The principle of it
"There's a principle at work here: The cable operators think that if they open the door at all to streaming of content that consumers might end up being able to get all the cable they want without paying for it," said Josh Bernoff, principal analyst at Forrester Research. "That would be a serious problem."
This principle was apparently at work during negotiations between Charter and ESPN in the last year to deliver ESPNews, a news-focused sports channel, to the cable company's 6.4 million households. The terms Charter introduced would have limited the sports channel's ability to stream content online.
The maximum number of hours was "minimal at best," according to ESPN spokesman M.C. Antil. He said that "it was conceivable that we might have been forced to scale back what we're streaming now."
Antil said that although the sports channel has no plans to expand its video streaming on the Internet, it wants "the ability to explore possibilities on the Internet. We're in the content distribution business; our goal is to distribute our product into as many homes as possible."
As a result, as of midnight June 30, ESPN is "de-authorising" Charter from carrying its ESPNews channel on its cable network. ESPN said it gave Charter notice of its intent by letter last month. The cable operator said the sports channel notified it two weeks ago.
In interviews, Charter and ESPN both expressed willingness to return to the negotiation table.
Andy Morgan, a Charter spokesman, said ESPN broke off negotiations because the sports channel was unwilling to consider any type of limitations on the amount of video streaming.
"It doesn't make any sense for Charter and our customers to pay higher and higher fees to ESPN for their programming if it's made available for free over the Internet," Morgan said, adding that this is the first time a programmer has balked at the language. "It devalues (our) service."
This argument is widely expressed by cable operators, which are increasingly trying to put locks on a market with unknown value.
"The real question is not what is the value of streaming in 2001--which is within a resounding zero--the problem is, what is it worth in 2004? Frankly, nobody really knows," Bernoff said. Charter "has no idea that what they're giving away is hugely valuable or not valuable at all. So the prudent thing is to just say no."
