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Battle Over Value of Content Intensifies

Content creators and distributors are locked in an ongoing war over exactly what content is worth. There's more content available than ever and consumers can watch on nearly infinite platforms, creating a new environment in which the two sides pick each battle. Whether it's online distributors or cable broadcasters, the distributors want to pay less.

Just last night Viacom and Hulu (NWS, DIS, GE) couldn't work out their fight, and the two decided to part ways. Viacom is pulling its Comedy Central programs from Hulu next week, including "The Daily Show" and "Colbert Report," two of the most popular shows on the site. Their contract expires, and sources tell me that Hulu simply wouldn't pay enough to make the deal worthwhile.

Now since Comedy Central is a cable channel, it would make sense that it wouldn't want to give away its shows online —after all, it wants to keep subscribers paying their cable or satellite TV bills. But that's not the issue, because Viacom will continue to offer both "The Daily Show" and "Colbert" on their own websites, free and ad supported. On these sites Viacom has total control over how many and which ads to place with which videos. And of course Viacom doesn't have to give a cut of that ad revenue to Hulu.

Hulu hasn't answered my questions about what this parting of ways means for its business, just saying that contract expirations are common. Hulu is being quite generous about the whole thing, bidding "A Fond Farewell" on the site's blog and directing viewers to watch the shows on their own sites. Still, losing this popular content has got to hurt.

While Hulu and Viacom's negotiations failed, talks between WABC and Cablevision over fees are ongoing. And the issue is still the value of content. There's a lot of dispute over what exactly is going on here.

WABC says it's negotiating separately for its New York area station, and that this station has never been directly compensated, despite the fact that Cablevision charges customers for broadcast stations. But Cablevision says this is absolutely not true, arguing that it pays W-ABC's parent a big chunk of change—$200 million—for a number of different programs. From Cablevision's perspective, none of ABC's stations are "free," and ABC is simply looking for a way to charge more for exactly the same programming.

Will Cablevision end up paying ABC more? Will ABC pull its affiliate off the air right before the Oscars, keeping three million viewers from watching the show? Sources tell me that advertisers are starting to get antsy, anxious to make sure that those viewers tune in.

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