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Sony, WB tune into digital TV

WASHINGTON (Reuters) -- In a landmark deal that could provide crucial momentum to the nation's foundering digital TV transition, Sony and Warner Bros. are expected Tuesday to announce a pact with the world's top electronics makers to open their vast libraries in exchange for some copy control, Variety reports.

The agreement covers only content carried over cable systems -- a sticking point that has left studios divided. The other five majors, some of whom have extensive broadcast interests, want over-the-air broadcasting to be protected as well.

Sony and Warners went ahead and signed their own deal late Friday with a licensing authority for Hitachi, Intel Corp., Matsushita Electric Industrial, Sony Corp. and Toshiba Corp. Deal permits the two studios to dictate how many times, if any, high-value programming can be copied.

The seven majors have been in tense negotiations for months with the five electronics makers, who argue there is no point in mass-producing digital TV sets if Hollywood isn't willing to offer top programming.

"Our agreements with Warner Bros. and Sony Pictures mark a watershed event in the transition to the all-digital home entertainment," said Michael Ayers, president of the Digital Transmission Licensing Administration.

Studio execs said the other five majors are exploring a different licensing scheme with unidentified electronics manufacturers, but offered no specific details. It's also possible that those studios could eventually join Warner Bros. and Sony, even if one at a time.

"The difference among the studios reflects differing opinions as to how copy protection should be approached," one industry exec said.

Hollywood's top lobbyist, Motion Picture Assn. of America president Jack Valenti, has said digital TV produces such a perfect picture that even amateurs could successfully pirate the content.

The Warners and Sony agreement greenlights encryption technology that would essentially allow digital TV sets and cable boxes to communicate with each other. If a cable operator restricted a certain Warner Bros. movie from being copied ad infinitum, the cable box and digital TV set would relay such information to each other.

The licensing agreement also includes technology preventing a cable line from being hooked up to the Internet.

The National Cable & Telecommunications Assn. endorsed encryption technology for set-top boxes earlier this year.

"For content providers, the creation of secure entertainment networks is key to the delivery of high-value, high-resolution motion picture content into the home," said Christopher Cookson, Warner Bros.' executive VP for technology.

Fox Filmed Entertainment and the Walt Disney Co. have been leading proponents of copy-protecting over-the-air broadcasting -- a controversial notion, since over-the-air is, by its literal definition, free and clear.

Broadcasters say they will be crippled if over-the-air programming isn't protected. A content provider will turn exclusively to cablers, leaving broadcasters out of the mix.

In the early 1980s, the U.S. Supreme Court ruled that consumers have the right to record TV programs for home viewing. Consumer advocates say that decision means over-the-air broadcasts can't be copy-protected -- period.

Disney and Fox say otherwise, arguing that advancing technology has changed the boundaries.

National Assn. of Broadcasters president-CEO Eddie Fritts has been appealing directly to Capitol Hill politicians on the issue.

Irrespective of copy protection, the transition to digital TV has other crucial hurdles to overcome.

Broadcasters are slated to go all-digital by 2006, or when 85 percent of American homes have a digital TV, whichever comes first.

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