June 24 (Bloomberg) -- Comcast Corp., the largest U.S. cable operator, and Time Warner Inc. are testing a system that will let cable-television subscribers watch shows such as “The Closer” on the Internet at no extra cost.

Comcast will start a trial of its “On Demand Online” service with 5,000 subscribers in July, carrying full-length programs from Time Warner’s TNT and TBS cable networks, the companies said today at a press conference in New York.

The plan marks another way the TV industry is trying to preserve revenue threatened by the proliferation of free videos online and illegal downloading. In recent months, Time Warner Chief Executive Officer Jeffrey Bewkes has been promoting his “TV Everywhere” proposal to bring more shows to the Web while protecting fees paid to cable channels by pay-TV operators.

“There are some fantastic things about the architecture of the American multichannel business, which includes the financial model that supports it,” Bewkes said at the conference. “We’re trying to take the fundamental structure and use the Internet now to even augment its appeal and its convenience.”

Comcast subscribers in the trial will be able to access shows including TNT’s “The Closer,” starring Kyra Sedgwick, and “Saving Grace,” with Holly Hunter, on the Comcast.net and Fancast.net Web sites, the companies said. The programs will be online within hours after airing on TV and with the same ads. The terms of the agreement weren’t disclosed.

The test be will expanded nationally in the fourth quarter and more networks are expected to join, Comcast Chief Executive Officer Brian Roberts said at the conference.

Logical Evolution

“This marks the very logical next evolution of where cable television has come from,” Roberts said.

Michael Nathanson, an analyst with Sanford C. Bernstein & Co., wrote in a report last week that video on the Web has “emerged as perhaps the defining controversy” in the technology, media and telecommunications industries.

Time Warner, the New York-based owner of CNN and Cartoon Network, rose 24 cents to $24.79 at 4 p.m. in New York Stock Exchange composite trading. Comcast, based in Philadelphia, gained 4 cents to $13.83 in Nasdaq Stock Market trading.

Time Warner expects more trials with other TV distributors “very shortly,” Bewkes said, without being more specific.

Broadcasters Walt Disney Co.’s ABC, General Electric Co.’s NBC and News Corp.’s Fox offer full episodes of shows such as “Grey’s Anatomy” and “Family Guy” free online, selling advertising, and Disney’s ESPN sports network makes users pay to access online features.

Apart from ESPN, cable channels had mostly stayed off the Internet to protect the fees that providers including Comcast pay to carry them. Online users can find clips of “The Closer” and “Saving Grace,” but few full episodes.

‘Paid Wall’

Media Access Project, a Washington-based public-interest law firm, said it objects to the Comcast trial and the TV Everywhere proposal because only users who already pay a cable subscription will be able to access the shows.

“Putting content behind a paid wall threatens the wide open model which has made the Internet innovative and diverse,” Media Access Project Vice President Parul P. Desai said in an e- mailed statement. “The ‘experiment’ announced today appears to limit customer choice.”

Bewkes and Roberts said they haven’t decided if consumers who don’t have pay-TV at home may later be allowed to buy a separate online-only subscription to the service.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: June 24, 2009 16:08 EDT