New Cracks Appear in Video Business Framework

There are some new cracks appearing in the traditional U.S. cable TV framework, which has included an informal “agreement not to compete” against other cable operators, as well as growing friction between all leading video distributors and leading programming suppliers, going well beyond the normal contract renegotiation disputes that happen from time to time.

In an unusual show of support, in recent days Time Warner Cable Inc., Cox Communications Inc. and Mediacom Communications Corp. have each publicly backed DirecTV's position in the firm’s negotiations with Viacom, as each of those companies share a similar concern about the spiraling cost of programming, which is resulting in annual rate increases for consumers that are significantly above the rate of inflation.

And that isn't all. In potentially historic development, Cablevision Systems Corp. appears to be readying a potential competitive challenge to other cable operators in perhaps 44 U.S. markets. That would violate an unwritten understanding among cable operators not to compete with each other.

To be sure, Cablevision is restricting its efforts to broadband access and voice, at least for the moment, avoiding a direct challenge to cable TV operator core video revenues. But the growing tensions between program suppliers and distributors, plus the potential competition between cable operators, show how tensions are growing in the video business.