The cable box edges closer to its end

A new streaming deal between Sony and Viacom intensifies the upheaval in the pay-TV world.

By Jonathan Berr Aug 16, 2013 3:39PM
Watching television (© image100/Corbis)Will the cable set-top box go the way of the horse and buggy? Perhaps one day.

The alliance between Sony (SNE) and Viacom (VIA) that has been reported by The New York Times and others shows that day may be coming sooner than many expect. Viacom has "tentatively agreed" to allow its cable channels such as Nickelodeon and Comedy Central to be part of an Internet-based TV service that Sony is developing. This is big news for several reasons.

First, any deal between Sony and Viacom could lay the groundwork for similar pacts with other content creators such as Time Warner (TWX) and 21st Century Fox (FOXA). Moreover, it may lead producers to sign deals with Google (GOOG) and Intel (INTC), which are developing offerings similar to Sony's.

"Analysts say cable delivered through the Internet could give households many more choices -- if the new services give customers more for their money and if cable incumbents don't smother the services," according to The Times.

The bad side to these types of arrangements is that they'll make it harder for consumers to avoid "the bundle." If these nascent services want access to popular channels, they're going to have to take less popular ones as well. Cable and satellite providers have done this for years, which forces consumers to shell out big bucks for shows they never watch.

Cablevision (CVC) filed suit against Viacom over its channel-bundling practices earlier this year calling them "anti-consumer and wrong." New York-based Viacom, not surprisingly, rejects those arguments.

Here's one of the few issues where content creators and the pay-TV industry agree: If consumers are allowed to buy only the channels they actually watch, it would create a fiscal Armageddon for both of their industries. But as the number of cord-cutters rise, they may be forced to change their tune regarding what's known as a-la-carte pricing.
Consumers have to wonder how much choice they will have from services such as Sony's, which will be similar to the cable and satellite services they already use. And for people who think that quitting cable TV will deal a mortal blow to companies such as Comcast (CMCSA),  remember: You'll have to stream your videos over something. More likely than not, it will be an Internet connection from Comcast or one of its rivals.

Jonathan Berr does not own the listed stocks. Follow him on Twitter @jdberr.

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