Sony Corp. 6758.TO -1.60% has reached a preliminary agreement with Viacom Inc. VIAB -1.47% to carry the media company's cable channels on its planned Internet-based TV service, a person familiar with the matter said, a significant boost for the Japanese company as it races to secure content rights against technology firms vying to offer similar services.
Sony plans to stream traditional cable channels as well as on-demand content over the Internet, posing new competition for cable, satellite and phone companies which have long sold subscription TV services.
Several other companies including Intel Corp. INTC -2.46% and Google Inc. GOOG -0.99% also are planning Internet-based TV services and have been on the hunt for programming rights. A Sony deal with Viacom, owner of MTV, Nickelodeon and Comedy Central, would be the first major content deal for one of the new entrants to become public.
Spokesmen for Sony and Viacom declined to comment.
Sony must still finalize details of its preliminary deal with Viacom, the person said. Sony also has had discussions with major programmers including Walt Disney Co., Time Warner Inc. and CBS Corp., people familiar with the situation said. The status of those talks isn't clear.
Until now, big entertainment companies which own major networks have been reluctant to license their programming to so called "over the top" services, for fear of undercutting the lucrative arrangements they have with pay- TV operators. Contractual obligations with some pay-TV operators also make it difficult for some programmers to license their channels to new entrants.
While Intel has been public about its efforts, saying it hopes to launch service in at least some markets by the end of this year, Sony's plans have been shrouded in mystery.
A person familiar with the matter said Sony is hoping to launch its online pay-TV service by the end of the year. Initially, at least, the service is expected to be available via Sony's PlayStation gaming console—a new edition of which could be released soon—as well as Bravia high-definition TVs, but later will also work on other Sony devices including tablets and smartphones, the person said.
People who have seen demonstrations of Sony's system say it has some features that are appealing in comparison to traditional pay-TV distributors, including one that recommends shows for users based on what they've previously watched.
Content providers are allowed to supply some of those recommendations, so they can steer users to other episodes on their channels, according to the people familiar with the matter. Sony provides other content suggestions for viewers based on an algorithm.
—Keach Hagey and Daisuke Wakabayashi contributed to this article.
via online.wsj.com
