Google Said to Weigh Supplying TV Channels - From NY Times

Foreshadowing what could someday be a new challenge to cable and satellite television providers, Google has begun talks with major media companies about licensing TV channels for an Internet cable service, according to people with direct knowledge of the meetings.

No deals appear imminent. But Google’s discussions with channel owners are a sign of the newfound race to sell cable-like services via the Internet, creating an alternative to the current cable packages that 100 million American households receive from companies like Comcast and Time Warner Cable.

Intel is working on one such service, and companies like Sony and Google have previously shown interest in the same idea, colloquially called an “over the top” service because the television channels would ride on top of existing broadband lines.

Google’s renewed push was first reported by The Wall Street Journal on Tuesday afternoon. A Google spokesperson did not immediately respond to a request for comment.

The people with direct knowledge of the meetings between Google and the channel owners said the talks were preliminary in nature. The people spoke on condition of anonymity because they were not authorized by their employers to speak.

In Kansas City, Google already sells a traditional package of cable channels as part of Google Fiber, its superfast broadband service. The company has plans to expand Google Fiber to other cities, but what it is proposing in its talks with channel owners is something different: an easy-to-use subscription service that would stream a bundle of live channels and on-demand shows, replacing the cable bundles that most households pay for.

Intel is trying to create something similar, but it has run into roadblocks set up by Time Warner Cable and other incumbent television distributors.

Some contracts between existing distributors and channel owners include clauses that expressly prohibit the channels to be sold to an Internet distributor like Intel or Google, while other contracts merely discourage such competition by including financial incentives or penalties.

Another challenge involves channel owners like The Walt Disney Company and Viacom, who could stand to benefit or suffer greatly from “over the top,” depending on how it all shakes out. Some owners doubt that there is much of a market for cable via the Internet in the first place.

If a market for it does develop, existing distributors could suddenly compete directly in markets all across the country. Comcast has quietly been working on an “over the top” service for well over a year.