Viacom vs. Time Warner Cable: What the Pause in the iPad Lawsuit Means (Analysis)

iPad 2 - PR Shot - 2011

Viacom and Time Warner Cable have put on hold their dispute over streamed content on iPads in an effort to come to a resolution.

On Wednesday, the two media giants filed a "standstill agreement" with a New York federal court. The move was made, according to a source who spoke to the Los Angeles Times, so that the companies could negotiate with each other without the time pressures that come with court-imposed deadlines for filings and hearings.

The move raises some hope that the two companies can work out a broader settlement over a dispute that first flared up this spring.

In March, TWC launched an iPad app allowing its subscribers to watch TV on a mobile device. The technology was unpopular with broadcasters concerned that viewership on iPads isn't counted in TV ratings, which helps determine the rates charged to advertisers. After getting cease-and-desist letters, TWC pulled stations from Viacom, Fox, and Discovery from their app. (Later, Fox and Discovery allowed their channels to return.)

The following month, the two companies filed dueling lawsuits. Viacom claimed that TWC had broken a contract and committed copyright infringement. TWC sought a declaration that copyright law permitted a limited, more convenient way for its subscribers to enjoy television in the home on their iPad devices. In late April, the two suits were consolidated into one.

Although the lawsuit has now gone to a commercial break, the two sides still have plenty of differences to resolve.

Among the most important is a basic understanding of the iPad -- what is it and how does it benefit or hurt the TV industry?

TWC has maintained that the iPad device inside the home is the functional equivalent of another television set and that by launching its iPad app, the cable company is saving its customers the expense of leasing expensive cable boxes.

But in recent interviews, Viacom CEO Philippe Dauman insists that he sees television apps on the iPad as merely a way for fans to catch up on content like old seasons of Jersey Shore. He says he believes these streams can add incremental revenues for broadcasters and expresses concern about "cannibalizing" audiences on traditional platforms.

If a deal shapes up, it might come in several forms. TWC could agree to paying a small mobile fee. Or Viacom might settle for tighter restrictions, necessary anti-piracy measures, and other carrots, like better distribution of Viacom's less popular stations.

Regardless of the outcome, the dispute likely won't be the last between content owners and distributors on the digital front. These parties have been fighting over time-shifting and place-shifting devices for nearly a decade, and without some sort of agreed-upon way to integrate web- and mobile-based viewership into TV ratings, the only convergence happening will be lawyers in a courtroom.