Time Warner to Subsidize Subscribers’ TV Device
Time Warner Cable, one of the nation’s top cable and Internet providers, said on Tuesday that it would subsidize some purchases of a set-top box called Slingbox that allows users to watch their home television programming from anywhere, like a vacation home or a mobile phone.
Time Warner Cable said it would give subscribers to its $99-a-month Wideband Internet service, which is faster and costlier than traditional broadband, a rebate for the total cost of the $300 device.
As a sales promotion, the rebate offer reflects the fact that Internet connectivity, not television, is becoming the core part of the business for companies like Time Warner Cable. But it doubles as something else: as a shot across the bow to cable programmers who say that distributors should pay them more for the right to such place-shifting.
Time Warner Cable has been wrestling with programmers for months over this issue. In March, the company released an app that allowed its paying subscribers to watch dozens of cable channels on the iPad at home. The app was challenged by some programmers, led by Viacom, which owns channels like MTV and Nickelodeon and which accused Time Warner Cable in a lawsuit of “unlicensed distribution” of its content.
Time Warner Cable, in its own lawsuit, argued that its existing carriage contracts with companies like Viacom cover all the screens in a subscriber’s home.
The dueling lawsuits demonstrate just how contentious the topic is for the television industry. “Both sides see their own future as being up for grabs,” said Dan Cryan, the senior principal analyst for broadband at IHS Screen Digest. Distributors are trying to make sure they keep pace with consumers who want to watch TV in new places and on new devices. Programmers are trying to make sure that they don’t miss a major revenue opportunity.
“As with everything, it’s about money at the end of the day — money and customer relationships,” Mr. Cryan said.
Earlier this year, Viacom battled with another distributor, Cablevision, over an even more technologically advanced iPad app that replicated the entire channel lineup, but two weeks ago the two companies resolved their lawsuits. They refused to reveal the terms of the agreement, leaving it unknown whether Cablevision conceded that it should pay more for the right to stream to tablet screens.
Meanwhile, Viacom and Time Warner Cable are at a stalemate. For now, Viacom’s channels are not being streamed via the app.
With the Slingbox rebate, Time Warner Cable is essentially reminding programmers that there are other ways to port channels to different screens and places, though it wouldn’t admit to such a tactic on the record.
The rebate will be available sometime in September. Jeffrey A. Hirsch, the executive vice president and chief marketing officer for Time Warner Cable, said the rebate was a promotion for Wideband, which only an undisclosed fraction of its subscribers have. “Over time we’re really trying to emphasize Wideband as a mainstream product,” he said.
With a Slingbox, Mr. Hirsch added, “you can take your entire video lineup out of the home with you.” He declined to address questions about Viacom, and Viacom declined to comment.