Customers Suffer As TV Networks Obfuscate

Last week, we brought you the story of how television networks were blocking Google TVs by not allowing them to display content normally accessible by browser. At that time, the likes of CBS and Disney were claiming that it was Google's refusal to remove links to pirated content that had them up in arms.

Apparently aware that the piracy argument wasn't very strong, the major networks have played the 'creative compensation' card. "Everyone of these businesses [dastardly web providers] is building these services out on our product," Fox Entertainment President Kevin Reilly said about devices like Google TV at an industry panel discussion in Los Angeles. Reilly later claimed this was a critical issue, saying networks must "get fairly compensated for the programs we make." Similar statements were made by other industry heads, including CBS Entertainment chief Nina Tassler. "We invest a tremendous amount of time and money in making great shows and we should be justly compensated," she said. "There is great value to it and we have to protect that. It is important to provide (content), but we just have to be compensated."

Such protestations don't reek as much as the RIAA's claim to be acting on behalf of music artists, but it's a near thing. The real battle has nothing to do with creative control and everything to do with what are called "retransmission fees." Retransmission fees were originally instituted when cable and satellite were newfangled options. The name is self-
explanatory—if Cable Company X wants to carry Fox programming, it pays a fee for the privilege of doing so. With the advertising market in the tank, the major networks have been cranking up their retransmission fees in an attempt to compensate.

Cable and satellite companies have dug in their heels to resist the higher fees. As a result, CableVision customers have been staring at a blank screen where major chunks of Fox programming previously aired. The two sides continue to harangue each other via press release; there's growing concern that the blackout may extend through the World Series. This is a problem less about preserving creative investment and more about raising rates.

The various major networks appear to have missed two key facts in their rush to retain revenue. First, customers who buy a Google TV and then attempt to actually watch something with it aren't going to blame Google when they discover they can't see anything on Fox or CBS—they're going to blame Fox and CBS. This is doubly true if the household in question still pays for cable or satellite service. From the consumer's point of view, they already pay for the privilege of NBC, ABC, and the Midget Dating Network. Network executives might have more ground to stand on if they'd collectively refused to broadcast on Hulu or their own Internet sites, but having established the practice of making content available online they'll have an exceptionally difficult time turning off the tap.

We suspect the entire issue might be moot once someone figures out how to use a cheap netbook as a TV proxy or discovers the secret of making a TV look like a PC as far as websites are concerned. Until then, we'll all enjoy the lack of content.