Pay television providers forced Al Jazeera to remove or block its online video content from American viewers in return for launching its new news channel on cable systems this week.

The Qatar-based news network had maintained a loyal, but small online audience for its English language news programming, using video streaming to reach American audiences that could not watch on cable or telco-TV.

For Time Warner Cable and AT&T U-verse customers, neither of which carry the new Al Jazeera America network, the move effectively cuts off viewing of the news channel’s English language programming.

The removal of Al Jazeera video content began with the termination of its live global English language stream within the United States. That was followed by blocking the network’s video clips on YouTube. The only way for viewers to watch the network now is by paying a cable, telephone, or satellite operator, assuming they are willing to carry it.

AT&T U-verse suddenly dropped predecessor Current TV just hours before Al Jazeera America was scheduled to launch in its place. The loss of five million potential viewers came as a complete surprise, culminating in a lawsuit filed against AT&T for violating its contract.

“Unfortunately, AT&T’s decision to unilaterally delete Al Jazeera America presented us with circumstances that were untenable — an affiliate that has willfully and knowingly breached its contractual obligations,” Al Jazeera America wrote in a statement issued Tuesday night. “Al Jazeera America’s strong hope is to resolve this matter quickly.”

AT&T issued its own statement stating the company “could not reach an agreement with Al Jazeera that we believed provided value for our customers and our business.”

Riyaad Minty, Al Jazeera’s head of social media has fielded complaints from loyal viewers who never got to watch the channel through their pay television provider and now can’t access the network without one. Minty tweeted the network was considering a new online offering within weeks, but it would not include Al Jazeera America.

The news channel is forced to tread carefully because of restrictive terms in its carriage agreements, designed to cut off cord cutters who refuse to pay for cable television. Most cable contracts forbid allowing cable networks to stream their programming online unless they offer it only to those who can prove they already pay an authorized provider.

Time Warner Cable is reportedly still negotiating with the news channel, which usually asks for less than five cents a month per subscriber. But no decision had been reached. Time Warner dropped predecessor network Current TV hours after news stories reported Al Gore, Jr. and other owners had sold the channel to the Qatar news organization.

Concern about programming costs only goes so far. While Time Warner Cable and Bright House customers continue to go without Showtime and access to CBS programming online (in addition to local station blackouts in New York, Texas and California), the two cable companies have found room in the budget to add two new expensive sports networks to their lineups.

Fox Sports 1 and 2 replaced the much-less-expensive Speed and Fuel Networks Aug. 17 on both cable systems. Fox had been getting 23¢ per subscriber each month for Speed and about 20¢ monthly for Fuel. Fox expects both cable operators to pay a monthly fee of 80¢ per subscriber for Fox Sports 1, rising quickly to $1.50 within a few years, according to Sports Business Daily. The cost of Fox Sports 2 is unknown.

Fox wants the two networks to gradually rival the most expensive network in your cable television package – ESPN. To manage that, Fox will need to engage in a bidding war with its Walt Disney-owned rival to grab the most-watched sporting events. Sports franchises love that, because they will profit handsomely from the proceeds. But both Fox and Walt Disney are bidding with cable subscribers’ money. The more sports programming costs, the higher cable bills will rise. ESPN already charges at least $5 a month per subscriber. To rival ESPN, Fox Sports may eventually have to charge as much, boosting cable bills an extra $4-5 a month for the competing sports networks.

“It’s going to be a popular channel,” said Joe Durkin, Bright House senior director of corporate communications. “It’ll be rich with sports, and we’re happy to bring it to our customers.”

Fox Sports negotiated access to more than 90 million U.S. homes through agreements with most large cable, telephone, and satellite TV distributors. Attracting them: at least 5,000 annual hours of live events and original programming including college basketball and football, joined by Major League Baseball next year. The network will also feature NASCAR, international soccer and Ultimate Fighting Championship (UFC) competitions.

Fox Sports 2 will feature mixed martial arts at the outset, with more programming coming as the network develops.

Besides the two national sports networks, Fox also owns almost two dozen regional sports channels including Prime Ticket and Fox Sports West. It also acquired a 49% stake in New York’s YES, the Yankees Entertainment and Sports Network, with an option to buy it outright later. It also recently acquired a sports channel in Cleveland.

Fox also plans to launch another entertainment cable network Sep. 2 with the debut of a companion to the FX network Fox is calling FXX.

FXX is being programmed for… you guessed it, young adults aged 18-34 — the most coveted demographic for advertisers. It will feature reruns and original programming, including Parks and Recreation, Arrested Development, How I Met Your Mother, Freaks and Geeks, Sports Night, It’s Always Sunny in Philadelphia, The League and Totally Biased with W. Kamau Bell.

You may not have asked for the new network, but chances are you are getting it anyway. Fox has signed carriage agreements with Comcast, Time Warner Cable, Charter, Verizon FiOS, AT&T U-verse, and both satellite services.

Sony’s bid to enter the “over-the-top” online video business has gotten a shot in the arm with news it has reached a preliminary agreement with Viacom, Inc., to carry its popular cable networks on the Japanese electronics giant’s planned online subscription TV service.

Sony wants to build its own virtual cable television service, offering live and on-demand programming delivered over broadband lines in direct competition with cable and phone companies Comcast, Time Warner Cable, AT&T and Verizon.

Getting agreements with traditional must-have cable networks like Comedy Central, ESPN, and USA have been difficult because the networks fear alienating their traditional customers — large cable, telco and satellite TV companies.

The Wall Street Journal reports Viacom’s agreement remains preliminary at the moment and the final details have yet to be worked out. If a final agreement is reached, it will be a breakthrough for so-called online cable systems which have gotten nowhere with other cable network owners, including Comcast-NBC, Walt Disney, Time Warner, and CBS.

Cable executives have repeatedly warned that a wider distribution of cable network programming would make them more reluctant to pay higher prices for the cable networks because of the loss of relative exclusivity. Many cable programming contracts restrict the ability of network owners to sell to would-be online competitors.

Viacom has had contentious relationships with cable and satellite companies in the past, so observers suggest it is no surprise Viacom would be among the first to break with tradition. Viacom’s CEO, Sumner Redstone, also controls CBS which is currently off Time Warner Cable systems in three major cities and has had its pay movie channels Showtime and The Movie Channel blacked out on Time Warner systems nationwide. If Sony’s service gets off the ground, CBS could ask Time Warner customers to sign up with Sony instead to get those networks back.

Cord Cutting is Real (Graphics: The Wall Street Journal)

Competing online video services from Intel and Google have largely gone nowhere because of stalled programming negotiations. How Sony managed a breakthrough remains a mystery. To secure rights, Sony may have been asked to sign a lengthy contract with favorable financial terms for Viacom, or Sony might have agreed to carry the full roster of Viacom-owned cable networks, which include:

The next generation of the Sony PlayStation may be your next cable box.

• BET
• CMT
• Comedy Central
• Logo
• MTV
• MTV2
• Nick at Nite
• Nick Jr.
• Nickelodeon
• Nicktoons
• Palladia
• Spike
• TeenNick
• Tr3s
• TV Land
• VH1

A source told the Journal Sony hopes to launch its new venture by the end of the year, perhaps on the next generation of Sony’s PlayStation gaming console due soon. Sony also could offer the service on its line of Bravia high-definition televisions, as well as tablets and smartphones.

The Journal:

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.

The development of online cable television in direct competition with large cable and phone companies could spark a new wave of broadband usage restrictions including usage caps and metered billing. The same telecom companies that earn a substantial part of their revenue selling cable television service are likely to find it unsettling to discover Sony undercutting them on price and using “their” broadband lines to do it. Placing restrictions on the amount of broadband traffic a customer can use each month would deliver a significant deterrent to would-be cord cutters.

A German court has blocked Liberty Global’s attempted $4.25 billion purchase of the country’s third largest cable company on antitrust and anti-competition grounds.

John Malone’s European cable conglomerate already owns UnityMedia, but has been turned away from acquiring Kabel Baden-Wuerttemberg on convincing evidence that the combination of the two cable operators would be grossly anti-competitive and violates German antitrust laws.

Liberty Global is hurrying to the German federal court to overturn the regional judge’s decision. If it cannot, it will have to unwind the merger between Kabel BW and UnityMedia.

The head complainant against Malone’s cable consolidation plan is the German telephone conglomerate Deutsche Telekom. Liberty Global’s investors hoped consolidating the German cable systems would lead to higher prices and revenue for the combined cable operation, as well as reduced costs. Liberty has similar plans to spark a renewed wave of cable consolidation in the American cable market.

Deutsche Telekom’s victory has emboldened the German phone company to consider filing a formal challenge to Vodafone’s separate $10.2 billion purchase of Germany’s largest cable company — Kabel Deutschland, on similar grounds.

CBS has blocked Time Warner Cable and Bright House Networks’ broadband customers from watching CBS online video in a retaliatory move against Time Warner Cable’s decision to pull CBS-owned programming off the lineup because of a contract dispute.

Broadband customers of both cable companies (Bright House relies on Time Warner Cable to negotiate its programming carriage agreements) started losing access to CBS streamed content late Friday, now replaced with a message blaming Time Warner Cable for the loss. Earthlink customers using either cable operator are collateral damage — Earthlink is effectively reselling the others’ cable broadband services.

“If Time Warner Cable is a customer’s Internet Service Provider, then their access to CBS full episode content via online and mobile platforms has been suspended as a result of Time Warner Cable’s decision to drop CBS and Showtime,” said a CBS spokesperson. “As soon as CBS is restored on cable systems in affected markets, that content will be accessible again.”

In place of the programming, cable customers get to see a brief attack ad criticizing Time Warner for yanking CBS-owned channels and networks, despite the fact CBS authorized the companies to keep the channels up and running until the dispute can be worked out.

Time Warner Cable shot back with their own rebuttal.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CBS Blackout – We Dont Want a War 8-4-13.flv[/flv]

Time Warner Cable claims it does not want a war over programming costs in its latest ad regarding the blackout of CBS programming, which now also affects the cable company’s broadband customers. (1 minute)

“CBS has shown utter lack of regard for consumers by blocking Time Warner Cable’s customers, including our high-speed data only customers, from accessing their shows on their free website,” the company said in a statement. “CBS enjoys the privilege of using public owned airwaves to deliver their programming – they should not be allowed to abuse that privilege.”

Customers well outside New York, Dallas, and Los Angeles discovered several CBS-owned cable channels were missing, even though they are not served by a CBS-owned local affiliate. The most obvious — Showtime/The Movie Channel came during the middle of the latest season of Dexter.

New York City residents can sat least keep watching WCBS by signing up for Aereo, which streams local stations over the Internet. A 30-day free trial is available. Getting programming in other cities is going to be much tougher. Some predict hardcore viewers will just look for pirated copies of their favorite shows.

CBS said no further negotiation took place over the weekend. Some industry analysts predict the impasse could run for weeks, even potentially until the start of football season — considered a line of PR destruction neither company is willing to cross.

Golf is not as critical, apparently. The PGA Championship taking place in Rochester, N.Y., this weekend is likely going to get a smaller viewing audience because of the blocked programming.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg CBS Blackout Enters Third Day 8-5-13.flv[/flv]

The blackout of CBS programming by Time Warner Cable enters its third day with no light at the end of the tunnel, suggests this Bloomberg News report. (3 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg Day Three of CBS Blackout Angers Audiences 8-5-13.flv[/flv]

This is not the first time broadcasters and cable operators have cut viewers off, sometimes for more than a week. Bloomberg News reports the soft deadline for Time Warner and CBS to sort out their differences is the start of the fall football season. Sources say Time Warner now pays $1 a month for CBS, but the network now wants $2 a month. (3 minutes)