CBS / Time Warner Fight Helps Slowly Unravel Cable TV

Showtime heavily promoted the final season of "Dexter," but now ironically millions have no access to it. Also lost are dozens of CBS and Showtime network series, football games and much more. Viewers are stranded. While Time Warner Cable and CBS remain deadlocked as they spat over license fees and retransmission money, they are helping to set in motion a dangerous trend: the slow unraveling of cable and satellite television. 

Dangerous not to consumers, but to themselves. Customers are already fed up with rising cable and satellite rates. Most package deals advertised via Time Warner Cable, for example, offer low prices such as $99 or $79 per month for Internet, phone and TV. But these packages can be deceiving. They usually offer a much smaller handful of channels, sometimes not even digital,with no DVR functionality and the slowest rate of broadband. Also once the trial period is over, the price usually jumps up substantially. TWC does offer month-to-month service, but satellite TV is a bit more savvy: it offers the one-year discount only if you sign a two-year contract. It takes a hit the first year, but jumps the rates up in the second year, and keeps users locked in. Many consumers live in areas where satellite TV is not available or cannot be installed (in multiple-apartment dwellings for example), so cable TV remains the only real choice. And then it’s only one provider. Mobile-TV options such as the Dyle initiative, branding to promote OTA free channels, have been off to a molasses-like start, and Aereo’s OTA surgical cable-bypass operation is rolling out incrementally city by city. In the end, cable TV is often a monopoly which offers few viable alternates. Customers sign up for it, but, at the same time, they are not happy with the option. The discontent is only amplified when a disagreement between the cable system and a broadcaster triggers a channel blackout. Statistically, blackouts are getting longer and longer, and viewers are starting to really fume — and take action. 

This week, viewers banded together to file a class-action lawsuit. Three Los Angeles area plaintiffs filed a lawsuit on behalf of Time Warner Cable subscribers in California. Time Warner subscribers James Armstrong, Michael Pourtemour, and Vatsana Bilavarn are seeking subscription fees and charge reimbursements on behalf of millions of fellow Time Warner subscribers. The goal is partly to get back "Dexter," "Ray Donovan," "NFL Football," "CSI," "Big Brother," the "PGA Championship" and many more, as well as rectify any potential unlawful or unfair business practices the conflict may have set in motion. Another repercussion is that piracy had spiked upwards as consumers look for alternative ways to watch their favorite programs. Dexter has a loyal following, and now many viewers are turning to file sharing and unauthorized Web sites to catch up on new episodes. All of this pushes already discontent subscribers more toward the edge. The edge of finding an alternative. 

In 2011 Time Magazine made a surprise announcement for their annual person of the year: It was the protester. Not a single person, but a body of people, unified around a single cause to right a wrong or to make progress happen in a certain direction. Often spearheaded by common people aimed at larger corporations. Large organizations in media over the years, such as the music industry and book publishing business have seen dramatic paradigm shifts, waves of consumers, or protesters, let's call them, wanted change, and the masses made it happen through legal and illegal support. Cautionary tales that cable television may do well to heed.

Right now, provider cable TV plus the network contracts and agreements is a pretty tight ball of twine. Channels and providers are locked into complex multi-year commitments, and dismantling cable will not happen overnight. But threads are starting to be pulled, and when providers such as CBS / Showtime are as irate as many customers, it could be a troubling sign. Meanwhile the uprising of independent providers such as Hulu Plus and Netflix continue to gain dramatic traction, offering consumers a variety of fresh original programming. As long as quality programming such as "Arrested Development," "House of Cards," and "Orange is the New Black" continues to arrive on an accelerated pace on Netflix, people will truly have an alternative option for original series and won’t feel so trapped by cable television.

Hardware options are escalating as well. Google’s Chromecast is a low-cost device that allows sending your mobile TV content to your large-screen TV; Roku and Apple TV continue to add new streaming channels; and Microsoft Xbox One, as well as the Sony PS4, will be next-generation streaming entertainment units in millions of homes this holiday season. 

Also, a few cable TV providers are gravitating toward alternate Internet options. This week it was widely reported that Viacom has reached an agreement with Sony to make its popular content and channels available as paid internet TV services. Cable TV a la carte and available as streaming TV? Could happen soon. Channels such as Comedy Central and Nickelodeon may soon be available on devices such as the Sony Playstation 3 and PS4. As more providers turn to the Web, we could see a dramatic shift in how TV is distributed. It will take a long time for this to pan out on a wider scale, and to be sure ABC, NBC and CBS will most likely be the last to make this move, but the Viacom deal does sound promising and forward-thinking. 

Like music CDs and traditional print books, cable TV is in no way going away soon. But like MP3s and e-books, streaming television and mobile TV offer a compelling new entrance to broadcasters and creative content providers, often ones with a lower cost barrier that also offers real choice. The constant blackouts and terse negotiations concerning broadcast and cable television are not expected to end soon. But the industry may be inflicting more long-term damage than short-term inconvenience as it struggles to remain relevant as well as profitable. Subscribers won’t be patient forever.