FCC digs into how restrictive cable contracts are preventing streaming TV options

Contracts with cable companies may prevent or discourage TV channels from venturing into the Internet.

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If you’re wondering why most TV channels haven’t branched out with new online streaming services, you’re not alone.

The Federal Communications Commission is now examining how contracts with cable companies can prevent TV networks from launching Internet channels, the Wall Street Journal reports. The story, which cites media firms and unnamed “industry insiders,” reaffirms the idea that TV networks would face repercussions if they offered their services outside of a pay TV bundle.

In some cases, for instance, contract provisions flat-out forbid TV channels from providing their current programming to streaming services. In others, those channels would merely forfeit a chunk of the carriage fees they collect from cable providers. Some reports have also suggested that cable companies can drop TV channels from their core bundles if those channels embrace streaming. In any case, TV networks may feel trapped in their marriage to the cable bundle as subscriber numbers decline.

Why is the FCC probing the matter now? Currently, the agency is considering a merger between Charter Communications and Time Warner Cable, and may be wary of the negotiating power that the combined entity would have over TV networks. The FCC could forbid anti-streaming contract provisions as a condition of the merger, in hopes that the rest of the industry would follow the precedent, the Journal reports.

Charter has countered that any such restrictions should apply to the entire industry, not to this specific merger. Responding to the FCC, the company said its contract provisions “have widely accepted legitimate business purposes, especially in fluid and rapidly-evolving markets.” Other pro-cable groups have argued that the economics of unbundling don’t make sense, as individual channels would have to charge a lot more to make up for what they earn as part of a big pay TV package.

Why this matters: Clearing the roadblocks to online TV channels could have a big impact on the streaming video landscape. Services like Sony’s PlayStation Vue, for instance, might actually get some real channels as part of its a la carte package, and other companies such Amazon or Apple might finally get long-rumored live video services off the ground. At the same time, TV networks could face a trade-off if these services destabilize the cable bundle and threaten the carriage fees that each channel collects. Whether or not a ban on anti-streaming contract clauses is the answer, the issue certainly deserves discussion as TV networks drag their feet on entering the Internet age.

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