January 1, 2009:
LOS ANGELES (AP) - There's no need to cry, Dora.
The programmer Viacom and Time Warner Cable agreed on compensation that preserved access for the cable system operator's 15.7 million subscribers to Dora's Nickelodeon network, MTV and 17 other channels.
The two sides, citing disagreement over fee hikes, had threatened a damaging blackout at a minute past midnight Thursday that would have cut off shows such as "Dora the Explorer," "SpongeBob SquarePants" and "The Colbert Report" for Time Warner Cable customers.
Terms of the deal were not disclosed. Details must still be finalized over the next few days, the companies said.
"We are pleased that our customers will continue to be able to watch the programming they enjoy on MTV Networks," said Glenn Britt, president and CEO of Time Warner Cable Inc. "We are sorry they had to endure a day of public disagreement as we worked through this negotiation."
Viacom Inc. president and CEO Philippe Dauman said the company was happy a deal was struck. Viacom had mounted an advertising onslaught warning customers of the possible blackout, taking out ads in major newspapers and Web sites from The New York Times and TVGuide.com featuring a tearful "Dora the Explorer" crying and clinging to her monkey pal, Boots.
"Why is Dora crying?" the ad read. "Tonight you will lose Nickelodeon and 18 other channels from your TV." It then prompted people to call their cable company to complain.
Time Warner's Britt on Wednesday had 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.
Spokeswoman Kelly McAndrew said that despite ranking high in the ratings, Viacom's cable networks' average daily license fee was 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."
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.
The latest dispute would have affected some 13.3 million Time Warner Cable subscribers, mainly in New York state, the Carolinas, Ohio, Southern California and Texas; and 2.4 million customers of Bright House Networks in Michigan, Indiana, California, Alabama and Florida.
The channels in the dispute were 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.
December 31, 2008:<br/>15 cable channels could go dark: The Real Deal
Syracuse, New York (WSYR-TV) - If you're a Time Warner Cable customer, you could lose more than a dozen channels as you ring in the new year Wednesday night.
Media giant Viacom says it's pulling their networks off the air if Time Warner doesn't agree to pay millions of dollars more for them in a new contract.
Some of the more popular channels that could go dark after midnight include Spike TV, VH1, Nickelodeon, Comedy Central, and MTV.
The dispute is leaving millions of cable customers caught in the middle.
Viacom says Time Warner Cable has "greatly undervalued their channels for a long time," so they're asking for a 25-cent-per-month, per-subscriber price increase. If they don't get it by midnight, the stations get pulled.
Time Warner says Viacom's network ratings are sagging, and much of the programming they offer can now be downloaded online for free.
“Why should cable customers be forced to pay for the fact that ad revenues are declining for these networks, viewership is flat – clearly, they're just not the value attached to the channels that MTV thinks there is,” says Time Warner Cable spokesman Jeff Unaitis.
Viacom has been scrolling a message on all their networks today, urging viewers to call Time Warner and tell them to keep their stations.
“It really comes down to, ‘Is it worth it?,’" Unaitis says. “If you're a parent of kids who love SpongeBob [Squarepants], the answer is a resounding yes; if you seldom watch MTV or Comedy Central, it's a no, so we're constantly trying to walk the line, do what's fair for our customers.”
If the two sides can't reach an agreement, 15 networks – five basic cable channels and 10 in the digital tier -- will go black for cable customers at 12:01am Thursday.
The two sides both say an extension on their negotiations isn't likely.
If the networks are pulled, you will see a credit on your Time Warner bill for every day they're not on the air. At this point, it's not clear how much that credit will be for; it will depend on how long they’re off the air. Time Warner says they're already looking at possible replacement programming for those channels, but nothing has been set up so far.
Time Warner says most of the complaints they've received have been from parents upset about the possibility of losing Nickelodeon; the best advice is to record many of your favorite shows right now, so you can watch them later while Time Warner and Viacom continue to negotiate a deal.
Statement from Viacom
The renewal we are seeking is reasonable and modest relative to the profits TWC enjoys from our networks. We have asked for an increase of less than
We make this request because TWC has so greatly undervalued our channels for so long. Americans spend more than 20% of their TV viewing time watching our networks, yet our fees amount to less than 2.5% of what Time Warner generates from their average customer.
Throughout the country, we have negotiated equitable license agreement renewals, or are in the final stages of renewals, with virtually every cable and satellite carrier. Nevertheless, Time Warner Cable has dismissed our efforts at a fair compromise and has effectively chosen to deny its customers some of the most popular TV shows on the air.
As a result, we are sorry to say that for Time Warner Cable customers our networks will go dark as of 12:01 on
Ultimately, however, if Nickelodeon, COMEDY CENTRAL, MTV and the rest of our programming is discontinued -- over less than a penny per day -- we believe viewers will see this behavior by their cable company as outrageous. Time
We find it a shame that Time Warner Cable remains unreasonable at this time. We hope its leadership will have a change of heart and will seek to negotiate a fair renewal agreement.
Statement from Time Warner
Statement from Glenn Britt, President & CEO, Time Warner Cable
Re: Viacom’s threats to pull MTV Networks from Time Warner Cable customers
December 31, 2008
Christmas is over, but Viacom is still playing Scrooge, threatening to pull its MTV Networks off of Time Warner Cable at midnight tonight unless we ask our customers to pay exorbitant price increases.
Viacom claims their demands equate to “pennies,” but that is misleading and insulting to our customers, from whom Viacom is trying to extort another $39 million annually – on top of the hundreds of millions of dollars our customers already pay to Viacom each year. That doesn’t sound like pennies to us.
Demanding that our customers pay so much more for these few networks would be unreasonable in any economy, but it is particularly outrageous given the current economic conditions.
We sympathize with the fact that Viacom’s advertising business is suffering and that their networks’ ratings have largely been declining. However, we can’t abide their attempt to make up their lost revenue on the backs of Time Warner Cable customers. We’ve negotiated in good faith and made several concessions to help reach a fair and reasonable deal.
We’ve asked for an extension of the current contract while we continue to negotiate. But Viacom doesn’t appear to be interested in what’s fair and reasonable for American consumers – they’re only interested in propping up their sagging bottom line, and they are poised to pull their networks from Time Warner Cable customers tonight.
Huge price increases like what Viacom is demanding threaten the ultimate value of cable TV. Time Warner Cable is a retail distributor of products we purchase wholesale. Wholesale programming costs are rising dramatically every year, and, like all multichannel distributors, we have to pass on at least a portion of the increases to our customers. Viacom’s MTV Networks are just a few of the hundreds of channels we carry. If every channel demanded huge, double-digit increases like what Viacom is trying to force our customers to pay, it would be impossible to keep the price of cable reasonable for our customers.
Time Warner Cable has reached hundreds of distribution agreements with other networks. In fact, we currently have deals with every other cable programmer. The negotiations aren’t always easy, but we work hard to reach agreements that are fair to our customers and to both businesses.
We hope Viacom won’t pull the MTV Networks from Time Warner Cable customers, and we’ll negotiate up to the last possible minute and beyond. But ultimately, it is Viacom’s decision. We implore them to join with us to reach a fair resolution or grant an extension, and we hope they won’t carry through with their threat to take their networks away from our customers tonight.
AP: Cable TV dispute could mean Nickelodeon, others go dark
Media giant Viacom Inc. said its Nickelodeon, MTV, Comedy Central and 16 other channels will go dark for 13 million subscribers at 12:01 a.m. Thursday if a new carriage fee deal with Time Warner Cable Inc. is not agreed upon by then.
The impasse would mean "SpongeBob" and other popular shows like Jon Stewart's "The Daily Show" and Stephen Colbert's "The Colbert Report" will be cut off on the nation's second-largest cable operator. Time Warner Cable primarily serves people in New York state, the Carolinas, Ohio, Southern California and Texas.
Viacom has asked for fee increases of between 22 percent and 36 percent per channel, or a total of $39 million more, an amount that could increase customers' cable bills, said Time Warner Cable spokesman Alex Dudley.
"The issue is that they have asked for an exorbitant increase in their carriage fees and their network ratings are sagging," Dudley said. "Basically we're trying to hold the line for our customer."
Viacom spokeswoman Kelly McAndrew disputed the figure, saying Viacom requested an increase in the very low double-digit percentage range.
Viacom said the increases would cost an extra 23 cents a month per subscriber. It said that 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.
"We make this request because Time Warner Cable has so greatly undervalued our channels for so long," Viacom said.
"Ultimately, however, if Nickelodeon, Comedy Central, MTV and the rest of our programming is discontinued - over less than a penny per day - we believe viewers will see this behavior by their cable company as outrageous," Viacom said.
Time Warner Cable's Dudley said Viacom rejected his company's proposal to extend the contract while the sides continue to negotiate.
Instead, Viacom appealed directly to Time Warner Cable's customers, with TV ads in major markets. In Wednesday's New York Times, the company ran a full-page, color advertisement with 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 urges viewers to call Time Warner Cable and demand that their favorite shows remain on the air.
If the shows go dark after midnight, Time Warner Cable will send people to the Internet to catch episodes. Dudley said the cable operator also will make available a video teaching people how to hook their computers up to the TV to watch online shows - a tactic it used during a contract dispute with broadcaster LIN TV in October.
Part of the disagreement is that most of Viacom's popular shows are rerun on Web sites where Viacom collects advertising revenue that it does not share with Time Warner, Dudley said. "We don't think that's fair," he said.
Viacom has staked much of its revenue-growth prospects on its ability to extract higher carriage rates out of its cable and satellite affiliates despite an ad slowdown and weak ratings.
In the third quarter, media network revenue, which accounts for about two-thirds of Viacom's total, grew 6 percent to $2.1 billion, despite global ad revenue falling 2 percent, largely because of double-digit percentage growth in affiliate fees and the success of its "Rock Band" video game.
Viacom shares rose 45 cents, 2.3 percent, to $19.71 in late morning trading Wednesday. Time Warner Cable shares lost 39 cents, 1.8 percent, to $21.37.