Tuesday, March 30, 2010

TV Everywhere = restraint of trade?

I just finished reading BusinessWeek's article from a couple of weeks ago on TV Everywhere. It gives the history of TV Everywhere as essentially a deal between the two largest US cable operators, Comcast and Time Warner Cable, to control distribution of video content over the Internet by limiting its availability to existing cable subscribers only. It also documents the difficulties that alternate distributors such as Netflix, Boxee and Sezmi have had in striking deals for cable and movie studio content, and points out that Sezmi has actually had to pay more than the cable operators for some content, even though it still has miniscule market share. It wraps it up with a few quotes from content providers saying that they'd be crazy to do deals with alternate distributors for fear of angering their largest customers, the cable operators.

Anyone who knows anything about U.S. antitrust law would see a host of red flags in the first paragraph of this post. The two largest cable operators colluded to prevent competition from Internet content distributors. Brian Roberts, the head of Comcast, had to be dissuaded from trying to force the individual content providers to shut down their own distribution sites. Alternate distribution services are at a competitive disadvantage because they can't get most of the content available to cable operators and have to pay more than cable operators for the content that they do get. The content providers confirm that they're holding back their content from alternative distribution channels to avoid retaliation by the major cable operators. So we've got collusion, restraint of trade and price fixing.

Time Warner and Comcast don't get out of the collusion charge because they don't directly compete with each other, since they were working together to limit mutual competitors. The cable networks and movie studios are in it up to their ears, and Comcast is trying to buy control of NBC Universal, which will give them even more control over cable programming and, for the first time, motion pictures and over-the-air services as well.

If I were with the U.S. Department of Justice, Federal Trade Commission or one of the companies named in the article like Netflix, Boxee and Sezmi, I'd be salivating over the opportunities for criminal and civil antitrust action. TV Everywhere, initially envisioned as a technique for the cable companies to take over control of video distribution on the Internet, may end up being the "step too far" that ends the cable companies' monopoly over video content distribution to homes.
Reblog this post [with Zemanta]
Post a Comment