TBS Prepares for Cable TV's Day of Digital Reckoning

(MoneyWatch)  Even as the cable industry prepares for that most traditional of business marketplaces -- the ad sales upfront -- it's becoming clear that, more than broadcast, it is preparing for its digital day of reckoning. That's when consumers shift en masse to video on demand, delivered over the Internet, bypassing the pipes, and the business model, that have supported video content for decades.

One sign came this week, when David Levy was promoted to the new role of president of sales, distribution and sports for Turner's TBS cable networks. Not only does this give one person greater visibility into the entire revenue structure for the cable group, it also makes room for TBS' former head of distribution, Andrew Heller, to concentrate on Time Warner's contribution to the "TV Everywhere" initiative. Though often, being named vice chairman is the first step toward retirement, there's no indication that this is the case here. TV Everywhere aims to let consumers view content where and when they want it -- as long as they can prove that they are already paying subscribers of a cable service, satellite provider, or telephone/cable play like Verizon FIOS -- and Time Warner is extremely serious about it. It's slated to launch a limited test of TV Everywhere in the second half of this year. Clearly, the cable guys want to get out in front of what they see as a seismic change in media consumption, before it eats them alive.

With that in mind, it's worth listening to this edition of 3-Minute Ad Age, which focuses on a speech given by Akamai CEO Paul Sagan (at right) to the Streaming Media Media Conference this week. Sagan, a former cable exec who also worked on Time Warner's early interactive TV experiment, the Full Service Network, says the rise of Internet video:

... is going to change the traditional media in ways as fundamental as what we see going on in newspapers and magazines today ... The gorilla in the home is the moving picture -- it's video. It's how you attract people and it's how you build businesses, and I think we're at this tipping point on the Internet where video is going to take on traditional TV and change the rest of the media. ... If you give [consumers] access to full motion video that they want -- gaming, movies, TV shows, news, information, sports -- that is what they will consume, and they will push everything else off the table.

The TV business' mission is to make sure that a viable business model isn't among the things that end up on the floor.