Broadband Cable Association of Pennsylvania


October 11, 2013

Liberty Media Corp. Chairman John Malone called for the cable industry to work together on programming ventures as a way to compete nationally with online video services like Netflix Inc.

Speaking to investors at a Liberty presentation in New York, Mr. Malone noted how Netflix had become a major force in online video streaming because of its ability to operate across the country, buying programming on a national basis. Because cable operators operate on a defined geographic basis, they can't buy programming nationally, he said, and often lack scale to invest in research and technology.

He said cable companies should "get behind" a service, either one already existing or started by an outsider, which could buy programming nationally. Recalling efforts by operators in the 1980s and '90s to support programming ventures, he said "the history of the business is replete with the industry solving its Balkanization and scale problem through joint efforts. I think that could be done again," he said. While the pay-TV industry has pushed its own online video effort dubbed TV Everywhere, Mr. Malone noted that had developed slowly and unevenly.

He singled out Xfinity, the brand for cable and Internet-based services of Comcast Corp. as potentially offering the vehicle for joint efforts. Speaking to analysts and reporters after the presentation, Mr. Malone said that Comcast could extend its Xfinity services, including a branded online video platform and next-generation set-top box called X2, for other operators to use. Mr. Malone said smaller operators have been wary about a linkup with Comcast has been fears that Comcast would one day sell Internet-based cable-TV service outside where it now operates. Mr. Malone said instead of the "paranoia and distrust" that have resulted in uncoordinated industry efforts, there needs to be more collaboration. A person close to Comcast said the operator is talking with smaller service providers about extending its set-top box technology to them, and noted that the company has said it is focused on operating inside its service area.

Mr. Malone made clear at the presentation he is still keen to see the industry consolidate, noting that cooperation would complement mergers. "The fewer big players, the easier it is to get alignment," he said. Liberty has acquired a 27% stake in cable operator Charter Communications , which Mr. Malone has said could be a vehicle to consolidate the industry. Charter has made approaches to Time Warner Cable Inc. about the possibility of merging, but Time Warner Cable has so far rebuffed those efforts. At the presentation, Liberty executives didn't elaborate on their interest in a Time Warner Cable-Charter deal, although Liberty Chief Executive Greg Maffei made a joking reference at the start of the presentation when he showed a slide with Charter's stock price chart and a picture of the Time Warner Center in New York where the cable operator is based. Headlining the slide was the name of the Rolling Stones' song "Time Is on My Side."

A Liberty executive made clear on Thursday his view that Time Warner Cable's industry-lagging performance wasn't likely to improve over the next year, suggesting Liberty thinks the opportunity for a deal will remain. Time Warner Cable declined to comment. Meanwhile, Liberty said that its majority-owned satellite radio unit, Sirius XM Radio Inc., would buy back $500 million of its shares from Liberty as part of a broader share repurchase. Sirius has also increased its repurchase program by $2 billion. Liberty Media expects to continue to own more than 52% of Sirius's shares after the repurchase. Liberty also said it was raised $500 million in convertible notes. Mr. Maffei told investors that the capital-raisings would "reloads the gun for us to do new things."

Liberty also said it has repurchased 5.2% of its shares outstanding from Comcast through the exchange of cash and assets. Separately, another company in Mr. Malone's empire, Liberty Interactive Corp. said it would reorganize its tracking stocks, creating new securities called QVC Group and Liberty TripAdvisor Holdings. Wall Street Journal; more from Reuters

Broadcasters could soon take their grievances with online video service Aereo Inc. to the U.S. Supreme Court in an effort to settle a raging debate over streaming-video technologies that has far-reaching ramifications for the TV industry.

TV broadcasters, whose petition to shut down Aereo was denied by the U.S. Second Circuit Court of Appeals earlier this year, are weighing a filing to the Supreme Court ahead of an Oct. 15 deadline, people familiar with the matter say. Among several broadcasters involved in that case are Comcast Corp.'s NBC, Walt Disney Co's ABC, CBS Corp. , and 21st Century Fox 's Fox Television Stations Inc.

The broadcasters argue that Aereo's service, which streams local-TV signals over the Web for a fee without their permission, violates their copyrights and threatens to undermine their business in fundamental ways. Aereo, a startup backed by media mogul Barry Diller , says its technology simply helps consumers take advantage of their legal right to free over-the-air TV. Consideration of a Supreme Court filing comes as broadcasters continue to lose in their lower-court efforts to shut down Aereo, most recently this week in Boston, where a federal judge denied a petition by a Hearst Corp.-owned TV station for an injunction against Aereo. Judge Nathaniel Gordon wrote in his order that Hearst "has not demonstrated a sufficient likelihood of success on the merits nor the requisite irreparable harm." Hearst said it would appeal the decision.

The high-stakes battle is being closely watched by TV executives. It is far from certain that the Supreme Court would agree to take up the issue, even if broadcasters move forward with an appeal. The Court hears only a small percentage of appeals that are filed. Legal experts and TV industry analysts say the Court would be more likely to weigh in if there were a split between two Circuit courts. That opening could come, they say, from litigation against FilmOn X, a company offering a service it says is similar to Aereo's. A California federal court sided with broadcasters in that case and the Ninth Circuit Court of Appeals recently heard oral arguments on FilmOn X's appeal. A ruling from the appellate court could "happen any day," said Ryan Baker , lead lawyer for FilmOn X who is with Baker Marquart LLP.

Barry Werbin , chair of the intellectual property and technology group at law firm Herrick, Feinstein LLP, said a Ninth Circuit ruling backing the broadcasters would "strengthen the chances" of the Supreme Court taking the case. He predicted the Supreme Court ultimately will have to intervene in the matter, because of the significant potential impact Aereo could have on television. Broadcasters worry such services could siphon viewers from local stations and compromise their growing business of selling carriage rights to pay-TV operators. Some cable and satellite operators have expressed interest in Aereo's design as a way, if legal, to push back on rising carriage fees. "You're dealing with nationwide TV for the masses," Mr. Werbin said. "The only way there could be a resolution is for the Supreme Court to interpret the [copyright] statute." The media trade publication Variety reported earlier that broadcasters may petition the Supreme Court over Aereo.

Meanwhile, heated legal battles in lower courts continue. Earlier this week, local Utah broadcasters joined with Fox Broadcasting in a similar copyright-infringement complaint, saying they were protecting their programming "from outright theft by opportunistic entities such as Aereo." (21st Century Fox and News Corp , owner of The Wall Street Journal, were until late June part of the same company.) In September, a D.C. district court sided with the broadcasters, ordering a nationwide shutdown of FilmOn X-except for states covered by the Second Circuit in the Northeast, where Aereo has triumphed. FilmOn X has appealed the decision and plans to petition the judge in the case to ask for relief from the broad scope of her initial ruling. After the Boston ruling in Aereo's favor, FilmOn X indicated it would start offering service in Boston, despite the injunction. "You've got courts all over the place in this case-interpreting the exact same statute," Mr. Baker said. Wall Street Journal; also see the Washington Post on another court victory for Aereo, and why it matters

The BBC and the Discovery Channel are essentially dissolving a relationship that dates to the 1990s and delivered natural history programs like "Blue Planet," "Planet Earth" and "Life" to American viewers. Some of the BBC's wildlife documentaries and films will be co-produced by its cable channel BBC America instead of Discovery in the future, the British broadcaster said Wednesday. Discovery will continue to work with the BBC on some programs, but will also strike deals with other producers for science and natural history programs. The two collaborators have become more like competitors over the years. Discovery is increasingly an international brand, and it wants to have worldwide rights to its programming; meanwhile, the BBC wants to bolster its own branded channel in America. The two companies said they had mutually agreed to go their separate ways. New York Times

Clout has always been captivated by "punching up," the practice in which little-known politicians swing haymakers at well-known foes just so folks will think they're standing in the same ring. The practice has another side - seen less often - where high-profile pols punch down to tactically elevate an opponent.

That's what Gov. Corbett appears to be doing these days with U.S. Rep. Allyson Schwartz, one of eight Democrats vying in the May 20 primary election for the nomination to challenge his bid for a second term. Judging from the jabs Corbett is throwing at Schwartz these days, you might think they were already engaged in the political pugilism of a general election. Schwartz took note this week when asked about Corbett's attacks on her proposal to fund education and infrastructure with a tax on natural-gas drillers. "I'm engaged in a general-election debate," Schwartz said. "It's already beginning. I think that's good for Pennsylvanians." Mike Barley, Corbett's campaign manager, declined to say if Schwartz is the Democrat his boss hopes to face next year. He said Schwartz looks to be a front-runner in the primary so far and has a long record of votes in the state General Assembly and U.S. House to examine closely. "I think it's a good contrast to her record, which has been raising taxes and growing government," Barley said.

The Republican Party has also targeted Schwartz, with Chairman Rob Gleason this week releasing a Web ad that attacks "the Obama-Schwartz war on Pennsylvania energy and jobs." Bruce Castor, a Montgomery County commissioner who flirted with a primary challenge against Corbett, agrees the governor is pulling for Schwartz to win the Democratic primary. "I think all of us who pay any attention to this believe that Allyson Schwartz is the candidate that Tom Corbett has the best chance to beat," Castor said. "That doesn't mean that he will. But that is who they're hoping to run against."

Bill Green, a Pittsburgh political consultant who worked for former Gov. Dick Thornburgh, said Schwartz's history of operating a Philadelphia women's clinic where abortions were performed before running for office is likely a factor in the tactics. That and her voting record gives Corbett general-election fodder that wouldn't be as available for other Democratic candidates such as state Treasurer Rob McCord or former state Revenue Secretary Tom Wolf. "I think they perceive her as probably the antithesis of Tom Corbett - an eastern Pennsylvania liberal that operated an abortion clinic," Green said. "They see that comparison between a western Pennsylvania conservative and clearly the lines are more black and white than they would be against McCord or Wolf." Philadelphia Daily News' "Clout" column by Chris Brennan