Groups Call for Probe of Cable’s TV Everywhere

A band of consumer groups has asked federal antitrust regulators to open an investigation into the cable industry’s strategy for bringing content online, arguing that the TV Everywhere initiative involves industry-wide collusion and is anticompetitive.

The groups, led by Free Press, worry that by brokering deals with entertainment companies to bring television content to the Web and then making it available only to paying cable subscribers, cable companies are attempting to stifle competition from emergent online video providers.

“This is a textbook antitrust violation,” Marvin Ammori, a law professor and advisor to Free Press, said in a statement. “The old media giants are working together to kill off innovative online competitors and carve up the market for themselves. TV Everywhere is designed to eliminate competition at a pivotal moment in the history of television.”

Ammori authored a report laying out the legal argument that accompanied the release of letters asking for the investigation that were delivered to the Department of Justice, the Federal Trade Commission and the leaders of three congressional committees with oversight authority in the matter.

TV Everywhere has been building momentum over the past year as the TV industry struggles to adapt its business model to the online era, a time when consumers increasingly expect programming to be available on demand and free.

Last June, Time Warner and Comcast began nationwide trials of their version of TV Everywhere, which would entail a verification program allowing Comcast cable subscribers to access the same Time Warner programming included in their cable package on the Web at no extra charge.

Since then, Time Warner has expanded its trials, and Comcast last month launched Fancast XFINITY, a nationwide on-demand Web video program for its subscribers, and the largest implementation of a TV Everywhere program to date. Other content providers and distributors have expressed interest in similar arrangements, which the cable industry trade association argues will lead to a net benefit for consumers while preserving the principal revenue stream that funds the production of programming.

“There is nothing nefarious or mysterious about this,” said Kyle McSlarrow, president and CEO of the National Cable and Telecommunications Association. “Programmers invest tens of billions of dollars a year to produce high-quality content. They have the right to experiment with different business models and determine how to recoup that investment in terms of distributing their content on different platforms.”

McSlarrow dismissed Free Press’ call for an antitrust probe as having “no factual or legal basis,” arguing that the word “collusion” does not apply to content providers striking individual and widely varying licensing deals with distributors. TV Everywhere simply brings a standard industry practice to the Web, he said.

“TV Everywhere envisions separate, bilateral agreements between one content company and one or more individual distributors,” he said. “It is purely vertical in nature — like any arrangement between a content company and a distributor.”

McSlarrow also noted that TV Everywhere is not the final word in online distribution of television content, pointing to ad-supported ventures such as Hulu, and subscription services like AppleTV and Netflix as examples of a young market that is still in a highly experimental phase.

But Free Press and its allies cry foul when they see powerful cable, phone and satellite companies attempt to bolt a business model that they view as anti-consumer to the Web. The groups have long pressed for rules to promote media diversity and roll back some of the consolidation that has created hulking media conglomerates and dominant cable and telecom providers.

Free Press, for instance, is leading a campaign to persuade regulators to block Comcast’s deal to take a controlling stake of NBC Universal, a deal the group argues would eliminate the natural friction between content producers and distributors, raising many of the same concerns about stifling competition and innovation as the TV Everywhere trials.

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