IP Democracy: Would the Feds Bless TV Networks' You-Tube Rival?

The broadcast networks, along with top TV programmer Viacom, could announce the creation of their own YouTube-esque consortium as early as this week, the New York Times’ Richard Siklos and Bill Carter report (here or here). NBC Universal, the News Corporation, Viacom and, likely, CBS are in talks to create a web site that showcases their traditional TV content and the activity is accelerating.

While the networks (and Viacom) want to ride the gravy train that led to YouTube’s superstar status, there are so many problems with this idea that it’s hard to know where to begin. For one thing, the various participants have so many divergent agendas and deals (not to mention egos) to manage that it seems to me this kind of organization is DOA.

“They really want to do it,” one executive briefed on the talks said of the partners involved. However, this executive predicted, doubting the ability of the competitors to play well together: “Ten minutes after they do it they’ll want to kill themselves.”

More importantly, however, the idea of TV programmers responsible for, say, over 90% of commercial broadcast TV programming (and a good chunk of cable programming) banding together to funnel their content to their own jointly owned web site is bound to raise the eyebrows, if not the investigative instincts, over at the Department of Justice. It all depends on how such a deal is structured —- specifically, whether the broadcast networks (and Viacom) decide to grant their own web site exclusivity or not.

There’s a lot of history here in the annals of antitrust law, some of which favors the idea of such a consortium and some of which spells trouble ahead for the programmers. And it all hinges on whether the programmers plan to grant their own web site exclusivity.

The history that favors this kind of banding together: in 2004 the DOJ cleared (thanks Seth!) a comparable consortium, the studio-backed online movie venture Movielink. What led to the Department’s clean bill of competitive health is the fact that the Movielink studios had no intention of limiting their online distribution to that web venture. Or, in the words of the DOJ, Movielink had not “decreased their [the studios] incentives to license movie content to competing video-on-demand (VOD) providers.”

The decision that spells possible doom for a TV programmer-backed YouTube rival is a 1980 U.S. District Court ruling in a case brought by the Justice Department against the studios after they formed a premium cable channel, Premiere, to take on HBO. (The decision is United States v. Columbia Pictures Industries, Inc., 507 F. Supp. 412 (S.D.N.Y 1980), but for the life of me I could find no link to it online.) Unlike Movielink, Premiere would have retained for itself some form of distribution exclusivity — that, of course, would have been its competitive trump card over HBO.

The judge in the Premiere case agreed with the feds that Premiere was a violation of the antitrust laws and the whole venture was dropped.

It’s likely, then, that the networks (and Viacom) would not make their YouTube-like venture exclusive, which raises the question: why do it? If Movielink, which is faltering and beset by stronger rivals that offer the same, if not better, movies, serves as an object lesson, the TV programmers should scrap this notion and get on with the business of licensing their content to the growing array of web sites hungry for TV content.

Posted by Cynthia Brumfield on December 18, 2006 10:10 AM to IP Democracy