Sumner Redstone Voicemail Sparks Controversy

The Wall Street Journal

 

Viacom Inc. attempted to distance itself Tuesday from comments Sumner Redstone, its executive chairman, made to a reporter.

In a nearly three-minute voicemail, Redstone said reporter Peter Lauria would be “well-rewarded and well-protected” if he coughed up the identity of a source for an early June story that he had written for Web publication The Daily Beast.

“We’re not going to hurt this guy. We just want to sit him down and find out why he did [what he did],” Redstone, 87 years old, said in the voicemail, which the Daily Beast posted its Web site Tuesday. Lauria wrote an accompanying story in which he declined to divulge his sources.

Viacom suggested Tuesday that Redstone was acting on his own. “There is no investigation at Viacom,” spokesman Carl Folta said. “We are not trying to find out who the leaker is.”

The story in question had reported, according to “sources with knowledge of the situation,” that Redstone had become “smitten” with a girl-band whose members were alleged to be both skimpy in their clothing and talent. Redstone was said to be pushing Viacom unit MTV to shoot a reality series about them.

MTV has been developing a show about the band, according to people familiar with the matter. It is still unclear, however, whether the MTV will pick up the show to air on the network.

In his voicemail, Redstone suggested that Lauria’s report had been inaccurate because the band, in fact, “is revolutionary.”

“We have to have the name of the person who gave you that story,” Redstone said in the voicemail. “We’re not going to kill him. We just want to talk to him. We’re not going to fire him. We just want to talk to him.”

In an emailed statement, a Daily Beast spokesman said “we hope the show does indeed make it to air so that the viewing public can indeed decide on whether or not the group are ‘revolutionary.’”

Hulu Said to Be in Talks With CBS, Viacom for Shows as Paid Service Nears

Bloomberg

 

Hulu LLC is in talks with CBS Corp., Viacom Inc. and Time Warner Inc. to add their television shows to the video website’s planned paid subscription service, people with direct knowledge of the discussions said.

CBS, the only one of the four major U.S. broadcast networks without an ownership stake in Hulu, may begin providing programs after the TV season starts in September, said one of the people, who asked not to be identified because the talks are private.

Hulu, which now lets users watch programs for free and gets its revenue from advertising, is seeking new shows to attract paying subscribers. The Los Angeles-based website will also need to renew rights to programs from owners such as NBC at the end of 2011, according to Laura Martin, a Needham & Co. analyst. Hulu’s audience shrank in April after Viacom pulled “The Daily Show with Jon Stewart” and “The Colbert Report.”

“Charging a subscription is possibly Hulu’s best way to improve its library of TV shows and films,” said Tony Wible, an analyst at Janney Montgomery Scott LLC in Philadelphia.

Christina Lee, a Hulu spokeswoman, said the company doesn’t comment on negotiations. Keith Cocozza, a spokesman for Time Warner, declined to comment, as did Kelly McAndrew, a Viacom spokeswoman.

Much of Hulu’s TV programming comes from the broadcast divisions of its owners: News Corp.’s Fox and General Electric Co.’s NBC, the co-founders; and Walt Disney Co.’s ABC. The networks also offer shows on their own websites.

Cable networks, including channels belonging to Hulu’s current owners, have been slower to make shows available online because they don’t want to upset pay-TV operators that provide the bulk of their revenue, Wible said.

“In its current form, Hulu isn’t just a threat to the cable operators, but also to the cable networks,” Wible said.

Revenue-Sharing

The website, a distant second to Google Inc.’s YouTube in online viewers, would share subscriber income to encourage TV programmers to join, said the people, who have taken part in negotiations or were briefed on the talks. When the service begins, Hulu may offer paying customers a deeper catalog and also insert more ads in free shows, the people said. The company has expressed a willingness to increase commercial minutes.

To be successful, Hulu must meet the programmers’ financial demands and not exceed what subscribers will pay, said Barton Crockett, an analyst at Lazard Capital Markets Ltd. in New York.

Viacom, the New York-based owner of MTV and Comedy Central, and Time Warner, parent of TBS and TNT, are seeking arrangements that don’t threaten existing businesses or limit other opportunities, said the people. Time Warner, also based in New York, is focused on TV Everywhere, a service to let cable and satellite pay-TV customers watch shows online at no added cost.

Programming Loss

Hulu, founded in 2007, hasn’t fully recovered from Viacom’s March decision to pull the two cable shows from the service. The site averaged 12.2 million visitors in March and 13.1 million in April, down from 14.1 million in February, before the programs were removed, according to Nielsen Co. data.

The $9.95-a-month service is expected to be called Hulu Plus, the Los Angeles Times reported in April.

New York-based CBS, home to eight of the top 10 scripted shows in prime time, including “CSI” and “NCIS,” would be likely to sign up if there are no demands for online exclusivity, one person said. Hulu and CBS have held on-and-off talks since the site started.

“We have a profitable, non-exclusive distribution strategy on the Web and in the mobile arena,” CBS said in a statement. “We’re in constant discussions with partners and entrepreneurs about how to generate incremental revenue for getting our content to consumers when and where they want it.”

Ad-Supported Model

In a May 5 conference call, CBS Chief Executive Officer Leslie Moonves stressed the importance of maintaining control over the use of its programs, including on its own TV.com site.

Hulu CEO Jason Kilar has said the site’s ad-supported model is profitable on a cash-flow basis.

The website garnered $52.4 million in net revenue in February, with 72 percent going to the content owners, according to estimates from research firm SNL Kagan. That left Hulu with $14.7 million in revenue, $12.6 million in costs and a $2.04 million profit, SNL Kagan calculates.

A subscription fee would address concerns among investors that TV programmers are cannibalizing their businesses by offering shows for free online with fewer ads.

Martin, the Needham analyst in Pasadena, California, says Hulu shows have four minutes of commercials per hour, compared with 16 on broadcast TV.

“Consumers should not be retrained that premium TV content is cheaper on any platform, especially the Internet,” Martin wrote in a June 1 report.

A subscription would put Hulu in more direct competition with Netflix Inc., which supplies online and mail-order access to movies and past-season TV shows starting at $8.99 a month.

Older film titles provide Netflix’s streaming service with an advantage, said Crockett.

“You may still remember a movie that was released 20 years ago and still want to see it,” Crockett said. “Far fewer TV shows fit that description.”

Viacom Quarterly Profit Jumps 38 Percent

Variety

MTV Recover leads media network growth

 

 

Viacom said Thursday net profit jumped 38% to $245 million last quarter on solid growth in media networks, led by a recovery at MTV – which posted its best-rated quarter in almost two years -- narrowed losses at filmed entertainment, and lower expenses.

Revenue dipped 4% to $2.79 billion as growth in affiliate and advertising sales was more than offset by lower feature film revenue.

"With a boost in ratings at our core networks and the advertising market showing signs of strength, our ad revenues moved into positive territory and are continuing that upward trend," said CEO Philippe Dauman in a statement.

Media Networks saw revenue rise 4% to $1.94 billion for the three months ended in March. Operating income grew 9% to $684 million.

Domestic advertising revenue nosed up 1% and worldwide ad revenue grew 3%. Worldwide affiliate revenue jumped 9%, due mainly to rate increases. Ancillary revenue fell 9% on softer sales of Rock Band music video games worldwide.

Networks include MTV, VH1, Nickelodeon, Nick at Nite, CMT, Logo, Comedy Central, Spike TV, BET and others.

Filmed Entertainment led by Paramount Pictures saw revenue fell 18% to $886 million on a 34% plunge in home entertainment sales. Operating losses for the division narrowed to $86 million from $123 million.

The revenue drop was mostly due to strong sales in the previous year's quarter of "Madagascar: Escape 2 Africa." There was no comparable seller this year, although the current quarter did benefit from sales of "Star Trek," "Transformers: Revenge of the Fallen" and "G.I. Joe: The Rise of the Cobra."

Theatrical revenue fell 6% and television license fees were down 16%.

Paramount opens the summer movie season next weekend with "Iron Man 2," followed by DreamWorks Animation's "Shrek Forever After" in 3D and Nickelodeon's "The Last Airbender" by M. Knight Shyamalan.

Viacom: 'Fair Use Works for Us'

Ars Technica

Viacom is unlikely to sue bloggers for posting their own clips of The Daily Show or The Colbert Report, contrary to reports floating around on the Internet. 

The company clarified its position to Ars on Thursday, noting that it tries to be as permissive as possible when it comes to fair use and that individual bloggers have never been on the studio's radar.

The confusion began when the Hollywood Reporter ran a story on Wednesday titled "Viacom will sue bloggers who post unauthorized 'Daily Show' clips," quoting Viacom spokesperson Tony Fox. "Yes, we intend to do so," Fox was quoted saying. "My feeling is if (websites) are making money on our copyrighted content, then that is a problem."

We reached out to Viacom's VP of PR Jeremy Zweig to confirm whether this position was true. After all, as numerous parties have pointed out, both The Daily Show and The Colbert Report make liberal use of clips from other networks that undoubtedly fall under fair use, and it seemed as if Viacom was willing to go after the little guy in order to ensure that no one got a single penny of revenue except for Viacom. This, however, was not the case.

"The headline is completely wrong," Zweig told Ars. He emphasized that the company has always been fairly open with fair use and that its policy has not changed. "Frankly, fair use works for us. I can't recall a time we've ever sued a blogger for the use of a Comedy Central clip, and there's no reason to believe that would be more likely today."

It's likely that Fox was referring to larger commercial websites that repost episodes without using the official embed tool from Comedy Central. In that case, it's not hard to see why Viacom would go after those whose sole purpose is to make money (via banner ads) by hosting Viacom's content, but according to Zweig, individual users have never been on the company's radar.

The news follows Hulu's announcement earlier this week that the two shows would disappear from its own site as of 11:59pm PST on Tuesday, March 9. Hulu said that the two shows have had "very strong results" over the past 21 months, both in terms of viewership and advertising revenue, but that the team at Comedy Central decided to pull out after a series of (apparently unsuccessful) discussions to keep the shows on Hulu.

The decision has been a controversial one among fans of the shows who also like Hulu. The shows will remain online, of course, but at TheDailyShow.com and ColbertNation.com, forcing regular Hulu users to add new stops along the information superhighway if they want to continue watching the same shows.

Still, online ad revenue is already not great compared to traditional TV, and Hulu has been struggling lately to fill some of its ad spots with much of anything. (Regular watchers know that the charity ads are just filler, and sometimes, you even get a black screen that simply says there are no ads to show for the time being.) Even though Hulu claims the two shows have been doing well lately, Comedy Central still has to split its revenue with Hulu, and in times like these, any split is probably too much.

This isn't to say that Stephen Colbert and John Stewart won't be showing up on Hulu again in the future, though. Part of the reason Hulu was so amicable in its announcement was undoubtedly to ensure that talks will continue and the shows might come back one day. After all, Hulu has been working on a plan to start charging for content—possibly by way of subscription or sticking the most popular shows behind a paywall. If Hulu manages to roll out such a service and it takes off with users, Viacom and Comedy Central may be open to bringing the shows back to take advantage of the new revenue stream. 

Disney Hopes Kids Will Take Online World of Cars Out for a Spin

LA Times

The company's latest virtual world, based on the Pixar film 'Cars,' is being tested for rollout this summer. The subscription-based online community is modeled after Disney's Club Penguin.

Lane Merrifield, co-founder of Club Penguin, which Disney acquired in 2007, relaxes at the online game's Canadian headquarters in Kelowna, British Columbia. He oversees Disney's virtual worlds.

Walt Disney Co. believes that World of Cars, its new subscription-based online community aimed at boys and based on the Pixar movie "Cars," won't get lost in the traffic of virtual worlds.

Things are already a bit congested. Some 200 virtual worlds target children under 12. Each competes for a slice of the 10 hours and 45 minutes a day the Kaiser Family Foundation estimates that kids spend viewing media, simultaneously vying for screen time against a growing number of portable media players and smart phones that offer their own diversions.

That's not deterring Disney, however, which is testing World of Cars for rollout this summer. The game will allow kids to create their own car persona and rub hubcaps with characters from the movie, such as Mater, the bucktoothed tow truck, or play online games such as tractor-tipping.

The launch marks the latest exercise in corporate cross-branding for Disney, which hopes it can leverage the movie's popularity into monthly subscription payments from boys and their NASCAR dads in advance of the release of "Cars 2" in summer 2011 and the Cars Land attraction that opens in 2012 at Disney's California Adventure theme park.

"We look at anything we can do online as a way to deepen and extend [people's] relationships with the characters," said Steve Wadsworth, president of Disney Interactive Media Group. "That only helps elevate the mind-share of that property or franchise with our audience."

World of Cars is modeled after Club Penguin, the online game of scarf-wearing penguins and igloos aimed at the juice-box crowd that Disney acquired in 2007. The site had 12 million active players and 700,000 subscribers when Disney bought it, although over the last year U.S. visitors to Club Penguin have leveled off, according to research firm ComScore Media Metrix.

Its global reach is broader, with Club Penguin attracting visitors from 190 countries as the site has been translated into Portuguese, Spanish and French. Kzero Worldwide, a British consulting firm, estimates that Club Penguin reaches as many as 35 million users globally, ranking it among the top five virtual worlds for children.

Disney will not release updated subscribers figures for Club Penguin -- Disney Chief Executive Robert Iger said in a recent analysts call that it had recorded gains -- but the subscription site is facing growing competition from toy makers seeking to extend their brands online.

Mattel Inc. made a leap online in 2007 with Barbie Girls, a site Kzero Worldwide estimates attracts 22 million players around the world. Hasbro Inc. partnered with video game maker Electronic Arts Inc. to launch Littlest Pet Shop Online in October, and toy giant Lego created Lego Universe, which debuted last month.

Established media companies with powerful children's programming, such as Viacom Inc.'s Nickelodeon, are similarly chasing their young audiences onto the Internet. After acquiring Neopets in 2005, Nickelodeon last May opened a spinoff virtual world, Petpet Park, which has attracted about 1.7 million registered users, according to Steve Youngwood, Nickelodeon's executive vice president for digital. It's in development on another virtual world, Monkey World.

The trick, however, isn't inventing a virtual world, but designing content that keeps children clicking back.

"Kids have notoriously short attention spans," said Steve Prentice at Gartner, a technology information and consulting firm. "They are intrigued by novelty, but unless there's an enduring reason for them to come back, they won't."

That's the challenge for Lane Merrifield, co-founder of Club Penguin, who oversees Disney's virtual worlds.

Pixie Hollow, the virtual world in which players flutter around with Tinker Belland other characters, has grown since its 2008 debut to 1.6 million monthly users in December, up from 1.3 million a year earlier. Toontown Online, one of the first virtual worlds, saw usage spike in the summer -- but the number of visitors in December fell below year-earlier levels, according to ComScore.

Meanwhile, Pirates of the Caribbean Online, the multi-player computer game that was launched in 2007, is taking on water. The number of online visitors fell below 192,000 in December from 500, 000 a year earlier, ComScore estimates.

"It's no secret it had some technical issues. There were some hurdles there," said Merrifield, who has been working to retool the game. "There were big downloads, and a lot of machines couldn't carry it."

Merrifield worked with the development team in North Hollywood to apply some of what he learned with Club Penguin. Players needed to be able to dive quickly into Pirates and play the game as soon as they launched their browser, he said, instead of waiting for a time-consuming download.

More fundamentally, Merrifield encouraged the Pirates team to depart from the game's linear storytelling to adopt Club Penguin's open-ended approach, in which the players have more say in the narrative and provide direction on the types of weapons, battles or quests they experience online.

That represents a fundamental shift in Disney's philosophy. Previously, whenever players sent e-mails suggesting ways to improve online games like Pirates or Toontown, they got an automated response saying the entertainment company did not accept unsolicited ideas.

"We retooled it. The foundation is where it needs to be. . . . We're hearing a lot of stories now about kids playing," Merrifield said.

Allowing players to determine the action on screen, Merrifield said, provides "a limitless supply of new content" and allows kids to become the storytellers. He credits 8-year-olds with some of Club Penguin's most popular ideas -- like the addition of ninjas.

Merrifield is applying the same approach to World of Cars. Players start by designing their own car, picking from among body types (stock car, say, or sleek, aerodynamic Porsche), colors and race-car numbers. As they roll down the main drag of Radiator Springs, they can choose to interact with characters from the movie, or head to Fillmore Fields to race through a hay bale maze with friends playing online.

"My goal is to make sure that Disney, from a virtual world standpoint, has the same tradition that Pixar does in 3-D computer animation," Merrifield said

Viacom Up, Sees TV Advertising Demand Rising

from the Wall Street Journal

Viacom Inc. executives said Tuesday that they were seeing increased demand and strong prices for television advertising heading into the holiday season, adding to an up-tempo chorus from media executives after a brutal year in which advertisers have slashed budgets.

The comments came as Viacom reported a 15% increase in second-quarter income, with cost cutting boosting brisk ticket sales for summer blockbuster movies.

Viacom, which owns a suite of cable networks including MTV, Nickelodeon and Comedy Central, saw its U.S. ad revenue decline 4% in the third quarter from the year-earlier period. But that was an improvement from a 6% decline in the third quarter.

"There is demand out there at the moment," Philippe Dauman, Viacom's chief executive, said of the advertising market. He said prices in the fourth quarter for last-minute ads, known as "scatter," are up "double-digit" percentages above ads sold in advance, in what is called the "upfront" market.

But Mr. Dauman added that many commercials remain unsold for the fourth quarter, because both cable and broadcast networks received fewer advance commitments in the upfront season.

"The next several weeks going forward will really tell the tale, as companies in different industries evaluate their own condition," Mr. Dauman added during a conference call to discuss results.

There are some signs that advertisers are spending more money, however, after months of cutting commitments and tightening purse strings. Some cable-TV networks are running out of spots to sell in November and early December, driving prices for last-minute ads well above prices for those sold in advance, ad buyers say.

"Inventory's very tight on some networks, especially in November or early December," said Chris Boothe, president and chief operating officer of Publicis Groupe SA's Starcom USA in an interview.

In part, TV ad spending appears increased because it comes against easier comparisons to last year's historic economic collapse. Increased prices for ads sold close to airdate also face easier comparisons to the lower prices TV networks were forced to accept over the summer in the upfront market. It was the first time since 2001 that many major network groups were forced to take across-the-board rate cuts.

Executives at major advertising holding companies have said recently that it's too early to call an ad recovery. While the tone of conversations with advertisers about the economy is improving, advertisers "generally remain cautious about committing to new marketing expenditures or increasing spending behind existing efforts," Michael I. Roth, chief executive of Interpublic Group of Cos., said last week on a conference call to discuss third-quarter results.

But ad buyers say some advertisers that cut money earlier in the year are putting that money back into the ad market in time for the holidays. Viacom's Mr. Dauman said he sees potential growth in some categories of advertisers, including technology companies and even car manufacturers.

"You see some categories that suffered a lot in the recession, such as automotive, who are coming back in," Mr. Dauman said.

Viacom reported a profit of $463 million, or 76 cents a share, up from $401 million, or 65 cents a share, a year earlier. Excluding a tax benefit as well as an after-tax loss related to paying off debt in the latest quarter, earnings rose to 69 cents a share from 55 cents a share. Analysts polled by Thomson Reuters expected earnings of 57 cents a share on revenue of $3.3 billion.

Revenue dropped 2.7% to $3.32 billion, as Viacom's Paramount movie studio saw revenue decline 6.5% to $1.2 billion. Paramount's results were dragged down by enduring weakness in DVD sales, more than offsetting an 16% increase in world-wide theatrical revenue from big summer blockbusters like "G.I. Joe: The Rise of Cobra."

The home-video picture could improve somewhat in the fourth quarter because of DVD releases of its summer popcorn films, Viacom executives said. "Transformers: Revenge of the Fallen" has sold 8.3 million DVDs since its release on Oct. 20, Mr. Dauman said.

For the last year, Viacom's results have also been dragged down by the poor performance of its flagship MTV cable channel. In the third quarter, viewership in its target audience of people between 12 and 34 years old declined 2.8%, compared with the year-earlier period, according to Nielsen Co. The company has shifted executives and increased the number of programs on the air, helping slow the decline in recent quarters.

"We are continuing to adjust MTV's content mix and schedule, bringing in more original shows, as well as targeted acquisitions that are being used to help lift daytime and afternoon ratings," Mr. Dauman said, adding that MTV will have a "bigger marketing presence" off the channel.

Viacom's new version of the "Rock Band" game, which features songs from the Beatles, helped boost the company's revenue, selling 595,000 copies in September, according to tracking firm NPD Group. Because of the expensive hardware sold with the game, "Rock Band" is a drag on Viacom's profit margin. But Tom Dooley, Viacom's chief financial officer, said the company expects the game to break even or become "slightly profitable" in the fourth quarter, depending on how many copies sell in the holiday period.

"It really depends literally on the next three to six weeks," Mr. Dooley said.

Monthly Billers Have Weathered The Market

From the Economist

Subscriptions have succoured media firms during the recession. That may not last

VIACOM, a media conglomerate based in New York, has an unusual response to the downturn: it is launching a television channel. This month Epix will begin showing films from Paramount and MGM, as well as original programmes. It may get off to a slow start, since it has not yet signed up many cable and satellite distributors. But its creation points to one of the media business’s few bright spots.

Having fallen steeply after the collapse of Lehman Brothers in September 2008, the shares of all the big American media companies have outperformed the market since March. But recession has struck some parts of the industry much harder than others, changing its shape. As a rule, media products that are sold in shops—CDs, DVDs and magazines—have suffered. Advertising is showing only tentative signs of recovery. The kind of media for which people pay a monthly bill, in contrast, has not only held up better but has in some instances prospered through the downturn.

Cable and satellite television was a good business going into the recession and is now triumphant. In the year to June 30th Britain’s BSkyB added more subscribers, obtained more revenue from each customer and reported more profit than the year before. Discovery Communications, which derives almost all of its revenue from cable, notched up a 13% increase in profits in the second quarter. In the past year the fortunes of big media groups have depended largely on the proportion of their revenues coming from pay television.

Cable networks obtain about half of their revenues from advertising and half from carriage fees paid by the firms that distribute their channels, which in turn get paid by subscribers. In the past year increases in carriage fees have outpaced inflation, offsetting weakness in advertising. At Time Warner’s cable networks, for example, advertising fell by $30m in the second quarter compared with a year earlier. Income from distribution rose by $144m. “People would sooner unplug their refrigerators than their cable boxes,” says Craig Moffett, an analyst at Sanford Bernstein.

As pay television has soared and just about everything else has fallen, even the most diversified conglomerates’ accounts have been transformed (see chart). News Corporation’s cable channels are worth more than broadcast television, film and newspapers put together. Although an advertising recovery will rebalance such firms somewhat, the underlying trend is clear. Media firms are investing in pay-television markets in Latin America, eastern Europe and Asia, which can be expected to grow. The number of channels in emerging markets is rising so fast it is actually boosting the firms that own the satellites (see article). Viewers and creative verve are drifting steadily from broadcast to cable networks. On October 5th Disney appointed Rich Ross, who ran its cable channels worldwide, to head its film studio—an acknowledgment of their success in producing lucrative new content.


A steady stream

The strength of subscription television has encouraged media firms to try charging for other products. Disney recently began selling subscriptions to its large online library of children’s books. Viacom’s chief executive, Philippe Dauman, said last month that the company was exploring ways of getting people to subscribe to its popular online games based on characters such as Dora the Explorer. The firm’s controlling shareholder, Sumner Redstone, once observed that content is king. But at the moment, subscription is king.

There has also been much talk of creating new subscription models for newspapers and magazines. As far as their online offerings go, this is still mostly talk. The boldest conglomerate is News Corporation, which sells online subscriptions to the Wall Street Journal and will begin charging for the newspaper’s smart-phone applications. This week the firm announced plans to charge for membership of rewards schemes run by Britain’s Times and Sunday Times. More quietly, but just as profoundly, many newspapers and magazines are stepping up their home-delivery efforts as newsstand sales falter.

The best model in media has its limits, however. The fact that nearly all newspaper websites remain free suggests how hard it is to charge for content that has been commoditised. Successful subscription models for music have proved elusive for a similar reason. Spotify, a music-streaming service created by Swedish programmers that has grown at an astonishing rate, is trying to move from dependence on advertising to subscriptions. Whether it succeeds will depend partly on the record labels. At the moment they view such upstarts as a handy way of weaning customers from illegal file-sharing websites. If they come to view them as competition for CD sales and digital downloads, the music-streaming sites are in trouble.

Even the mighty pay-television business is showing signs of strain. Cable and satellite operators have tolerated the shrinking margins that come with higher carriage fees so far, but will not do so for ever. Yet they may find it hard to pass price increases on to customers. Mr Moffett reckons the finances of the poorest 40% of American households have been so stretched by the recession that they have little money left for entertainment. Unemployment in California has reached 12%; in Michigan it stands at 15%. It may be that people will have to unplug both their refrigerators and their cable boxes.

Then there is the looming threat of the internet, with its tendency to disintermediate content from carrier. Consumers can already obtain many broadcast-television programmes online, and the worry is that they will eventually drop their cable and satellite services. Jeff Bewkes, the head of Time Warner, is leading a charge to prevent that. He envisages an authentication system that could be used to restrict access to some online content to those who subscribe to multi-channel television. The fear of “cord-cutting” may also underlie Comcast’s ambitious and, given the dismal history of media mergers, risky attempt to acquire a controlling stake in NBC Universal, a content company now owned by General Electric and Vivendi.

For a glimpse of a brighter future look at Denmark, where the biggest cable company not only allows subscribers to watch some television on their computers but also allows non-subscribers to pay a monthly fee to watch some of its programmes online. YouSee offers 18 channels at present, including biggish ones like CNBC Europe and Nickelodeon, and the number is rising. So far there is no evidence that this is cannibalising YouSee’s cable business, according to Anders Blauenfeldt, its head of product development. Anyway, he says, “It is better to cannibalise yourself than to lose customers.”