Peter Kafka

Recent Posts by Peter Kafka

CBS' Comcast Deal Clears the Deck for Hulu. Maybe Apple, Too.

The 10-year carriage deal that CBS and Comcast announced today is all about good old fashioned TV, delivered via cable pipes, to be consumed on your 42-inch plasma.

But the deal could also give Les Moonves and company the ability to strike less conventional distribution deals, too. Now that Comcast is out of the way, CBS could move forward with a Hulu deal, and perhaps the likes of an Apple TV product as well.

Make no mistake: The real focus of today’s deal is the money Comcast will fork over for the right to distribute CBS’ broadcast programming to its cable subscribers’ TV sets. Comcast and other cable guys have resisted paying the so-called retransmission fee for TV that’s available free over the airwaves. But one by one, they’re conceding and paying up, which means their customers will, too.

Barclays analyst Anthony DiClemente guesses Comcast’s CBS fee will start at 50 cents a month per subscriber and move well past $1 by the end of the deal, though I’ve heard grunts and murmurs from Black Rock that those numbers are low. Perhaps we’ll hear more during tomorrow’s earnings call.

And while the release announcing the deal notes that Comcast (CMCSA) gets online rights as part of the pact, the near-term impact for Web viewers will be very limited.

Specifically, if you’re a Comcast cable subscriber who pays for Showtime and/or The Movie Channel, you’ll soon be able to watch programming from those channels online, too. Good news for “Weeds” and “Dexter” fans, but that’s about it.

That said, down the road, CBS may start moving to a model where it pulls more of its broadcast TV shows like “CSI” off of the free Web and makes them available only to “authenticated” customers–Comcast subscribers and anyone else whose pipe provider has a deal with the broadcaster.

And that, in turn, gives the network the go-ahead to move forward with Hulu, Apple and every other player who also wants to sell online access to TV programming.

CBS had previously chatted with other outlets like Apple and Hulu–in part because it was interested, and in part because it was good for Comcast to know that it was interested. But now it has a framework for those deals: Comcast is paying us this much money for this much access to our shows. You’ll need to pay that amount or more.

So it shouldn’t be a surprise to see Moonves acknowledge his interest today in joining Hulu’s paid subscription service, which would mean patching things up with former online rivals News Corp.’s (NWS) Fox, Disney’s (DIS) ABC and GE’s (GE) NBC.

And I wouldn’t be shocked to see him murmur positive things about supplying online programming to Apple (AAPL), or Google (GOOG) for that matter, during tomorrow’s call. Stay tuned.


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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