We wrote about Twitter’s collaboration with a startup called Snappy TV and Turner Broadcasting that allowed the NCAA to tweet out highlight clips from March Madness throughout the annual college basketball tournament, with the clips sponsored by AT&T and Coke Zero, and a Twitter spokesperson confirmed Monday that the ESPN clips will appear in a similar manner inside Twitter Cards. The report indicated that Twitter will be selling advertising specifically around the sports clips that are tweeted out.

The company announced major updates to its Cards technology in early April that allowed for more types of content to appear in the tweets and more app promotion for third-party apps cross-posting to Twitter. The key to Cards is that a user never has to leave Twitter to view the content the Cards contain — everything is viewable directly in stream, which encourages users to stay on Twitter’s website.

My colleague Mathew Ingram and I have written about Twitter’s transformation over the past year or so to become more of a media company, and Twitter’s partnerships with television, music and video outlets are numerous. There were rumors of deals with Viacom and NBC, a partnership with Nielson to measure user activity around television, the launch of the Twitter #music app and following music entertainment show.

For Twitter, all of this content could make tweets more engaging for users who become captive audience members participating in live events. But perhaps more importantly for the company, if it’s gearing up for the IPO everyone expects, video provides an excellent platform for advertising and big brand partnerships that could make Twitter a lot of money.

The TV business is still based on an archaic business model that forces customers to buy arbitrary bundles of channels. Fans of arts programming, for instance, often have to shell out $5 a month for football shows — even if they hate football.

This isn’t a technology issue. It’s instead the problem of what media doyen Peter Kafka calls the “TV industrial complex” — a cabal of broadcasters and cable distributors that refuse to surrender their bundled TV business model.

That’s why upstart Aereo, which uses tiny antennas to stream TV signals to mobile devices, is so intriguing to watch. The company is offering a way for people to watch shows where and when they want — and has so far withstood the TV industry’s lawsuits. Yesterday, we showed off photos of Aereo’s tech. Today, we’re exploring the vision and strategy of the man who wants to kick in the door of the TV industrial complex once and for all.

The quest to end an “abusive” system

Chet Kanojia, who is speaking at paidContent Live in April, is a soft-spoken engineer who likes stylish shoes. At 43, he’s already built an advertising company, Navic Networks, and sold it to Microsoft — and presumably made himself a fortune. When we chatted at Aereo’s site in Brooklyn this week, the first thing I wanted to know is why he picked this fight. Why, that is, did he decide put so much energy into Aereo when the TV industry might crush the company in a second like it has done to others before?

“I had the option to be a VC, to do nothing or to do something really really meaningful,” said Kanojia. “In my heart of hearts, I belive that when businesses are created or preserved with analogue mentalities, they’re artificially constrained and ripe to to be recast in a different way.”

He adds that he loves TV content like 60 Minutes, Parenthood and Downton Abbey. But he is exasperated by the TV industry’s ossified pricing model.

“Why can’t there be a simple way to pay for this? It’s just irrational that it should cost hundreds of dollars a month. It’s an abusive system set up in an artificial way.”

Broadcasters like NBC and Fox, of course, would argue that we need a system that provides revenue to produce the content that people like so much. In recent years, these networks have been leaning on distributors to pay them for carrying over-the-air channels — and presumably think Aereo should too.

Kanojia is having none of it, saying the broadcasters are already making money from public spectrum through advertising and that it’s unreasonable for them to ask for more. Also, Aereo is not part of the regulatory regime that requires big TV companies to offer their channels for sale to cable and satellite distributors; this means that, for now, Aereo is unable to sell channels like ESPN (owned by ABC) to its customers.

Kanojia adds that pure “a la carte” TV is not the only solution to the TV muddle. He would also settle for “rational bundles.”

A high stakes bet

Aereo’s disruptive potential lies in the fact that, unlike other forms of pay TV, subscribers can add or drop it without the hassle of set-top boxes or contracts. For now, Aereo is available only in New York City but is about to roll out to 22 new markets across the country for the same price of $1 a day or $8 a month to watch and record shows. Kanojia believes this will change people’s conception of how we get access to television.

“You can come in five or ten times a year and a pay a dollar. We have lots of habitual one dollar buyers. It’s a massive dent in the psyche.”

For Aereo to have a long-term impact, though, it will still have to survive an ongoing legal gauntlet. On this front, it has a decent chance because investors and lawyers designed the company as a high-stakes bet, counting on a 2008 appeals court ruling that said private remote DVRs don’t violate copyright (you can read the legal details here). After broadcasters sued it last year, Aereo won the first round and the case is now on appeal.

The price tag for the loser will be high. On one hand, media mogul Barry Diller and others have put at least $58 million into Aereo, money that could evaporate if Aereo is shut down. On the other hand, GigaOM Pro analyst Paul Sweeting (who has written about Aereo) said the initial court decision was a “disaster” for the networks and that a loss at the appeal level will open the floodgates.

“If the networks don’t win, what it means is that all you have to do is bounce a signal off a cloud-based DVR and you can do what you want,” said Sweeting by phone.

Whatever the outcome of the court case (which could go to the Supreme Court if courts in New York and California continue to disagree), Kanojia thinks he will have made an inexorable dent in the current tv structure. He also thinks the litigation will help other pioneering TV companies.

“The legal situation is unfortunate, but it forces clarity and that’s a good thing.”

This overstates the case. A better way to look at the situation is that it’s time for publishers to make better ads, and not to chuck the display format altogether. Check out, for instance, ESPN’s dynamic wall paper ad for an upcoming college football game that wraps around a story and lets viewers vote on their favorite team:

The ad, first reported by AdWeek, expands dramatically for those who click to vote but still does not take over the entire screen:

The football message, which also contains video and social media features, is effective compared to traditional banner ads because it’s less intrusive and is relevant to the surrounding content. One can imagine this formula working well for other genres like travel or food.

According to Marc Horine, VP of Revenue & Operations for ESPN, last year brought about a “creative renaissance” that is letting brands “break through the clutter of the traditional ad experience.” Horine also points to ESPN’s investment in technology that lets the site display elegant TV-like ads behind a story.

ESPN is hardly the only one making innovative ads, of course. Another example is OneSpot, a Texas firm that makes customized content for major retailers and inserts it in relevant places around the web. The result is a sort of hybrid between traditional display ads and the fully bespoke native advertising.

The new ad formats are promising, especially when paired with sophisticated analytics tools that let brands measure an ad’s ROI in real time. The one wildcard is whether nervous publishers will double down and invest in these promising new ad formats at a time when the larger online ad market is declining.

The media conglomerate reported a 24 percent second-quarter profit increase to $1.83 billion Tuesday, driven by strong cable and broadcast ad sales, affiliate fees, licensed Avengers toy purchases and theme park attendance.

Also read: Blame it on Mars – Rich Ross done as Disney studio chief

Revenue for the Burbank, Calif.-based company was up 4 percent to $11.08 billion in the quarter.

Driven by the powerful ESPN cable channel and the ABC broadcast network, Disney’s media networks division saw a 3 percent spike in revenue to $5.08 billion, with operating income increasing 2 percent to $2.12 billion

Revenue from parks and resorts was up 9 percent to $3.44 billion, with a earthquake-induced shutdown of the company’s Tokyo theme park last year making Q2 2012 compare favorably.

Also read: Disney avenges traditional media models

Even with the $1.64 billion theatrical performance of superhero movie The Avengers, revenue was flat in the quarter for Disney’s studio entertainment division. But operating income increased from $264 million to $313 million during the period, with the studio managing production costs on its films better these days.

Operating income in Disney’s consumer products division was also up 35 perent to $209 million.

Losses in the company’s interactive unit, meanwhile, narrowed 51 percent to $42 million, with Q2 comparing favorably with a 2011 quarter that saw Disney buy social game maker Playdom for $743 million.

But the Disney-owned sports channel spent most of Tuesday hyping — and shooting down rumors about — new digital initiatives.

Notably, an ESPN spokesperson denied a Bloomberg report that earlier stated that ESPN and Apple executives are in talks to make the authenticated TV Everywhere app WatchESPN available on Apple TV.

That’s not to say a deal is never going to happen.

Bloomberg quoted Sean Bratches, ESPN executive VP of affiliate and advertising sales, as saying his company would be open to a deal with Apple that would allow subscribers of select multichannel TV services password-protected access to ESPN programming on the over-the-top Apple TV platform.

ESPN already has a deal in place with Apple to let subscribers of select multichannel services, including No. 1 provider Comcast, stream its sports news on iOS mobile devices the iPad and iPhone. And in the living room, Comcast Xfinity subscribers can also stream ESPN programming on Microsoft’s Xbox gaming consoles.

“To the extent that in the future there’s an opportunity with Apple to authenticate through the pay-TV food chain as we’re doing with Microsoft, that’s something that we will participate in,” Bratches told Bloomberg.

Just don’t get your hopes up for anything to happen soon.

“We’re not having conversations with Apple about authenticating WatchESPN,” ESPN spokeswoman Amy Phillips re-iterated to paidContent.

Double-teaming brands with Twitter

At its upfront presentation earlier in the day, ESPN unveiled an advertising partnership with Twitter that will allow the social media giant to monetize all those tweets that occur around big-ticket sports events. (During the final three minutes of February’s Super Bowl, for example, Twitter reported that 10,000 tweets per second were being transacted on its network.)

The collaboration will kick off with next month’s NBA Finals coverage. Studio analysts for ESPN’s NBA Tonight highlights/analysis show will encourage viewers to tweet their painted “game faces” with the hashtag #gameface, with the most telegenic of the lot presented on the linear broadcast.

Twitter and ESPN will be co-sell the campaign through promoted tweets and trends, as well as product plugs on Disney’s ABC, ESPN and ESPN.com channels. The cross-platform offering will be sold to sponsors as a single package.

Going live with Comcast doubles the number of households with access to WatchESPN to 40 million.

WatchESPN is part of a multi-year deal Comcast and Disney reached earlier this year that combined traditional carriage agreements with multi-platform access. Other channels due to get the “watch” treatment include Disney Channel, DisneyXD and Disney Junior.

Choices

Instead of forcing users to go through XfinityTV.com or the Xfinity TV app, access through WatchESPN lets sports fans zero on programming from across the ESPN network and to take advantage of the ESPN user experience.

But integrating it with Xfinity TV apps also makes it easier for Comcast viewers looking for a way to manage their portable or off-TV viewing experience through a single gateway. That’s also how users will be able to setup remote recording. WatchESPN is a network experience; XfnityTV is programming plus program management.

How does it work

Make sure you’re using the current WatchESPN app update dated May 8. Click on settings and go to “choose provider. Until today, the only options were Verizon FiOS TV and Broadband, Bright House Networks, and Time Warner Cable. Now Comcast is in the list. Select Comcast and you get a white splash screen that explains the requirements — must subscribe to Xfinity TV with access to VOD and must subscribe to the network you are trying to watch. If you don’t get ESPN in your Xfinity package, you can’t watch it through the app or online. That splash screen, which is bigger than those of other MSOs, also includes something unusual — ads from Comcast.

Enter your Xfinity user name and password, and you’re in. I don’t live in a Comcast area but I do tech support for parents who do and tested it with one of their logins. In a matter of seconds, I had access to live streams from ESPN, ESPN2 and ESPNU, plus replays on broadband channel ESPN3 (nothing live at the moment), ESPN Radio and more.

Comcast Ventures head Amy Banse, one of the architects of Comcast’s multi-platform strategy, will be speaking at paidContent 2012: At The Crossroads, May 23 in New York. Here’s how you can join us for the conversation.

The episode offers some intriguing lessons about digital journalism and social media. We offer some observations below, but first here is a quick recap of the story itself:

This week, sports site Deadspin began raising questions about whether a fetching young woman who writes ESPN’s “Junk Mail” column was pulling a series of internet scams.

Deadspin reported how Phillips, who got her start posing as a gambling addict for betting site Covers.com, has left a trail of sketchy behavior like:

• Using her ESPN position to persuade a 19-year-old college student to hand over the password for his website, and then stealing the site

• Posting fake photos of herself for biography pictures, including one that appears on a site called “Hot Chicks with Douchebags“

• Defrauding a Covers.com reader and then extorting more money from him, and then threatening him with a beating at the hands of the LAPD

This week, ESPN fired Phillips while Deadspin uncovered a steady drip-drip of new details about her scams, lies and rise to minor internet sports personality:

• People who knew Phillips say she knew or cared little about sports or betting; the posts that vaulted her to prominence appear to have been written – or at least informed by – a puppet master named Nilesh Prasad

Rees, previously VP for ESPN (NYSE: DIS) Inc in the US, is becoming international digital media VP for ESPN International, overseeing ESPNCricinfo, ESPNScrum, ESPNF1, ESPNSoccernet and other properties.

Gleeson, who had led the cricket site Cricinfo through its acquisition by ESPN, is now consulting for ESPN and working with Rees on the transition.

Amongst ESPN’s most prestigious overseas TV rights is 23 live matches in the UK of England’s Premier League soccer. It also holds mobile highlights rights to all the tournament’s games.

The app through which it exploits those highlights rights, ESPN Goals, was last year switched from paid to ad-supported free by the broadcaster, which also introduced a post-match live web discussion show. ESPN Goals has passed two million downloads.

Rees is a former strategy head of the Union of European Football Associations (UEFA) and will work from New York.

– Yahoo: MaryBeth Malcolm has been promoted to senior director, Yahoo (NSDQ: YHOO) category development and marketing solutions. The company also announced two new category leads: Debbie Menin to lead entertainment and travel, and Karina Montgomery heading up CPG/FMCG and health. Menin and Montgomery report to Malcolm, who reports to Elizabeth Ritzcovan, VP, marketing solutions. Throughout her tenure at Yahoo, Malcolm has overseen development of advertising programs on the Yahoo Homepage, Mail, Messenger, Mobile, Finance and Flickr. Previously, Montgomery was VP, sales development at SocialVibe, while Menin was entertainment practice head at AOL.

– Wikia: Hilary Goldstein joins as gaming category manager and Eric Moro is now entertainment category manager. They’ll lead Wikia’s community by curating and creating content as well as industry partnerships. Goldstein was previously editor-in-chief of IGN Games, while Moro was editor-in-chief of IGN’s movies, TV and Blu-ray/DVD site.

– AdoTube: Thomas MacLean has been hired to lead the new Detroit office as VP of sales. He previously was strategic accounts manager at Kontera. AdoTube also has new account executives, Bia Parente and Carter Wall.

The sprawling deal covers 70 services, including cable networks, retransmission consent for seven ABC O&Os, the launch of Disney Junior on Comcast and more. The Disney, Disney XD and ABC Family licnesing deal expired at the end of last year; the two companies decided to roll that up into a bigger deal.

So what does it mean for consumers? Those who already pay for Comcast will get access to more programming in more ways (depending on the subscription level) — and, they probably will pay more over the life of the deal to get it. Those who don’t want to pay for cable and the kind of expanded exclusive digital access now being included in deals will face the kind of situation I outlined a few days ago: more access for paid users means less for those relying on the free part of freemium.

They’ll have more options through the set-top as well as online or mobile devices and tablets. At this point, more ABC content has been available on demand through Hulu.com or ABC.com then on TV. ABC, ABC Family and Disney all will have expanded on demand access, including full seasons for some shows — the kind of move that can keep fans interested and engaged.

On another note, it also means that Comcast subscribers in New York, Chicago, Philadelphia, San Francisco, Houston, Raleigh-Durham and Fresno get to skip the public posturing over retrans and threats of ABC going dark on their system into the next decade.

Some more details in the release:

Comcast Corporation (Nasdaq: CMCSA, CMCSK) and The Walt Disney Company today announced a long-term, comprehensive distribution agreement that will deliver Disney’s top quality sports, news and entertainment content to Comcast’s Xfinity TV customers into the next decade on television, online, on tablets and handheld devices. The new agreement enhances the multichannel business model and supports the companies’ mutual goal to deliver the best video content to customers across multiple platforms using the latest technology and cloud innovation. For the first time ever, Comcast’s Xfinity TV customers will be able to watch ESPN, ABC or Disney shows live or on demand and across multiple screens. The companies also agreed to collaborate over the term of the deal to create new, innovative viewing experiences for Xfinity TV customers.

The networks and services covered by the agreement include: ABC, ABC Family, Disney Channel, Disney XD, ESPN, ESPN2, ESPNU, ESPN Deportes, ESPNEWS, ESPN Classic, ESPN Goal Line, ESPN Buzzer Beater, ESPN 3D, ESPN GamePlan, ESPN FullCourt and ESPN3; retransmission consent for seven ABC-owned broadcast television stations (WABC-TV New York, WLS-TV Chicago, WPVI-TV Philadelphia, KGO-TV San Francisco, KTRK-TV Houston, KTVD-TV Raleigh-Durham, and KFSN-TV Fresno) as well as more than 10 high-definition networks. Additionally, Comcast will launch Disney Junior, a new 24-hour basic channel for preschool-age children, parents and caregivers. Comcast will also provide its Xfinity TV customers with broad access to a suite of live Disney networks on an authenticated basis and expanded Xfinity On Demand content through Disney’s comprehensive TV+ initiative. In total, 70 services are covered by the broad scope of this new agreement. License fee schedules for different services under the deal will be phased in over time.

“Comcast was the first video provider to create technology that enabled us to deliver content to customers where and when they want it across any viewing experience,” said Neil Smit, President and Chief Executive Officer, Comcast Cable. “We are very pleased to have reached this unprecedented and innovative, long-term agreement with Disney which embraces the future of entertainment and allows Comcast to continue to bring our vision of TV Everywhere to Xfinity customers whether at home or on the go.”

Anne Sweeney, Co-Chairman, Disney Media Networks and President, Disney/ABC Television Group, added, “This landmark deal is a great example of what can be achieved when programmers and distributors collaborate and innovate together to meet the ever-evolving needs of consumers and enhance the viewing experience. By combining the best news, sports and entertainment content available today with cutting-edge technologies, we’re able to fully realize our comprehensive TV+ initiative, and introduce a brand new suite of authenticated services to Comcast subscribers.”

Added George Bodenheimer, Executive Chairman, ESPN, Inc., “Given the scope of assets Comcast and Disney/ABC/ESPN are making available to consumers, this agreement is unprecedented in our industry. It reinforces the value of the multichannel subscription and takes full advantage of new technologies, which serve all of our viewers.”

The extensive and expanded rights package for Comcast’s Xfinity TV customers includes rights across multiple platforms for:

– Comcast’s Xfinity TV customers will receive more ABC, ABC Family, Disney and ESPN content through their set-top-box and, at this time, Disney and ESPN content online, including:

– ABC On Demand, ABC’s fast-forward-disabled On Demand service, which currently features a selection of top-rated primetime entertainment programming, including episodes of such popular current ABC shows as Castle, Grey’s Anatomy, Once Upon A Time (NYSE: TWX), Private Practice and Revenge. Full current seasons will be made available on a number of shows. Additionally, Xfinity TV customers will have access to a variety of ABC News programming as well as some local ABC owned-station content.

– ABC Family On Demand, which features a variety of top-rated full episodes, refreshed monthly, from such popular millennial favorites as The Secret Life of the American Teenager, Switched at Birth, and Melissa & Joey. Full current seasons will be made available on a number of shows. ABC Family original movies like “12 Dates of Christmas” will also be available.

– Disney-branded On Demand offerings, including Disney Channel On Demand, Disney Junior On Demand, and Disney XD On Demand. Refreshed each month, the Disney Channel On Demand offering will include episodes from such series as Handy Manny, Mickey Mouse Clubhouse, and Jake and the Never Land Pirates for preschoolers, as well as variety of episodes from A.N.T. Farm, Good Luck Charlie, Wizards of Waverly Place, and other popular series for older kids. Select episodes featured on Disney Channel On Demand will be available in innovative new offerings, such as playlists and monthly programming blocks, in addition to a number of episodes available in multiple languages. Disney Channel Original Movies such as Lemonade Mouth, Geek Charming and Phineas and Ferb: Across the Second Dimension will also be available. Disney XD On Demand features a variety of episodes from such series as the Emmy Award-winning animated hit Phineas and Ferb.

– Disney Channel’s subscription Video On Demand service, which offers on demand access to select episodes before they air, will now be available to Xfinity TV customers who receive Disney Channel, a service that Comcast will offer to these customers for no additional fee.

– Expanded on demand content from ESPN, including content from ESPN Deportes and ESPN’s award-winning original content from ESPN Films.

– The subscription On Demand service “Disney Family Movies,” which features a selection of classic and contemporary feature films and animated shorts from The Walt Disney Studios.

– Xfinity TV customers will receive broad access to existing authenticated products like WatchESPN, as well as upcoming authenticated products, including WatchDisneyChannel, WatchDisneyXD and WatchDisneyJunior. These services will give Comcast’s Xfinity TV customers more opportunities to access live and video on demand content, both in-home and out-of-home, on their computers, smartphones, tablets and gaming consoles.

Xfinity TV customers will also receive the recently announced Disney Junior, a new 24-hour basic channel for children ages 2-7, parents and caregivers. Upon its debut in 2012, the new channel will feature animated and live action programming that blends Disney’s unparalleled storytelling and beloved characters with learning, including early math, language skills, healthy eating and lifestyles, and social skills.

Comcast also obtained rights to air certain content from ESPN3, ESPN FullCourt and ESPN GamePlan on Comcast’s Xfinity Sports Entertainment Package.