Google more likely to partner than compete with cable operators

Google (Nasdaq: GOOG) may attempt to sell pay TV service in Kansas City through on a broadband network capable of building data at 1 Gbps. The Internet giant has talked to programmers such as Disney (NYSE: DIS) and Time Warner (NYSE: TWX) about supplying content for its Kansas City pilot project, The Wall Street Journal reported Friday.

While the WSJ report is already prompting some industry observers to speculate that Google could shake up the pay TV industry, the company doesn't pose a serious threat to cable and satellite providers.

It would cost billions for Google to overbuild cable operators with its own broadband network. If Google were to attempt to enter the pay TV business, a more likely scenario would be that it would partner with a cable MSO to market pay TV and Internet video programming to an operator's high-speed Internet subscribers. A cable operator such as Charter Communications (Nasdaq: CHTR)--which said this week that it sees itself more as an ISP than a cable operator--could be a good partner for Google.

It's also not surprising that programmers such as ESPN parent Disney and Time Warner are talking to Google. Most pay TV programmers are platform agnostic, and have demonstrated that they will supply programming to distributors ranging from cable and satellite providers to telcos and over-the-top video providers such as Roku.

For more:
- The WSJ has this story (sub. req.)

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