Online content affecting cable offerings

Barry Diller predicts entertainment distribution chain changes

NEW YORK -- Possible a la carte cable offers and cable cord cutting thanks to expanding opportunities for consumers to get online content were recurring themes at a big investor conference here Tuesday.

Economic and technology issues alike have affected multi-channel TV subscription figures as of late, TiVo Inc. CEO Tom Rogers told the Goldman Sachs Communacopia investor conference.

The weak economy and housing market are cyclical factors that have affected cable operators, he said.

But an increasing number of people that don't necessarily need any or at least no full-blown package of TV channels amid increasing opportunities to get content online is also playing some role. "That's going to continue to grow as a trend," Rogers predicted.

But even if Web use and a la carte demands continue to rise, he said that a "massive" majority of consumers will continue to subscribe to use linear TV in packaged form.

Time Warner Cable last week warned of slow third-quarter subscription trends, among other recent data points highlighting the sluggishness of basic cable customer trends.

Earlier in the conference day, IAC CEO Barry Diller had suggested that the growth of Internet-enabled TVs over the next few years may lead to "huge changes to the distribution chain of entertainment," including possible a la carte offers.

Diller spoke of the "a la carting of life," arguing it could lead cable operators to start offering networks a la carte instead of as part of a broader program package. After all, consumers may increasingly think: "I'm not going to pay a cable bill of warehousing," because I don't like golf or other programming, said Diller.

Meanwhile, Walt Disney CEO Bob Iger had said in his Goldman appearance that he has "not seen any evidence of cord cutting."

Asked if TiVo sees Apple, Boxee, Google TV and others providing Web content to TV set as competitors or partners, TiVo CEO Rogers said Tuesday that most such providers only do a piece of what the TiVo experience encompasses. TiVo is seeing itself as a broader gateway to various forms of content, which is good for consumers and cable partners, he explained, adding: "We are about an integrated viewing experience."

Over the next few years, Rogers predicted, broadband content consumption could go from about 1% of total TV viewing now to up to 10%.

Meanwhile, Nexstar Broadcasting Group CEO Perry Sook on Tuesday suggested that one Web video player may see changes over the coming years. Online broadcast video hub Hulu.com, which is a joint venture of NBC Universal, News Corp. and Disney, "will be out of business or owned by a cable operator in five years," he predicted. After all, distributors can't be happy that the site offers programming they pay for, he argued.
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