HBO's announcement that it will start offering its full line-up of TV programs to online viewers may not sound like such a big deal, since it's limited to only Internet users who get their broadband from Time-Warner, HBO's parent company, and is further limited to only those customers who subscribe to HBO. But it represents a milestone in chipping away at TV distribution exclusivity. (See HBO to let subscribers download TV shows, movies.)
Exclusivity is at the core of all TV programming business relationships in the U.S. In the beginning, it was simply between a network and local TV station affiliates having the exclusive right to carry the networks' programs for that geographic area. As cable-TV came into the picture, the concept was extended by cable networks to distribute their programs exclusively through cable operators, and then later, through direct broadcast satellites.
Lest anyone doubt how seriously these exclusive contracts are taken, consider this: On any given day, at any given moment during prime time (as well as many other parts of the day), each U.S. satellite broadcaster -- Echostar/Dish and DirecTV -- devotes close to a thousand channels of their precious satellite spectrum to just five programs, which are repeated hundreds of times each. These five programs are from CBS, NBC, ABC, FOX and PBS. Why does it require hundreds of satellite channels to carry just five signals? Because rather than take feeds from the networks, the satellite operators are legally required to honor the exclusivity these networks have with their local affiliates, the TV stations -- so they must carry the same signals, repeated hundreds of times, each representing a different local TV station.
(Imagine how crazy, and impossible the situation would be if that concept had been extended to carrying cable networks, like CNN and Comedy Central, through feeds from their local affiliates, the local cable systems!)
Time-Warner is indeed taking a baby step with their HBO-via-Internet announcement. It was designed to offend no one, and ruffle no exclusive deals -- yet. But as a first step towards the end of exclusivity, it may prove much more significant. Ultimately, if they start offering these programs for a separate fee over broadband, they'll be ending exclusive distribution with local cable systems, something you wouldn't quite expect from such a vertically integrated media conglomerate.