Disney's Deal With Dish Network Reveals Why Cable Companies Are Terrified Of Online Streaming Services

Jeff bewkesAPTime Warner CEO Jeff Bewkes

The Information’s Martin Peers wrote an interesting column on Thursday arguing traditional media companies are simply denying how online streaming services, like Netflix and Amazon, are disrupting the $US100 billion-plus TV network industry.

And more disruptive services are coming. Dish Network, for example, plans to launch an online service with a smaller package of channels but programs from big media companies like ESPN, A+E Networks, and Scripps Networks Interactive.

Time Warner’s chairman Jeff Bewkes, however, shrugged off Dish’s upcoming service, saying, “Some people do (want less channels); a lot of people don’t.”

Even the TV networks getting involved with Dish’s fledgling service are clearly wary of what it might mean in terms of cannibalising their other deals with cable networks. Peers offers this particularly startling bit of information:

To be sure, programmers are taking steps to limit erosion in their deals with Dish. One industry executive says the Disney agreement with Dish has a provision that if the streaming service signs up more than a certain number of subscribers, the deal is off. Dish declined to comment.

In other words, Disney will play along with Dish Network’s new service, but if it succeeds to a certain extent, they will be forced to pull out — likely to honour their partnerships with longstanding cable providers like Time Warner and Comcast.

Peers offers two potential reasons for why big media companies like Time Warner are downplaying streaming and other disruptive services:

The simple answer is that most media company CEOs are nearing the end of their careers and are more focused on short-term quarterly performance than trends that might or might not happen for a decade. Another answer is that they’re in denial about the implications of what they’re doing.

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