Time Warner vs. Viacom

[Lee]

From Yahoo:

LOS ANGELES – A spat between Time Warner Cable Inc. and Viacom Inc. over how much the cable company pays to carry channels such as MTV and Comedy Central headed down to the wire on New Year's Eve — with little sign of movement as a blackout looked likely at a minute past the stroke of midnight.

Time Warner, the nation's second-largest cable operator, proposed an increase in what it pays for Viacom's channels, but the offer was rejected as "a pittance," said Viacom spokeswoman Kelly McAndrew.

If the impasse is not resolved, shows such as "SpongeBob SquarePants" and "The Colbert Report" will be unavailable to Time Warner's 13.3 million cable subscribers. Time Warner Cable primarily serves people in New York state, the Carolinas, Ohio, Southern California and Texas.

Time Warner Chief Executive Glenn Britt on Wednesday called Viacom's demand for a 12 percent increase in fees — an extra $39 million on top of the estimated $300 million it pays Viacom annually — extortion and outrageous given the recession. Viacom countered that the requested increase amounted to an extra $2.76 annually per subscriber.

"We sympathize with the fact that Viacom's advertising business is suffering and that their networks' ratings have largely been declining," Britt said in a statement. "However, we can't abide their attempt to make up their lost revenue on the backs of Time Warner Cable customers."

In a public relations blitz, Viacom took out newspaper ads showing Nickelodeon's animated bilingual heroine "Dora the Explorer" crying and clinging to her monkey pal, Boots.

"Why is Dora crying?" the ad asks. "Time Warner Cable is taking Dora off the air tonight!" The ad urged viewers to call Time Warner Cable and demand that their favorite shows remain on the air.

Viacom also planned to run TV ads starting Thursday on local broadcast stations in 11 major markets including New York, Los Angeles and Dallas, blaming Time Warner Cable for the blackout.

Time Warner spokesman Alex Dudley said the advertising campaign was a sign that Viacom had been preparing for a damaging shutdown.

"They never had any intention of settling this or negotiating in good faith," Dudley said.

Viacom said Americans spend a fifth of their TV time watching Viacom shows but its fees make up less than 2.5 percent of the Time Warner cable bill.

McAndrew said that despite ranking high in the ratings, Viacom's cable networks' average daily license fee is 65 percent lower than that of networks run by The Walt Disney Co., News Corp.'s Fox, Time Warner Inc.'s Turner Broadcasting System and Discovery Communications Inc.

Analyst Michael Nathanson with Bernstein Research said Viacom's channels had been "underpriced relative to their peers." He expected a settlement relatively quickly.

"Both sides may not want to see if this battle results in mutually assured destruction, as Viacom loses ad dollars and Time Warner Cable loses subscribers," he wrote in a research note.

Public carriage fee disputes of this scale between a programmer and a cable operator are not that common, especially when there's a threat of a blackout, said Derek Baine, senior analyst at SNL Kagan in Monterey, Calif. Typically, both sides agree on contract extensions as they negotiate on terms, he said, and any blackouts don't last long because TV operators get calls from outraged customers.

One prominent carriage fee fight in recent years was in 2004, between Viacom and EchoStar, the former name of Dish Network Corp. Shows were dropped for two days.

In October, Time Warner Cable wrestled with LIN TV Corp., which operates local TV stations affiliated with NBC, CBS, Fox and CW. But this time, Time Warner Cable faces Viacom, the largest cable programmer, not a small independent with a handful of channels.

"It's a must have," Baine said. "That's probably why Viacom is playing hardball."

If Time Warner Cable and Viacom can't reach a deal or an extension, the channel blackout would occur after midnight in each time zone. The affected channels would be: Comedy Central, Logo, Palladia, MTV, MTV 2, MTV Hits, MTV Jams, MTV Tr3s, Nickelodeon, Noggin, Nick 2, Nicktoons, Spike, The N, TV Land, VH1, VH1 Classic, VH1 Soul and CMT: Pure Country.

Viacom shares rose 88 cents, or 4.5 percent, to close at $20.12 on Wednesday, while Time Warner Cable shares fell 31 cents, or 1.4 percent, to $21.45.

[Bar Rat]

From Yahoo:

If Time Warner Cable and Viacom can't reach a deal or an extension, the channel blackout would occur after midnight in each time zone. The affected channels would be: Comedy Central, Logo, Palladia, MTV, MTV 2, MTV Hits, MTV Jams, MTV Tr3s, Nickelodeon, Noggin, Nick 2, Nicktoons, Spike, The N, TV Land, VH1, VH1 Classic, VH1 Soul and CMT: Pure Country.

I'll miss Nick, Spike, and TV Land. Other than that... I really can't say I'll miss any of this.

[cgarison]

If it would drop the price of my cable TV, I wish Comcast would drop Viacom's channels. I would miss spike, but the rest could just blow away without any issues.

[Lester]

No really... I'm at $135 with ONE premium channel and Internet... what am I paying for already?

[Big Media]

No really... I'm at $135 with ONE premium channel and Internet... what am I paying for already?

That's ridiculous. Still, par for the course. My satellite with HD DVR service and Comcast Internet combined is about $100 to $110.

[Lester]

And if, by some miracle, the Viacom issue doesn't iron itself out... can I expect my bill to drop?

[The People's DJ]

Its well past 7 AM on New Years day and all the Viacom stations that is on my local Time Warner are still up and running. So....who blinked?

[David Paleg]

Its well past 7 AM on New Years day and all the Viacom stations that is on my local Time Warner are still up and running. So....who blinked?

From TVGuide.com:

You can disregard Dora's tears if you still see them scattered throughout the Internet. Time Warner Cable Inc. on late Wednesday reached a deal with Viacom Inc. on carriage fees, saving 15.7 million TWC and Bright House Networks subscribers from having to see their MTV, Comedy Central and 17 other channels go dark in the new year.

According to the AP, the handshake agreement on a new contract came after midnight, after the two sides agreed to extend the deadline by an hour. Terms were not immediately disclosed, and a joint statement was expected on Thursday morning.

"We are happy to report that [we]have reached an agreement to ensure that you continue to receive the channels and shows you love," Viacom announced on a website that had been erected to educate consumers on the dispute. "Please disregard any further ads you see that indicate our channels are going off the air. Those ads will come down shortly."

Time Warner had characterized Viacom's request for a 12 percent increase in fees as exorbitant in this economy, and claimed it was a move meant to offset sagging ratings and ad revenue for its programming. Viacom noted that its demanded increase totaled just $2.76 annually per subscriber.

[The Interpreter]

Time Warner and Viacom have reached an agreement:

http://www.timesoftheinternet.com/33518.html

You can expect T-W will use this as a reason to increase rates yet again.

[David Paleg]

Since when do cable companies actually have to have a reason to raise our rates? Never stopped them before.

[Kitesgot]

This dispute is similar to paying ASCAP and BMI royalties.

Neither entity can live without the other. If radio doesn't play the songs, they sell nothing.

If Time-Warner allows 13 million people to go to the wayside, what does that say to the advertisers?
It's almost as if THAT fact is left out of the entire equation.

It ain't HBO.

i've always wondered what their thought process was concerning "payment for carriage' of their programming, vs---ad revenue.

I guess they still don't know for certain either.

[Big Media]

And if, by some miracle, the Viacom issue doesn't iron itself out... can I expect my bill to drop?

wait... wait....


oh..

here it comes again!

[genlock]

This "dispute" and 99.99% of the others are all about promotion.
T-W had no intention of losing these channels and Viacom had no intention of pulling them.
If you had called the cable company to protest the possible loss of the channels,
they would use the opportunity to sell you a bigger package or condition you for
a rate increase. "Disputes" like this also make for an easier go when state or local
regulators look at cable rates. I hate to appear cynical, but it's all a game.

[The Interpreter]

On the 6pm WSAZ newscast, the anchorwoman (she would want me to say her name) just informed us all that Viacom owns Time Warner. It made the entire rest of the story, which seemed to be an AP rip and read, totally senseless. Sloppy, sloppy, sloppy.

[cgarison]

On the 6pm WSAZ newscast, the anchorwoman (she would want me to say her name) just informed us all that Viacom owns Time Warner.