Yahoo and CNBC have signed a distribution deal in which Yahoo Finance will distribute a handful of CNBC clips each day. This is a smart step for both parties, but it’s also only a tiny fraction of what the two companies could and should do together.
CNBC is nowhere online, primarily because of its restrictive (and lucrative) carriage deals with cable companies. CNBC makes a significant portion of its revenue and profit from carriage fees–the amount cable providers pay the network each month to carry the channel. CNBC cannot afford to lose these fees…
The cable companies, meanwhile, depend on monopoly access to networks like CNBC and cannot afford to be circumvented by, say, a live CNBC web feed (lest a web trickle become a flood). So the CNBC-cable deals prohibit CNBC from streaming its feed online.
The structure of the Yahoo deal as well as the structure of CNBC’s own lame web site shows the tortured steps CNBC is forced to take as it tries to begin to circumvent its cable partners and build an effective online strategy. A handful of stale clips have some value to online users, but only a fraction of the value of a live feed.
The Yahoo deal is a good step for CNBC, but if CNBC wants to maintain its franchise in a fully online world, it is eventually going to have to bite the bullet and stand up to the cable providers. Channel conflict has crippled dozens of businesses since the Internet appeared in 1995, and baby-steps–even smart ones–usually don’t prevent this.
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