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Sony clears major hurdle to Internet TV with Viacom channels

Sony's fully online TV service -- the first of its kind -- is coming, but it's no cable killer yet. It seals a big deal for Viacom channels like Comedy Central, Nickelodeon and MTV.

Sony executive Andrew House announces the company's virtual pay-TV service at CES 2014. Sarah Tew/CNET

Sony's coming cloud-based TV service will carry 22 Viacom networks at launch, the companies said in a release Wednesday.

The deal is a milestone in the technology and entertainment industry's ambitions for a fully online pay-TV service, one that gives you the most popular networks of your cable provider but delivers them over the Internet. It has been a goal for a plethora of companies but has largely remained out of reach. Apple and Google have been said to be in pursuit, and for nearly a year, Intel was the only company to outright broadcast its plans to launch one. Sony went public with its goal at the Consumer Electronics Show in January, saying it plans to pilot a cloud-based TV service this year that combines live television content with on-demand and DVR.

The deal Wednesday signifies Sony has cleared the major hurdle that has tripped up its rivals -- securing the programming.

Though the service appears it will lack the full breadth of channels to rival pay-TV services from cable and satellite companies, it is Viacom's first-ever agreement to provide its networks for an Internet-based live TV and video-on-demand service. Though Viacom is only one television company of about nine that comprise the vast majority of TV channels consumers in the US watch, it is one of the biggest. It will provide 22 channels for the Sony service, which include Comedy Central, MTV, Nickelodeon, BET, CMT, Spike, TV Land and VH1.

"Viacom always strives to create transformational opportunities that combine consumer value and technological innovation," said Viacom CEO Philippe Dauman, in a release. "Given our young, tech-savvy audiences, our networks are essential for any new distribution platform, and we're excited to be among the many programmers that will help power Sony's new service and advance a new era for television."

Last year, Dauman said at a UBS investor conference that a so-called "over-the-top" TV service had "a very strong chance" of arriving in 2014.

The companies didn't provide details such as a launch date. They said the service will offer Internet-based live TV and video on demand "from major programmers," including Viacom. Among the Viacom content is at least 22 "linear networks" (that's the one-show-after-another channel you watch on your TV live), access to Viacom's TV Everywhere websites and apps, and Viacom's full video-on-demand package.

Financial terms were not disclosed. Sony shares traded on the New York Stock Exchange were up less than a percentage point at $19.35, and Viacom's were down less than a percentage point at $79.12 in recent trading.

In March, Dish Network took the lead in turning Internet TV into reality when the satellite television provider unveiled a deal with the Walt Disney Co., owner of such networks as ABC and ESPN, to give Dish the right to stream video, live and on demand, as part of an Internet-delivered television service. But the Sony deal with Viacom represents the first totally stand-alone Web TV service to secure the content rights to be viable.

Update, 7:48 a.m. PT: With further details of the service and context.