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Cable May Lose Strength, Face ‘Digital Destruction’: Chernin

Former News Corp. pres and COO Peter Chernin has given cable networks a dire prediction for the future: they will ultimately face the same “digital destruction” that has nearly decimated newspapers and has negatively affected broadcast television and other traditional media.

Cable networks, with their multiple revenue streams, account for at least 60% of the profits of media conglomerates, but that may be set to change, Chernin said during a round table discussion at USC Annenberg School for Communications. The threat from on-demand video may prove to be as harmful to cable as it has been to other media, as internet-connected TVs and streaming online video proliferate over the next several years and hack away at cable’s current business model, writes bNet.

Another dynamic that could work against cable is federally mandated a la carte pricing, which would allow consumers to pay only for the channels they want. This could spell doom for two-thirds of niche channels that are packaged with bulk carriage agreements, said Gordon Crawford, managing director of the Capital Group and a media investor who also sat on the panel.

To combat the threat, cable operators Time Warner and Comcast are planning TV Everywhere, a new service which will allow subscribers to access their favorite cable content on other devices. Currently, a debate is taking place between content owners and the cable operators on a proposed revenue split - but assuming the two can find a way to work together, TV Everywhere is likely to help the cable industry, writes The Business Insider.

Currently, the cable operators are saying they will make the content available to subscribers online, at no charge, but some in the industry predict there will eventually be a charge for the content, because making content available on streaming video sites could get pricey. However, the cable companies own the pipes, so the endeavor would be less expensive for them than for other media companies that have to pay content delivery fees. And cable companies are likely to be willing to spend that money in order to protect their franchise.