WSJ: ‘TV Downloads May Undercut ABC Stations’

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Appleis release of TV content through the iTunes Music Store "may have helped open a Pandorais box for the media business," wrote Nick Wingfield, Joe Flint and Ethan Smith for The Wall Street Journal on Monday. Apple and ABC parent company Disney "have taken a potentially significant step in the dismantling of a decades-old system for distributing TV programming to viewers."

With that move, the reports posit that there could be "profound long-term consequences for broadcasters, cable systems and satellite companies if more users download shows instead of watching them the old-fashioned way." In fact, they note, Leon Long, who runs an association that represents ABCis affiliates, on Friday issued a letter to ABC network president Alex Wallau that "expressed misgivings about the partnership ... ABC affiliates are concerned that they werenit given an opportunity for financial participation in a new form of distributing shows that derives value through the promotion and broadcasting of affiliates."

The Wall Street Journal received a copy of the letter and noted that part of it says: "It is both disappointing and unsettling that ABC would embark on a new -- and competitive -- network program distribution partnership without the fundamental courtesy of consultation" with its affiliates. Mr. Wallau and Mr. Long declined to comment on the letteris content, but the former said he would respond to ABCis affiliates this week.

Already, the Hollywood unions representing writers, producers, directors and actors have said that they expect royalties from this new revenue stream. Writers Guild of America West president Patric Verrone told The Wall Street Journal that the deal between Apple and Disney should fall under guidelines covering video-on-demand and other pay TV formats.

In addition, the Apple-Disney partnership could upset such cable companies as Comcast, which already offers video-on-demand of certain TV shows at no extra cost. Comcast has been trying to add Desperate Housewives to that line-up, according to The Wall Street Journal, but was apparently having trouble because of the lack of additional revenue to offer.

Long-term, the The Wall Street Journal reporters note, all this new technology will kill "appointment viewing," the term TV networks coined to describe the phenomenon of viewers staying home to watch shows at specific times. It also spells trouble for TV advertising, given the fact that the iTunes offerings are ad-free.

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