Inside the TV Wars: Mergers, Monoliths and Shady Backroom Deals

The real fight to watch isn’t on television -- Conan vs. Leno, Olbermann vs. O’Reilly. Rather, it’s about television, and the future of online video -- a fight that pits cable and content companies against consumers.

Instead of being glued to our favorite shows, we’d be wise to pay attention to the various battles, mergers and backroom deals happening between big media corporations who are trying desperately to cling to a sinking broadcast media model -- and pull the public down with them.

Cable and broadcast companies see the writing on the wall, and it no longer spells "media empire." Although a majority of Americans are still watching television -- clocking in an average of five hours of viewing a day (Nielsen Wire, 5/20/09) -- people are increasingly switching off the tube and using their computers and laptops to watch their favorite shows, as well as to find alternative programming. Options like TiVo and DVR have given us the blessed ability to skip over advertisements. And advertising companies are jumping ship, heading over to the Internet or simply not placing ads in a market that can no longer guarantee as many eyeballs.

Thanks to the Internet’s open platform, anyone can create and share video, meaning we’re no longer tethered to traditional media gatekeepers who decide what’s entertaining and who gets the spotlight. We’re also realizing that we can cancel our hefty cable subscriptions and still watch the Daily Show online -- for free. It’s a Pandora’s box that media corporations are trying to sit on top of while the public wrenches the lid up from below.

These new trends threaten the old media model, and cable and broadcast companies are hatching various plans to keep their stranglehold on content, control and profit -- all to the detriment of consumers. If they get their way, we’ll likely see higher prices, fewer choices, worse programming and a slow stifling of online video innovation.

Here are three developments worth paying attention to:

1. Time Warner Cable vs. Fox/News Corp.

The deal long accepted by the TV broadcasters and their affiliates was that they’d get free use of the public airwaves, and in return they’d give the public free programming -- making their money by interspersing the shows with ads. With overall ad spending down in a tight economy, the networks have been looking for a new profit model -- and enviously eyeing the cable companies’ ability to get audiences to pay money for the privilege of watching ad-filled TV (New York Times, 2/23/07).

Accordingly, News Corp’s Fox Broadcasting recently demanded that cable company Time Warner Cable (an independent company spun off by Time Warner in 2009) pay $1 per subscriber in exchange for delivering Fox programming to viewers. In response, TWC threatened to stop airing Fox altogether. The squabble erupted into a public showdown, with both sides creating ridiculous websites (KeepFoxOn.com, RollOverGetTough.com) hoping to pull consumers into their camps, and leaving those in TWC markets to wonder if they’d ever see American Idol again (New York Times, 12/29/09). In early January, the two companies came to a quiet agreement, not disclosing the details of the settlement (Boston Globe, 1/2/10).

What does this mean for consumers? Cable providers have long negotiated deals to carry cable channels like ESPN and MTV -- largely owned by the same companies that own the broadcast networks -- paying monthly fees that are passed on to subscribers in ever-increasing cable bills. As cable companies start to pay for over-the-air channels as well (programming that viewers could get for free just by turning off their cable and hooking up an antenna), don’t expect them to just eat those costs. The same day TWC announced its agreement with Fox, it also announced new rate increases (New York Times, 1/4/10).