Programmers vs. operators: an oddity wrapped in strangeness

Jim BartholdCable is a weird industry.

That is the technologically, scientifically, justifiably produced conclusion that comes from the recent and not so recent dust-ups between programmers (aka content providers) and their deliverymen.

At the foundation level, you have an industry spawned by delivering television to consumers but losing the eyes of its consumers to other media: satellite, telco and the amorphous over-the-top.

This has, on the one hand, caused cable operators to revisit the base definition of their industry and determine that broadband is the new foundation and television is only a layer on top of that. The problem there, though, is that people still are willing to pay a lot--some would say too much--for television, so it's not like cable operators can simply give away their subscribers.

But broadband has muddied the waters by making it possible to get that television from sources not strictly flowing through coaxial cable into a TV set. And that's caught the attention of cable's program suppliers who, wittingly or not, are feeding the idea that consumers don't necessarily need a coaxial cable hooked to a set-top box feeding a television set to get television; they can use a computer, a cell phone or a tablet.

Which in turn has brought the cable operators back to the same idea with a twist. Consumers don't necessarily need a television set. So cable operators, in particular Time Warner Cable (NYSE: TWC) and Cablevision Systems (NYSE: CVC), took some of the same television that was being delivered to television sets and diverted it to iPads and presumably, in the future, other tablets, within the residence. They did so, remarkably for the cable service provider industry, without raising rates.

This is remarkable because it might at some level show that service providers are actually concerned that those golden egg-laying consumer geese might be reaching their financial saturation point. In fact some, including Time Warner's Glenn Britt, have actually espoused cable heresy by suggesting that programming costs too much and the industry should consider some base level plans.

Britt's theory is that the cable industry can no longer afford to tap into every consumer's home for every last nickel and dime it can find in the sofa cushions, because some of those homes can no longer afford what has become basic cable.

The programmers disagree. They--and by they, think Viacom (NYSE: VIA) in this instance--see the move to iPads as threatening to their product. Agreed, it is tough to measure that miniscule number of consumers who actually want to watch a handheld pad rather than a 58-inch flat screen HDTV so it might impact ad-based ratings. But that's a tough argument to swallow, all things considered, for an industry that's trying to keep pace with the viewing advances of the 21st Century, some of which have been created by the programmers.

This is what makes cable a weird industry.

On the one hand, it's chock full with the excellent and the excrement of programming and has found a way to make the public believe TV is as important as or more important than a family vacation or a week's groceries. On the other, it's an industry where programmers demand still more for that programming--and service providers pass along the costs to consumers--in the face of increasing evidence that consumers might be looking for their fun elsewhere and at a lower price.

Rather than cooperating, the programmers and the providers are litigating.

And that spells weird, no matter how you look at it.--Jim