Time Warner Cable, Verizon to test TV on the Web
By Yinka Adegoke
NEW YORK (Reuters) - Two more U.S. pay-TV providers, Time Warner Cable Inc and Verizon Communications Inc, plan to test systems to offer shows on the Web to paying customers in a bid to protect their subscription revenue.
Time Warner Cable and Verizon separately announced their plans on Thursday and will follow Comcast Corp, the largest U.S. cable operator, which said in July it would test a Web TV service with some of its customers.
Pay-TV companies are concerned that the recession-resistant subscription revenue of cable television could be undermined if cable shows became widely available over the Web, effectively cutting out the cable and satellite TV operators.
So the cable network industry, led by Time Warner Inc Chief Executive Jeffrey Bewkes, is testing a concept called TV Everywhere as a way for paying cable subscribers to access cable shows over the Web via an authentication process.
Time Warner Cable said its TV Everywhere trial will include the NBC Universal-owned Syfy channel; Time Warner's TNT, HBO and TBS; Cablevision Systems Corp's AMC, IFC and Sundance Channel; and BBC's BBC America.
CBS Corp and Discovery Communications Inc are also involved in the trial. NBC Universal is 80 percent owned by General Electric Co and 20 percent by France's Vivendi SA.
Time Warner Cable's test involves making TV shows available on the Web to 5,000 homes of paying subscribers. They will be able to access the shows on the networks' own websites, as well as on Time Warner Cable's Web properties.
Verizon, meanwhile, will launch a TV Everywhere trial of its FiOS TV online with programing from Time Warner's Turner networks, TNT and TBS for no extra cost to FiOS subscribers.
DirecTV Group Inc, the largest U.S. satellite TV provider, is also working on a version of TV Everywhere, according to a person familiar with its plans.
While cable network owners are determined to stop the successful pay-TV television business model from being undermined by programing made available free on the Web, the major broadcast networks have taken a different approach.
Because free-to-air broadcasters are dependent on advertising revenue rather than subscriptions, they have made their shows readily available over the Web. Sites like Hulu, owned by News Corp, NBC Universal and Walt Disney Co, are free to anyone and feature broadcast network programs such as "The Office" or "House."
In a few cases, some episodes of full cable programs are now available free on the Internet.
Time Warner Cable shares rose $1.04 or 2.9 percent on the New York Stock Exchange to $37.01. Verizon dipped 42 cents or 1.3 percent to $31.06.
(Additional reporting by S. John Tilak in Bangalore; editing by Gerald E. McCormick and Andre Grenon)