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(Rewrites first paragraph, adds details, background)
By Alexei Oreskovic and Yinka Adegoke
NEW YORK, June 14 YouTube's boss said that cable
television channels with small audiences will in the future
migrate to the Web and become available on a stand-alone basis,
potentially making a home for themselves on the No.1 video
The cable channels could provide more professionally
produced content for YouTube as it weighs selling subscriptions
for consumers to access some of its video offerings.
As YouTube, owned by Google Inc (GOOG.O), ponders selling
subscriptions, it has "seen demand from the kind of networks
that have smaller audiences on cable," and which get very little
or no affiliate fees from cable distributors, Kamangar said at
the Reuters Media and Technology Summit on Thursday.
"I see those kinds of networks becoming available in the
future on the Web and I see those becoming available in an a la
carte basis," he said.
Cable channels are traditionally sold in fixed bundles of up
to 100 channels -- an arrangement which has triggered grumbles
from consumer advocates as the price of even the cheapest
package outpaces inflation.
New entrants like Google, Intel Corp (INTC.O) and Microsoft
Corp (MSFT.O) among others have tried to convince major content
owners to allow them to sell smaller bundles of TV networks to
consumers over the Internet. But the network owners have refused
to break the cable bundles for fear of undermining their
lucrative $100 billion relationship with their traditional
Kamangar told Reuters that Google had thought long and hard
about bringing traditional programming to YouTube but had found
it too expensive.
Small to midsize networks with fewer viewers sometimes
struggle in the cable space as they have less leverage to raise
their prices with the operators.
Kamangar's comments come as Department of Justice has
launched an inquiry into whether cable TV distributors are
hampering development of the fledgling online video
One of the key issues Justice is looking at is how the cable
industry insists on only selling bundles of networks to cable
and satellite partners.
Large media companies, meanwhile, are increasingly looking
at ways to offer their own specialized programs on YouTube,
seeking potential acquisitions in some of the specialized video
“channels” currently available on YouTube.
"The top network executives are really taking notice.
They’re asking questions about who is doing well, about who is
building a professional management team. And I think eyes are
very much on this space now," said Kamangar.
Discovery Communications' (DISCA.O) acquisition of Web video
provider Revision3 last month is the first of more such deals
that Kamangar predicted will happen in the coming year.
"They're circling," he said, of media companies' interest in
YouTube, the world’s No.1 video website, which streams more
than 4 billion videos every day, is moving to add
professional-grade video programs to the vast archive of
amateur, home-shot videos that made the site popular.
In October YouTube announced that it had struck 100 original
video programming deals with media partners including pop star
Madonna and hip-hop mogul Jay-Z. Thomson Reuters is among
Roughly half the channels have launched so far, said
Kamangar, and the top ten channels are each getting about one
million views a week.
Kamangar said the channels are also drawing interest from
large brand advertisers such as Toyota and Unilever that have
spent money to advertise on the channels.
YouTube is also considering making some of the original
video programs featured on recently launched YouTube "channels"
available for a fee, which would be shared by the content
provider and YouTube.
"There’s a lot of demand from some of our top video game
networks," Kamangar said. "They have such a big audiences that
they can start to segment their audiences into those that are
willing to pay a higher amount" for things like new gaming
He also cited sports such as the Ultimate Fighting
Championship as being ideally suited for online subscriptions.
YouTube currently makes money by selling advertising
including pre-roll video ads and sponsorships of certain parts
of the site, though Google does not break out financial results
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(Reporting Alexei Oreskovic and Yinka Adegoke; Editing by Peter
Lauria, Carol Bishopric and Phil Berlowitz)
((Tel: 415 677 2511))
Keywords: MEDIA TECH SUMMIT/YOUTUBE
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