Peter Kafka

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Fox Faces Off Against Time Warner Cable. Will Hulu Get Roped Into the Fight?

it's always sunnyThe TV business loves to recycle old plots. Here’s a familiar one: TV programmer A wants more money from cable company B, which doesn’t want to pay up. Negotiations stall and both sides threaten to take their balls and go home–which would leave cable subscribers with empty TV channels.

Last year’s version featured Time Warner Cable facing off against Viacom (VIA). This year, it’s Time Warner Cable (TWC) versus News Corp.’s (NWS) Fox channel. (Disclosure: News Corp. owns Dow Jones, which owns this Web site).

If you’re looking for a  variation on a theme, note that Fox is trying to get paid for its Fox broadcast channels, which the cable guys traditionally don’t pay for, at least not directly. But big picture, it’s the same pool of money, divvied up by the same companies and funded by the same people–Time Warner Cable customers like me–who don’t really have a say. Nothing new here.

I have noticed one difference. Last year, the Time Warner Cable guys suggested that if Viacom shows really did disappear from customers’ homes, it would be easy enough to find them by going online. And the company promised to help its customers figure out just how to find the likes SpongeBob and Jon Stewart on the Web, if it came to that.

This year, we haven’t heard this particular threat. But for a lot of people, Web TV is a much more plausible alternative than it was 12 months ago. What gives?

Nothing, says TWC spokesman Alexander Dudley. He just hasn’t gotten around to talking about it yet.

“We have plans, if it goes on, to direct customers to specific content” on the Web, Dudley says. One of the reasons it hasn’t come up yet, he adds, is because it’s so obvious–everyone knows that if you want to watch Fox shows on the Web, you go to Hulu, the video site the company owns with GE’s (GE) NBC and Disney’s (DIS) ABC.

“Part of the reason that we find their demands outrageous is because the content is available for free online,” Dudley says. “And if it goes on, we plan to show our customers how to connect their PCs to a TV using an S cable.”

Dudley won’t spell it out, but he’s essentially repeating one of the cable industry’s main criticisms of Hulu: Handing out free TV on the Web devalues the stuff programmers try to sell to the cable guys.

We’ll see. I think that if push really does come to shove, casual Hulu users might discover that the site is no longer the treasure chest of free TV they thought it was.

For starters, there’s broadcast stuff that never gets to Hulu in the first place–like live events. In Fox’s case, that’s a very big deal, since its January schedule includes both NFL football playoffs and the start of “American Idol.”

And when it comes to cable programming like “It’s Always Sunny in Philadelphia” or “Nip/Tuck”–stuff that Time Warner Cable is already paying for–Hulu’s owners have been careful not to put much on the Web in the first place. Go try to watch “Sons of Anarchy,” the FX biker show on Hulu and you’ll end up pretty frustrated.

So here’s a question for Time Warner Cable: Do you really want to send angry customers to Hulu–and then have to deal with them a second time, when they find they still can’t watch their favorite shows, S cable and all?

Another thought: What if Fox simply yanked the programming it supplies to Hulu from Time Warner Cable users? Is that doable–either technically or contractually? I’m lobbing the question to News Corp. and will let you know if I get a response.

Best bet: Just like last year, this year’s fight will likely go up until the Dec. 31 deadline. And then it will get resolved, with the cable guys paying more than they wanted and the network getting less.

Then again, there is dark muttering that is really different this time because both sides have important precedents at stake, etc. I wouldn’t put much stock in that yet–what else are they going to say?–but if it pans out, it will be interesting to see what role Hulu ends up playing.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik