New Yorker

New Yorker.   Interview with Barry Diller.  Very smart guy.

Question:  And what about Internet connectivity? Do you see it through the cable wire, or the telephone wire, or some other wire?

Diller:  I think it's going to come from lots of places. I think that, from what I have seen, cable-modem penetration is growing, is efficient, people love it as a service. But it is wildly overpriced. It racks in at forty dollars a month, and the profits are huge. But the customer likes it. You would have thought that the telephone company would be right there from the first hour of the first day offering high-speed connection. I don't know where you live, but in New York City try and get a DSL connection in your house. It took me three months, and every part of the experience was a train wreck. So they have not done that. And cable has.

Question:  But what is government's proper role? Should government be involved and engaged and policing some of these mergers?

Diller:  Absolutely. I mean, I actually think that there is a real argument to be made for separating production and distribution, particularly when you have a situation where if A.T. & T. and Comcast combine twenty-two million subscriptions and Time Warner has twelve million, there'll be complete concentration one way or the other from the cable and pipe distribution. I believe there'll be complete concentration in the sky to compete with it. Because I think that's the only way you'll have any effective competition. So, when you've got that kind of power, distribution power—and, by the way, even if you get competition, it is still going to be a business in which the margins are extremely good—then I don't believe you should also have the ability to own programs as well, except in a very minor way.

Question:  Let me make sure I understand that. So Comcast, which owns, say, QVC ... or AOL Time Warner, which owns cable and Warner Bros. and other network and television assets, should be asked to divest? Is that what you're saying?

Diller:  Yeah. We were recently trying to look at the effects of all of these things. We looked at programs that were owned by cable M.S.O.s [multiple-system operators] and programs that were not owned by M.S.O.s. And the differences of preferences were so categorical in every case—the disadvantage of anybody who has an unaligned program service, as against an aligned program service, is so glaring.

Question: So where do you see the impact of technology? We've seen the impact of technology on the music business. Do you see it actually enhancing the movie business?

Diller:  Well, I would hope that the movie companies do not act as the music companies have—they were protective and said that they were going to stand on the railroad track with their arm out while technology ran them over. But the movie business is engaged now in figuring it out before it happens to them—before you get the digital files up there and able to be downloaded with any speed and with any clarity, before that develops. And I'm hopeful that the film business will get out there with products that will keep tech piracy at reasonable bay. I think that's achievable. I mean, you think about the film business—technology has been the movie business's greatest friend ever. [John Robb's Radio Weblog]

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