Hulu’s owners, including Walt Disney Co., News Corp., and Comcast Corp., are considering various strategic options for the site including a sale. Other firms that have bid or expressed interest in Hulu include cable operator Time Warner Cable Inc., Guggenheim Partners, Yahoo Inc. and former News Corp. president Peter Chernin’s investment group.

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It isn’t clear how much Time Warner Cable is willing to pay and whether it is considering purchasing a minority stake in the site or an all-out acquisition. Hulu’s current owners don’t see the cable operator as the most likely buyer at the valuation it has signaled it would do the deal, one of the people familiar with the matter said.

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That also isn’t a surprise, since it fits the no-growth trend we’ve seen from pay TV for several years now.

For the record, SNL Kagan figures that the U.S. pay TV industry — cable, telco and satellite — grew by a teeny-tiny 46,000 subscribers last year.

That’s basically negligible given an installed base of 100 million pay TV households. But it’s not a decline.

And it’s also in line with what we’ve seen from the industry for a while, where subscriptions go up and down each quarter — usually up in Q1 and Q4, and down in Q2 and Q3. And as always, it’s important to note that this is for all the pay TV platforms.

You might read today, for instance, that Kagan says the cable guys — Comcast, Time Warner Cable, etc. — lost 1.66 million customers this year. True! But the telco guys — Verizon and AT&T — and the satellite guys — Dish and DirecTV — added the same number. Hence, no growth.

As always, the real debate is about why there’s no growth. There are three standard answers, which don’t necessarily negate one another:

• 100 million pay TV customers is the size of the U.S. market, period. It’s just not going to get bigger.
• The market would be bigger if the economy was better, and more people were buying homes instead of “doubling up.”
• People are ditching pay TV for the Internet and some combination of Netflix, iTunes, Hulu, etc. And/or the population of “cord-nevers” — college grads who have grown up with Web TV and see no reason to pay for cable — is growing.

The last one is certainly worrisome for the pay TV guys, and the ones who used to boast that they see no evidence of cord-cutting are a lot more muted about it these days.

You’ll occasionally hear a top pay TV executive — like Dish’s Charlie Ergen — talk candidly about the fact that there are lots of kids, like his own, who aren’t paying for TV anymore. But as always, for right now, cord-cutters are like vegans — you may know a lot of them, but the rest of the country still eats a whole lot of Big Macs.

As far as the bad news … we’ll get to that. But let’s stay upbeat for a minute, and I’ll try to generate more optimism for you.

Start with some charts, via Google Finance.

Here’s what happened to AOL stock after the company split off from Time Warner, just like you’re set to do:

And here’s what happened to Time Warner Cable shares when that company did the same thing:

And for good measure, let’s mash them together:

So, on the whole, not too terrible. Two companies that Jeff Bewkes didn’t want weighing down his cable and movie business, and they’ve done okay once he cut them loose. AOL shares are up 62 percent since the split.** Time Warner Cable is down 21 percent, but shareholders have gotten another $6.41 per share in dividends, so things are a bit better than they look here.

Let’s continue to stay upbeat, and channel the talking points you’re likely to hear in months leading up to the split:

• Hey, just because this is Plan B for Jeff Bewkes doesn’t mean he doesn’t want this to succeed. Time Warner, after all, will end up owning a chunk of the spun-off company, so it has a vested interest in this thing working.
• And, seriously, this could be good for Time Inc.! After all, in the last few years the thing has just been in stasis/shrinking mode, and no one cared. Now they’ll have to care, and maybe the newco will go do some serious re-orging and perhaps some investing, too. After all, it’s good enough for News Corp.!

And all of that is potentially true. Or at least truthy. Or something.

Alas:

• Jeff Bewkes doesn’t care about Time Inc., and investors don’t either — they’ve wanted him to dump it forever. If they haven’t priced the spinoff into the share price already, they will do so immediately, and then that will be that.
• It’s hard to imagine any scenario where Time Inc. is able to navigate the print-to-digital shift effectively. But it certainly won’t get its best odds as a public company made to answer to the Street’s quarterly demands. And even if, say, a deep-pocketed and semi-benevolent benefactor materialized to buy the thing, Bewkes wouldn’t sell, because of the tax hit that would generate (the spinoff will be tax-free for shareholders).
• For better and worse, the News Corp. spin (which is set to include this website) is going to be steered by Rupert Murdoch, a man with a lot of money invested in the company’s perfomance, and even more ego tied up in it. Time Inc. will be run by … someone, and they’ll get a nice paycheck and some options for their effort, but no one expects them to work a miracle here.
• And that’s what Time Inc,. stripped of Time Warner’s corporate shield, will need to turn around. It has the classic analog/digital channel conflict, where the latter is the only way out, but the former generates all the cash. And that’s hard enough to deal with at the most nimble and most flexible companies. This one, shoved out of the nest and into the market without any kind of cushion, seems set up to fail. I hope I’m wrong.

*Des Moines is nice enough, by the way. But the Meredith/Time Inc. culture clash stories you heard were very true.
** True, AOL has fired a lot of people since it went its own way. But that’s going to happen at Time Inc., no matter what. And, yes, the stock’s rise has a lot to do with a $1 billion patent sale, but let’s stay positive!

(Image courtesy of Shutterstock/mikeledray)

AT&T Inc., Cablevision Systems Corp., Time Warner Cable Inc, Verizon Communications Inc. and Comcast Corp. have put into place an alerts system with “six strikes,” with various degrees of penalty for subscribers accused of piracy.

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But that kind of chatter doesn’t matter much to Wall Street, which is very happy that Time Warner CEO Jeff Bewkes has finally decided to dump his magazines. Time Warner shares closed at $53.63 today, up 2.5 percent since midday Tuesday, when the news first broke.

And that boost was enough to bring TWX to levels it hasn’t seen since the fall of 2007. Back then, Dick Parsons still ran the company, and it still owned AOL and Time Warner Cable. And Lehman Brothers wasn’t a smoking crater.

The bump reflects the certainty that even if the Meredith joint venture doesn’t happen — and my understanding is that those talks are quite far along at this point — Bewkes has now committed to dumping publishing, period.

Smart people I talk to say that if the Meredith deal falls apart, then the next step would be to pursue a public spinoff, a la Time Warner Cable and AOL. While I had originally assumed that both traditional publishers and non-strategic investors would want to take a crack at Time Inc., I’ve since become disabused of that notion: A straightforward sale would create a huge tax bill for Time Warner, because even in their declining state, some of these magazines are going to create huge capital gains. Spinning them off into a newco should solve that.

[Shutterstock/Andrew Bassett]

Meanwhile, a question for the Web video guys: Are you bummed out about Al Jazeera’s Current TV deal? Maybe you should be.

Because this is a deal you could have had for yourself.

The Internet isn’t going to get its hands on TV’s most valuable properties, like big-time sports, anytime soon. But Al Jazeera would have been a perfect candidate to bypass cable and go digital-only.

Consider:

You’ve already got the infrastructure: A few years ago, the Web’s capacity to handle lots of streaming video was an open question. But now we’ve seen — courtesy of the Olympics and Felix Baumgartner’s space jump – that this isn’t a problem, at least not for a cable-sized crowd.

You’ve already got the eyeballs: No need to reiterate the size of YouTube’s audience (but it’s around 800 million people worldwide, in case you’ve forgotten). The more important part is that Al Jazeera’s prospective U.S. audience — news junkies, Muslim Americans, Muslims living in America, etc. — are quite certainly already getting most of their information from the Web. They do that now because they have no choice, but my hunch is that even when Al Jazeera shows up on cable, they’ll keep consuming most of their news on the Web. Because that’s where they like to consume it.

You’ve got the flexibility: Right now, anyone in America can stream Al Jazeera whenever they want, for free, without paying for cable. But that’s not the case with Current TV or nearly any other cable network, because the cable providers who pay for cable programming don’t want it going out on the Web for free. They want to package Web access (along with phones, tablets, connected TV, etc.) as a “TV Everywhere” bonus for pay-TV subscribers. Maybe Al Jazeera wants that, too. But moving from Web-only to cable means it will have much less choice in the matter, regardless.

So why not spend much less than a half-billion dollars and make Al Jazeera the Web’s first “real” TV news operation?

If you’re a Web video guy who wants to make yourself feel better, you can tell yourself that its owners have misjudged TV’s value. Maybe they’re like all those guys who bought newspapers at the end of the ’90s. Or maybe they’re like Japanese trophy hunters buying Pebble Beach and Rockefeller Center at the end of the ’80s.

But if you’re waiting around for an ambitious, deep-pocketed player with global appeal to make a big bet on Web video as a real TV alternative, you just missed a huge opportunity. May be a while before you get another one.

(Image courtesy of Shutterstock/Altay Kaya)

Synacor is a behind-the-scenes technology company that provides authentication services, Web-based TV solutions — and now Zynga games —  to 45 cable, satellite and telecom companies.

Starting next year, Synacor’s customers will be able to offer their subscribers access to games from their homepages. Additionally, those providers will be able to include Zynga’s in-game currency as part of their subscription offerings. In other words, they can now bundle together TV + telephone + Internet + FarmVille Cash.

Synacor’s customers include a variety of providers, such as Verizon, CenturyLink, Broadstripe, Charter and US Cable, and claims to reach 24 million households in the U.S.

Zynga has inked other distribution deals in the past, such as a rewards program with American Express that enables people to earn virtual currency when they spend money in the real world. This is the first TV-and-games mash-up for the social game company. It may take awhile before it becomes a meaningful business, if it ever does become meaningful, but at least it shows the company’s dedication to finding new subscribers, wherever they might be.

A lot of the details are still being hammered out, like how customers will navigate from an operator’s homescreen to a game. Customers may be redirected to Facebook, Zynga.com or another network, like Google+. Clearly, if the customers are already existing players, they will likely want to play on the platform of their choice. Customers will receive a discount code in order to redeem the currency inside the game.

It’s still not clear how much in-game currency customers will be offered, and, in theory, it could fluctuate based on the subscription package. A Zynga spokesperson declined to disclose terms of the deal.

“Not gonna happen,” comes the response from the TV guys, over and over. “Not anytime soon, at least.”

That’s particularly true for premium pay channels like HBO and Showtime, which make almost all their money from subscription sales, and rely heavily on pay-TV providers to handle their marketing, as well as all of their customer service, billing, etc.

Yes, there are a bunch of people who would pay to watch episodes of “Game of Thrones,” but don’t want to get HBO. And there also a bunch of people who say they would be happy to subscribe to HBO, but not pay for cable. But HBO and Showtime executives figure that the upside of pleasing those people doesn’t outweigh the downside of angering the cable, telco and satellite guys, who give them a ton of dough.

You can go around and around on this one, but it’s easier to show instead of tell. So take a look at this ad, which millions of you have already seen this fall:

To sum up: That’s a classic twofer, promoting both the hottest show on cable TV and the company that will bring it to you.

But I’m told that the financing for this one is pretty one-sided, with Time Warner Cable footing almost all of the bill. People familiar with the ad tell me that Showtime took care of the six-figure bill for Claire Danes’s participation, but everything else is on the cable guys, who will end up spending more than $20 million on the campaign.

Clearly, big TV campaigns promoting their network and their hit show aren’t the only thing keeping Showtime tethered to the pay-TV model. If CBS wanted to run its own marketing push for Homeland, it could do so.

But the ad does speak to the tight, profitable symbiosis between the network and the guys who run the pipes. The Internet isn’t going to break that up anytime soon.

If Google doesn’t need to rely on the Comcasts/Time Warner Cables of the world to connect with your computer, then all kinds of interesting stuff could happen — if Google really does want to get into the business of becoming a broadband provider.

Google says that’s the case, but it’s hard to imagine the company really following through. So, we’ll see.

Meantime, Google Fiber, which started rolling out to homes last week, also gives you a glimpse at what The TV Of The Future is supposed to look like. You turn on your set and can watch whatever you want, no matter who is sending out the signal: Broadcast TV, cable TV, Netflix, etc. (You’re probably going to pay for it the same way you do now, though.)

BTIG analysts Rich Greenfield and Walt Piecyk trekked out from New York City last week to get a hands-on demo of the TV service (registration required), and you can see a demo clip here.

It’s not a thrilling video, because it relies on still shots, but it does give you a sense of what the product actually looks like.

The big idea here is one we’ve also seen from other next-gen TV experiments, including Google TV, Microsoft Xbox and Nintendo’s new console: One screen, many inputs, and a guide that simply lets you find whatever you want to watch, without having to worry about the source. If a mythical Apple TV ever shows up, it should do the same thing:

One other point: Note that the one thing you’d expect to see from Google in a TV product — YouTube — isn’t actually available yet. It’s supposed to show up next year, and the fact that it hasn’t yet is sort of astonishing, given YouTube’s stated ambition to compete directly with TV for eyeballs and ad dollars.

But bear in mind that for whatever reason, the Google org structure puts YouTube and Google TV in a completely different silo than Google Fiber. Internally, that must make sense in some Googley way. But it’s hard to fathom from the outside.

Among the sweeteners granted Google by both cities are free office space and free power for Google’s equipment, according to the agreement on file with the cities. The company also gets the use of all the cities’ “assets and infrastructure”—including fiber, buildings, land and computer tools, for no charge. Both cities are even providing Google a team of government employees “dedicated to the project.”

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The cable company notified other major Clearwire investors, which have an option to buy part or all of the stake, of the move and disclosed its intention in a regulatory filing Friday. Clearwire, which is intertwined with network partner and largest shareholder Sprint Nextel Corp., is overhauling its network and seeking partnerships or asset sales to raise cash.

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Synacor, the behind-the-scenes tech company that provides authentication services to television companies, will be launching a new identification platform for pay-TV services that will allow users to use social IDs rather than passwords across multiple devices.

While it is common for consumers to do so for a range of Web services, Synacor Cloud ID will be the first to allow customers to use social logins from Facebook, Twitter and Google+ for cable TV authorization.

The Buffalo-based Synacor is a leader in white-label authentication services for many “TV Everywhere” events, including 2012 March Madness, the 2010 Vancouver Winter Olympics and, most recently, the 2012 London Summer Olympics.

To do so, the company has worked with many pay-TV providers, as well as channels, including Dish Network, Charter, HBO Go, CNN and the Cartoon Network.

It has not announced any done deals as yet, said a spokesman, but the goal is obviously to work with the big ones, such as Comcast, Dish and Time Warner Cable.

Such a move is an important one, as Peter Kafka wrote recently:

“That’s one of the fundamental precepts of the ‘TV Everywhere’ plan that the cable guys are using to hold off disruption, and in practice it’s a hassle. It requires digging up your cable bill so you can find your account number, and starting up yet another online account and password. Not rocket science, but certainly not one-click easy.”

Here’s the full press Synacor release:

Pay-TV Industry First: “Social Login with TVE Authorization” — Consumers Login Using Their Favorite Social Account and Simultaneously Authorize with Their Pay-TV Billing Account

BUFFALO, NY (PRWEB — September 6, 2012) — Synacor, Inc. (NASDAQ: SYNC), leading provider of next-gen startpages, TV Everywhere solutions and cloud-based services, today announced an expanded Cloud Identity Management platform, broadening its cloud-based services suite for consumer electronics companies, wireless carriers, programmers and app developers in addition to Pay-TV providers. Synacor’s Cloud ID works whenever and wherever consumers must be authenticated, authorized and/or registered, and on any device.

Synacor’s Cloud ID offering features an industry first: Social Login with Pay-TV Authorization. To authenticate for access to online Pay-TV content, consumers can now login with their favorite social account like Facebook, Twitter or Google, while simultaneously authorizing with their pay-TV provider or billing account. Synacor Cloud ID brings the convenience of social login to TV Everywhere consumers with the trust of entitlement verification for TV authorization.

“Synacor’s experience and scale providing web authentication and identity integrations is a strategic advantage over other cloud identity providers,” said Michael Bishara, Synacor GM for TV Everywhere. “Synacor successfully provided authentication for NBC Universal’s TV Everywhere 2012 Summer Olympics on behalf of nearly 40 pay-TV customers, spanning all 50 states, reaching 25 million subscribers — the largest TVE Olympics footprint. Synacor is now leveraging our experience to provide cloud identity services for additional customer verticals that require registration, authentication and authorization capabilities.”

Synacor’s Cloud ID Management Platform already provides authentication services for TV Everywhere, Messaging and Value Added Services, but has been expanded to provide a full suite of Identity Management Services. These expanded capabilities will enable consumer electronics companies, app developers and programmers to provide a Secure and Trusted Identity Management solution to their end-consumers.

“Synacor provides end-consumers a seamless authentication, authorization and registration experience while providing our customers all their administrative needs such as Account Management, Auditing and Reporting,” said Synacor co-founder and EVP George Chamoun. “As identity management moves from the enterprise to a distributed model, companies such as pay-TV, consumer electronics and app developers need a trusted and tested partner to serve as their conduit for ID services. With more than a decade behind us, innumerable integrations and millions of authentications across hundreds of devices, Synacor is that Cloud ID partner.”

Synacor Cloud ID spans the entire ecosystem, offering an end-to-end or distributed component solution, and existing in Synacor’s cloud or the customer’s. Synacor’s key advantages include the following:

Scale — Delivering millions of authentications, including authentication for Synacor’s pay-TV customers’ 25 million subscriber footprint for the 2012 Summer Olympics and on an ongoing basis for TV Everywhere, Synacor is the scale player in Cloud ID management.

Gateway — Synacor is the bridge connecting hundreds of identity systems for authentication, authorization and user profile information while leveraging industry-standard technologies such as SAML, OAuth, OpenID, and Social IDs, creating a multipronged gateway that both identifies as well as entitles based on a consumer’s rights profile, and integrated with the preferred ID technologies of Synacor’s customers.

Social Login — An industry first. Synacor’s Social Login feature creates a trusted connection among content providers and pay-TV providers, allowing consumers to bind their pay-TV credentials to their favorite and frequented social media accounts like Facebook, Twitter and Google, allowing for a seamless sign-on process, and using the credentials most consumers remember.

Multi-Platform and Multi-Language — Synacor Cloud ID is accessible on desktop, mobile, tablet and across a range of connected devices, as well as being fully localized for user interfaces in multiple languages.

Trusted Framework — With a decade of success, Synacor is a tested and trusted connection in the distributed, cloud-based model of Identity Management and Services. Synacor’s fraud prevention technology monitors for suspicious account activity across multiple devices, streams and providers. Synacor delivers its solution from three data centers in the United States and in Europe. Synacor customers are in full control over their data, yet can leverage Synacor’s experience.

Synacor has provided authentication services for key TV Everywhere events including 2012 March Madness, 2010 Vancouver Winter Olympics and most recently the 2012 London Summer Olympics. Synacor has completed integrations with numerous pay-TV providers, as well as many pay-TV channels. Pay-TV providers include DISH Network, Charter, CenturyLink, Mediacom, Suddenlink and WOW! among others. Integrations include HBO GO, Max GO, CNN, TBS, TNT, tru TV, Cartoon Network, Adult Swim, Epix, Comcast Entertainment Group (E!, Style, G4), Fox, Speed2, BigTen and a number of other TV channels.

For more information on Synacor’s cloud-based services including Cloud ID, TV Everywhere and Cloud Messaging Services, please visit synacor.com or email sales@synacor.com. Synacor reaches over 23 million households, tallying a monthly average of 20 million unique visitors and 3.7 billion ad impressions.

The Cupertino, Calif.-based company proposes giving viewers the ability to start any show at any time through a digital-video recorder that would store TV shows on the Internet. Viewers even could start a show minutes after it has begun. Time Warner Cable Inc. offers a limited version of this feature called Start Over.

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But if it is, the numbers don’t show it.

It’s easy to be confused about this stuff, but it’s also easy to clear it up: If you want to evaluate the state of the pay-TV business, you have to include the results from the telco guys, who have been taking share from the cable and satellite guys. And you have to look at numbers for the whole year, not a single quarter.

Once you do that, you end up with numbers that are basically flat, give or take a few thousand subscribers.

Here’s the data from the Reuters story, which uses publicly disclosed numbers from the country’s biggest pay-TV providers, who have been reporting second-quarter earnings over the last few days.

Q2 Video subscriber losses:
DirecTV: 52,000
Time Warner Cable: 169,000
Comcast: 176,000
Dish: 10,000
——————-
Total: 407,000 lost subscribers

Those numbers will likely get worse once we see results from Charter and Cablevision, who report next week. And there are still a bunch of small cable companies that aren’t public, so sussing out those numbers involves some guesswork. For argument’s sake, let’s say those companies followed the trendline of the last few years, and ended up collectively losing another 300,000 subs.

Estimated total: 700,000 lost subscribers

Still, that’s a loss, right? Yes. But as the Reuters piece itself notes, the second quarter of the year is always the worst for the pay-TV guys. College kids move away, people move into new homes, etc.

Last year, for instance, the pay-TV guys lost 442,000 subscribers in Q2. But they still ended up adding more than 200,000 subscribers by the end of 2011. That’s barely any growth at all — something like 0.2 percent — but it’s better than a loss.

This year’s trends look similar. Pay TV added 422,000 subscribers in Q1 – which means they’re basically flat for the year. If recent patterns hold, they’ll have another flat or down quarter in Q3, and then add more again in Q4.

You can argue that the pay-TV industry’s no-growth or barely-there growth is due to a weak economy and lousy household formation numbers. Or you can argue that it’s because people really are swapping out pay TV for Netflix, Apple TV, etc. Or a mix of both, or whatever.

But for now, at least, you can’t argue that the pay-TV industry is shrinking.

Time Warner Cable, the second-largest U.S. cable television provider behind Comcast Corp., has struggled alongside other cable providers against television networks as disputes over programming costs have caused rounds of blackouts for consumers. Cable providers claim the programmer’s fee increases are excessive and lead to higher prices for customers, while networks maintain they are only asking for a fair deal.

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That’s all old news now: All the big media companies that took hits yesterday — Comcast, Viacom, Disney, etc. — are trading back where they were on Wednesday, before Barry Diller and his Web video start-up won a legal victory.

So which group got it right? The sky-is-kinda-falling folks who sold media stocks yesterday morning? Or the “What, me worry?” camp that bought them up yesterday afternoon and today?

Insert professional shrug here. The big-TV versus Aereo case is just starting — this week’s ruling was simply a decision not to shut the company down while the trial moves on — and is likely to drag on for years.

Investors don’t like uncertainity, but they’re kind of okay with uncertainity that won’t affect the near-term future. So that’s probably the best explanation for keeping things status quo, share-price-wise.

But just for giggles, let’s pretend that Aereo ends up definitively winning its legal argument: That it can sell access to broadcast-TV programming without paying broadcasters.

What then? Here’s how it might break down for different parts of the Big TV Industrial Complex:

Broadcasters: These guys have the most to lose. In recent years, big over-the-air broadcasters have been able to secure big “retransmission” fees from the cable companies for their stuff — CBS, for instance, has said it should pocket $250 million in retrans fees this year, and that it could end up pocketing as much as $700 million a year a few years from now.

And if Aereo doesn’t need to pay broadcasters to show that stuff, then maybe pay-TV providers like Time Warner Cable and Verizon don’t have to, either. Broadcasters still make most of their money from selling ads, and that business doesn’t have to disappear if viewers head to Aereo or other “over the top” alternatives.

But just like the fees that Netflix and other digital outlets have started paying Big Media companies, retrans fees are extra valuable to the broadcasters because they’re almost 100 percent pure profit.

Cable programmers: Their core business doesn’t get affected, because there’s no way for Aereo to get its hands on stuff like ESPN or Bravo without paying for it.

There is a possibility that Aereo’s customers are happy to just get programming from the four big broadcast networks, and add in a few shows here and there from iTunes, Amazon, Netflix, etc. And if that happens, that’s not good for cable programmers, since it could accelerate cord-cutting.

But it’s just as likely that Aereo ends up striking deals with the cable networks, so it can sell its customers a more complete package, becoming a virtual pay-TV provider itself. And the cable guys would be just fine with that — as long as Aereo agrees to buy bundles.

Pay-TV providers: The negative scenario is one where Aereo attracts lots of subscribers for a broadcast-only package of programming, and many of those customers stop paying the likes of Comcast and Verizon for TV.

But even if that happens, they’ll still end up paying the likes of Comcast and Verizon for broadband. And that’s not a terrible scenario for those guys at all, since broadband margins are much better than video-service margins. And again, if Aereo doesn’t have to pay for broadcast TV, then the pay-TV guys could make the same argument themselves — which is what Time Warner Cable boss Glenn Britt has already been publicly musing about.

Now, let’s make it even more complex: All of the big media companies are in multiple lines of business, which makes it even harder to assess their impact.

Three of the Big Four broadcasters, for instance, are owned by companies with big cable programming businesses, which reduces the hit they might take (it may also give them the option to move some programming from broadcast channels to cable channels, as Disney did when it moved “Monday Night Football” from ABC to ESPN).

And Comcast is a broadcaster, a cable programmer and a cable provider. What does Aereo mean for it?

So it’s easy to see why Barry Diller is betting on Aereo: If it works, it could change the way money flows in the TV business, and he could be in a position to pocket some of the flow himself.

But that doesn’t mean Aereo will fundamentally disrupt the TV business. Or at least that’s what Wall Street seems to think today.

That’s the story, more or less, for all the glitzy, expensive programming you see on TV these days. The TV industry’s paywalls might topple one day, but it won’t happen soon, and that means you’re going to have to pony up to see this stuff (legally).

But, as Venrock’s David Pakman, YouTube’s Hunter Walk and lots of others point out, your TV-programming guide isn’t dominated by high-end stuff. Most of what’s on, most of the time, is a lot less exalted. Like reruns and reality TV.

And that’s where TV’s first real weak spot will materialize.

Thanks to Netflix and Hulu, we already have a pretty good idea of what reruns on the Web look like. What about reality? Well, it looks a bit like this:

That’s an episode from Demand Media’s “eHow Home” channel, one of three the Web publisher is producing for YouTube’s new “professional” content venture.

To my eyes, it looks a whole lot like “real” reality TV — multiple camera angles, professional edits and an easy-to-understand narrative. If you were scrolling through channels on your couch, it would seem familiar, at the very least.

It’s a whole lot cheaper than “real” TV, though. An hour of similar programming on Scripps’ HGTV may cost something like $250,000 to $350,000. An informed guess places Demand’s costs at something like $100,000 an hour for its stuff. Quite likely much less.

Right now, Scripps can afford to shell out so much for its programming because it gets paid twice for its shows: Once by advertisers, who pay much more than YouTube has traditionally been able to command for its video; and another time by pay-TV subscribers, who pony up a monthly fee that gets cut up between Scripps and all the other programmers on the TV grid.

They’re not paying a whole lot for HGTV — the channel probably gets 20 cents or less per subscriber, per month. But all of those subscribers add up, and Scripps is able to bundle HGTV with all of its other channels — Cooking Channel, DIY Network, Food Network, etc. – and ends up with a nice chunk of guaranteed revenue, no matter who watches.

So if Demand and Google — which is underwriting all of this, with its $5 million interest-free loans — are successful, they’ll be able to attack TV on two fronts:

• Marketers may decide they’d rather pay to reach eyeballs on the Web, instead of TV.
• And cable-TV providers like Comcast or Time Warner Cable may decide that HGTV, etc., isn’t must-see programming, and it may push to lower the channels’ subscriptions fees (or threaten to drop them altogether, like Dish TV is doing).

This doesn’t work at all if no one actually watches the stuff on YouTube. And right now the view counts for “life style celebrity” P. Allen Smith’s home-building series on eHow’s channels are quite modest.

And remember that even if the P. Allen Smiths of the world do start chipping away at the pay-TV business, most of you may not notice — because you’re not watching channels like HGTV in the first place.

But if it does pan out, the net effect is that money flows into Web video and away from TV, which puts pressure on budgets for everything — even the high-end TV you really care about. Sketch that curve out far enough, and things really will change. You may even be able watch your dwarfs and dragons without paying for TV.

Justice Department officials have spoken to several online video providers, including Netflix Inc. and Hulu LLC, those people said. Investigators have also questioned Comcast Corp., Time Warner Cable Inc. and other cable companies about issues such as setting data caps, limits to the amount of data a subscriber can download each month, these people said.

Representatives of all those companies and the Justice Department declined to comment on the investigation.

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The consortium includes Comcast Corp., Time Warner Cable Inc., Cablevision Systems Corp., Bright House Networks LLC and Cox Communications Inc. Consumers will be able to access more than 50,000 Wi-Fi hot spots in the New York area, Los Angeles, Tampa, Orlando and Philadelphia. Most of the operators offer the service only as a perk to current broadband subscribers — but Time Warner Cable has offered a pay-as-you-go option for non-customers as well.

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In short, Comcast is moving from a flat cap to usage-based billing.

It is scrapping its 250-gigabytes a month cap and trying a couple different plans in its place. One version will introduce a 300-gig cap and offer additional tiers of service, with bigger caps, along with the ability to buy more chunks of data. Another version also uses a 300-gig cap and the ability to buy incremental blocks of data as needed.

Comcast, which has more than 18 million high-speed data customers, says it will experiment with the two plans in some of its territories.

It also says that in markets where it’s not trying the new plans, it will scrap its data cap entirely until it settles on a new plan.

The move comes as Comcast has taken heat about the way it treats data on some of its proprietary video services, in particular the Xfinity app for Microsoft’s Xbox console.

Netflix CEO Reed Hastings has argued that because Comcast doesn’t count data delivered via that service against its usage caps, it is violating “net neutrality” principles. Comcast says it’s in the clear because that data isn’t delivered via the public Internet but on its own network, and doesn’t plan on changing its policy.

Comcast executives referenced the debate as they introduced the new plans today. “There has been a little bit of noise along with the Xfinity Xbox plan,” said Comcast EVP David Cohen. But Comcast also insists that only a small handful of its users come close to using the 250-gig cap today. The company says median usage runs around 8 gigabytes to 10GB a month.

Other broadband providers, notably Time Warner Cable, have also moved to usage-based pricing. If you take the companies at their word, they’re doing it because they need to charge more money to provide more bandwidth because “our network is not an infinite resource, and it is expensive to build it,” as Cohen says.

But usage-based pricing is also a useful tool to have available if cable TV users really do stop subscribing in large numbers, and replace their pay TV packages with Web video. That gives the cable (and telco) guys a way to replace the video revenue they lose with more broadband dollars. A bonus for them: Broadband subscriptions are much more profitable than video subscriptions.

[Shutterstock/Janos Levente]

So why did the number of pay-TV subscribers increase in just the last three months?

They didn’t grow much — a modest 422,000 subscribers, for a very modest 0.2 percent growth rate — but they still grew.

Those numbers come from Bernstein Research’s Craig Moffett, a longtime skeptic that “cord-cutting” is a real and pervasive problem for the cable guys (at least for now). It’s not the first time he’s shown evidence of barely-there growth for cable TV — last quarter, for instance, he gathered similar numbers.

But his numbers do conflict with other reports that show evidence of cord-cutting. Earlier this month, for instance, Nielsen said that pay-TV subscribers had shrunk by 1.5 million in 2011.

The easiest way to reconcile Moffett’s numbers with other reports is to note that almost all of the analyst’s data comes from the publicly traded pay-TV providers themselves — like Comcast, Time Warner Cable and Verizon — in the reports they offer up to shareholders. Most of the other stuff you’re seeing comes from polls and surveys.

Here’s his data. You’ll need to click the image to enlarge it:

But what about all of you folks who tell me, over and over, that you’ve ditched cable for some kind of combo of Netflix, Hulu, Apple TV, or even pirate streams? Surely I’ll hear from some of you again, just as soon as I publish this.

And I believe you folks, too. I can certainly imagine many scenarios where tech-savvy people — and even not-that-tech-savvy people — are able to satisfy their video urges without paying for a TV subscription. But my operating theory, for now, remains my vegan analogy: “They’re real, and they’re out there. They’re particularly notable in certain places like New York, the Bay Area and college towns. And they over-index at certain Web gathering places, like this one. But McDonald’s sales are still chugging along.”

That brings Simulmedia’s total raise to some $27 million over three years. That money is going into Morgan’s take on “targeted” TV advertising, which promises to merge Web-style targeting with traditional TV ads.

There are lots of people chasing targeted TV ads, and to date none of them have gotten very far. Canoe Ventures, a consortium led by Comcast, Time Warner Cable and the rest of the cable industry, just imploded earlier this year.

The TV guys will probably get there, someday. But in the meantime, Morgan is trying a slightly less ambitious version that he says can work now.

Rather than trying to deliver customized ads to every TV viewer based on their individual set-top-box data, Simulmedia uses some set-top-box data (which it gets from providers like DirecTV, TiVo and AT&T) to try to find undervalued ad inventory. So, in theory, it can help an advertiser find a cheaper way to get in front of a specific audience it wants to reach.

If that sounds a bit like Web advertising, that makes sense. Morgan built two pioneering Internet ad companies — 24/7 Real Media and Tacoda, which were acquired by WPP and AOL — before tackling TV.

Simulmedia says it has run 200 campaigns for 24 brands since it pivoted to its current model (it had originally tried using the same technology to target TV advertising for TV programming), and Morgan says he is “very close to profitability.” This is the second time Morgan has funded the company with an inside round: The same group of investors put in about $9 million a year ago.

Here’s the promo, released this morning. The first episode, featuring Assange chatting up bird-flipping Super Bowl performer M.I.A., runs April 17. WikiLeaks says you should be able to watch it on the Web and via Russian cable news network RT, which you can get in the U.S. via the Dish Network and on some Comcast and Time Warner Cable systems.

WikiLeaks says Assange has taped 12 of these so far. I hope one of the guests turns out to be Saturday Night Live’s Bill Hader.