Old media turns combative against new media

At a panel discussion on the second day of the 56th annual National Cable & Telecommunications Association conference, top executives said talk of the demise of traditional media in the digital age was overblown.

While new distribution technologies like the Internet and mobile phones are siphoning television audiences, media companies argued that the Web also brings new revenue streams.

But the discussion quickly moved to criticism of the perception that traditional media businesses are dead, and to the rampant copyright offenses enabled by new digital technologies.

"The Googles of the world, they are the Custer of the modern world. We are the Sioux nation," Time Warner Inc. Chief Executive Richard Parsons said, referring to the Civil War American general George Custer who was defeated by Native Americans in a battle dubbed "Custer's Last Stand".

"They will lose this war if they go to war," Parsons added, "The notion that the new kids on the block have taken over is a false notion."

Time Warner defended its discussions on copyright protection with Internet search leader Google Inc., which another panel member, Viacom Inc., has sued.

Viacom, owner of the MTV and Comedy Central networks, is seeking more than $1 billion from Google and its online video site YouTube, accusing them in a lawsuit of "massive intentional copyright infringement."

Viacom CEO Philippe Dauman said on the panel his company had discussed working with Google and YouTube earlier than other major media companies, by virtue of the popularity of its programs on the Web and their resonance with young viewers.

Dauman said Viacom had little choice after failing to reach an agreement, as video clips of its shows were uploaded by YouTube users without its permission.

"So, it was only reluctantly after trying for a long period of time, to reach a deal that we found that we could not tolerate having our content taken, when we've got Brian and Dick and others compensating us for it," Dauman said, referring to Comcast Corp. Chief Executive Brian Roberts and Time Warner CEO Richard Parsons.

"We were forced into it," he added.

Google, whose advances in applying its Internet paid search technology to the television industry, radio and print has spooked traditional media companies, owns a 5 percent stake in Time Warner's AOL Internet unit.

"We're in a world where we're a partner with everybody and we're fighting everybody," News Corp. Chief Operating Officer Peter Chernin said on the panel.

Despite the attention from Wall Street, the media industry and the press, executives said the percentage of overall sales contributed by digital businesses remained small and they should be mindful of destroying existing lucrative businesses.

"The amount of money we get from those (Internet companies) are a fraction of those we get from the cable industry," Chernin said. "We have to be careful not to disaggregate."

News Corp. is likely in a position to know how enemies today could turn into friends tomorrow.

A source familiar with the matter said News Corp.'s Fox Interactive Media, which oversees its popular Internet social network MySpace, had reached a preliminary deal to buy photo sharing site Photobucket for an estimated $250 million.

MySpace last month blocked traffic coming from Photobucket after the photo service began running ads on photos displayed on MySpace sites. MySpace said it had violated its service terms.

"You'll see more acquisitions," Chernin said. "This is a world where the big get bigger. You'll see increased consolidation."