the entertainment industry; that’s exactly how entertainment companies compete. This is why, for example, you can only watch ‘Fast and Furious 6’ in a movie theater (not in your living room), Sunday Ticket on DirecTV and the new ‘Arrested Development’ episodes on Netflix.”

But TW Cable’s comparisons are apples and oranges, Greenfield said. Whereas the MSO does not restrict deals with satellite or telco rivals, the prohibition on Internet distributors is aimed at a specific class of competitors, he wrote in an email.

Other pay TV providers that have programming contracts that discourage cable nets from striking deals with “virtual cable operator” services include DirecTV, Dish Network and Cablevision Systems, according to industry sources.

However, it is unclear how widely other distributors employ the exclusivity provisions TWC has acknowledged using to block over-the-top providers’ access to cable TV networks.

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