Wednesday, September 2, 2015

Cable vs Web TV: the Al-Jazeera case

Comcast and the other video gatekeepers don't like the paid networks they carry to offer free Web competition

Cable vs Web TV: the Al-Jazeera case

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The Al Jazeera news service, owned by the royal family of Qatar, a small, oil-rich, conservative Arab ally of the U.S., has struggled for years to get carried by Comcast and other cable TV giants in major markets, with limited success.

So the channel this week bought ex-Vice President Al Gore's liberal-leaning Current TV, for a reported $500 million, and instantly gained the promise of carriage on Comcast and other national video distributors - but at a price that sheds light on Big TV's real objection to the upstart channel's Web-friendly platform (whatever managers' political view of Jazeera's Arab-friendly content):

"To keep cable operators happy, Al Jazeera may have to make a difficult bargain: Giving up on the Web," writes the Wall St Journal here.

"The Qatar government-backed television news operation, which acquired Current TV for a few hundred million dollars from investors including Al Gore, said Thursday that it will at least temporarily stop streaming online Al Jazeera English, its global English-language news service, in about 90 days. That's when it plans to replace Current TV's programming with Al Jazeera English," eventually replacing it with a new channel, Al Jazeera America.

Will Al-Jazeera's English service go back online? A spokesman for the channel told WSJ that "a decision about that was dependent on negotiations with cable operators. 

"The network's decision to pull its service off the Web is at the behest of cable and satellite operators. It reflects a broader conflict between pay television and online streaming that other TV channels face.

"Because cable and satellite operators pay networks to carry their programming, the operators don't want the programming appearing for free online. Aside from older series available through services like Netflix, most cable programming is available online only to people who subscribe to cable TV. 'We'd love to be able to do both' cable and Internet distribution, 'but the deals with distributors prevent it. The economics are better on cable.'"

Time Warner has dropped Current TV following the Al-Jazeera deal, but industry leader Comcast along with the satellite-dish and phone-based video giants plan to keep the service, at least for now. 

Especially after losing 9 million Time Warner subscribers, "Al Jazeera may have to drop the license fee to zero in order to gain widespread support for carrying the channel in the U.S., a move that would certainly imperil its economic model, which relies upon license fees for 80% of the network's revenue. But maybe this is the only way for Al Jazeera America to gain a solid foothold in the U.S.," writes Derek Baine for SNL Financial here.

"In the U.S., [Al Jazeera, pre-Current TV] is available only in New York; Washington; Burlington, Vt.; Toledo, Ohio; and Bristol, R.I., versus 250 million households across the world in 120 countries."

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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