08/21/2013 11:36 am ET Updated Oct 21, 2013

Watching Cable TV... Online

The tentative deal under which Sony will stream some of Viacom's cable channels online demonstrates that regulators -- for example, the Federal Communications Commission -- need to rethink their approach to cable television. It suggests that efforts to require the cable companies to offer stations a la carte, an idea recently resurrected by Senator McCain, are a little like fighting the last war. More and more shows are distributed a la carte, not on the "cable TV" part of the pipeline, but on the "Internet" part of the same pipeline, via Netflix and Hulu and Amazon and so forth.

Cable companies decry a la carte and also fear competitors that offer television programs on-demand, online. As well they should; this affects their power to charge consumers high prices for cable packages. Ironically, the same cable companies also make money from the new form of digital distribution by charging large monthly fees to customers for Internet access, without which consumers couldn't watch anything online.

Of course, this new digital a la carte menu is still rather limited. Although Netflix, Hulu, Amazon, iTunes and other entities are paying license fees to producers for larger and larger slates of content, many shows and films are still not (lawfully) available online for lengthy "window" periods during which they are distributed exclusively through other methods of distribution (e.g., DVDs) from which the content-owners can make money. But it now appears that entire networks' worth of programming might become available, simultaneous with cable "broadcast," through Sony TV. It is far too early to declare this a new a la carte model a fait accompli, but I would advise content creators to keep an eye on the revenues the cable companies generate not from selling bundles of traditional cable TV channels, but from renting access to the Internet itself via high-speed broadband connections. As the dictum goes, follow the money - in this case up the pipeline to the cable companies' coffers.