UPDATE 1-Disney plays bully in dispute, says Cablevision

Tue Mar 2, 2010 7:57pm EST

* Cablevision CEO says Disney tactics "bullying"

* Says talks with Disney only began in earnest recently (Adds source says $40 million, said to be sought by ABC, is exaggeration)

By Paul Thomasch

NEW YORK, March 2 (Reuters) - Cablevision Systems Corp (CVC.N) Chief Executive Jim Dolan blasted Walt Disney Co's (DIS.N) "bullying" threat to pull ABC from its cable systems over a contract dispute, calling the move senseless and one that invites questions from U.S. regulators.

In his first public remarks about the intensifying fight, Dolan said, "Fundamental to this issue right now is our subscribers, our customers, should not have to pay for something others are getting for free."

Dolan said discussions between the two sides only began in earnest several weeks ago, disputing Disney's statement that little progress has been made during some two years of talks.

"The idea that they are going to pull their signal .... I don't think that that's good business. I think that it invites scrutiny from the governmental side and, to be honest, I don't really understand it because we're negotiating," Dolan said on Tuesday at a Morgan Stanley conference in San Francisco.

"I would have thought they would have taken a more diplomatic stance," he added.

Dolan's comments come in response Disney's announcement that ABC has begun running on-air messages to Cablevision subscribers warning them they may no longer have access to the network from Sunday, March 7.

Cablevision on Monday said ABC was threatening to remove the network unless Cablevision and its customers pay $40 million in new fees for programming that it offers for free.

A source familiar with the matter on Tuesday said the $40 million was an overstatement by Cablevision, and that negotiations between the two companies were ongoing.

ABC's shows include "Lost," "Grey's Anatomy" and "Desperate Housewives" as well as news programs like "Good Morning America." ABC is also carrying the Academy Awards on Sunday, often one of the most highly rated TV programs of the year.

The Disney-Cablevision dispute follows several other high-profile contract battles between broadcasters and cable providers. Both sides are showing far more concern about fees -- partly due to the bad economy -- and a willingness to take extreme measures to make the point.

At the heart of the issue is a disagreement over how much a broadcast network should be paid by a cable distributor to deliver free-to-air programs to their subscribers.

Fox, owned by News Corp (NWSA.O), and Time Warner Cable Inc (TWC.N), which had similarly disagreed over how much the cable service provider should pay for the right to carry the network, reached a deal on Jan. 1 to avoid a blackout after months of negotiations. [ID:nSGE60001O] (Reporting by Paul Thomasch; Editing by Richard Chang, Gary Hill)

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Comments (1)
nnorman wrote:
To Cablevision and Walt Disney Company

I may not be as eloquent as some, but I have one thing to ask.
What’s up with you guys.

When I was young, we watched TV [for free, really] for only the price of the television along with the price of the electricity used. The programs being paid and endorsed by and with the numerous commercials interrupting our favorite shows.

Today, we have not only pay to watch our favorite shows but still endure those commercials that take up a good part of the programming. And to be quite honest, with all the channels available, most of the time there is still nothing worth watching.

“Disney is warning that it will cut off Cablevision’s ability to show WABC on Saturday night if a payment deal is not reached, leaving millions of cable customers without the channel. The timing is intended to maximize the urgency of the negotiations because ABC will carry the Academy Awards on Sunday night”.

That to me is a threat if I ever heard one.
What you are doing is holding the public viewers hostage. Pay up or the ability to watch a particular channel will be eliminated.

“The so-called retransmission payments are growing more common as television stations seek to supplement advertising with a new, predictable revenue stream”
What? You’re not making enough money from the advertising? Now you want the public to cough up more money to line your pockets even more. Guess your profit margin is not high enough.

First it was: The News Corporation sought a $1 amount for its Fox stations from Time Warner Cable. An agreement was reached on New Year’s Day, averting an interruption for the stations.

Next [in a separate case involving cable fees] the Food Network and HGTV were removed from Cablevision systems for much of January.
This too was eventually resolved, but for how much, is anyone’s guess.

Now, ABC may prove to be equally willing to engage the issue. It was said that Disney was “pretty resolute” about the payments to stations “because they know the value of these stations.”
Again, sounds like a threat. (They know how valuable this is to you so they will hold it hostage [take it off the air] till we cough up some money.

ABC says: We think these shows are valuable. And your bill shows that Cablevision must agree, since you already pay for ABC7 as part of your Broadcast Basic Tier – a service for which, as a Cablevision customer, you pay as much as $18 each month.
What your bill doesn’t show is how much Cablevision pays us for these programs.
The answer: They Pay Nothing. That’s right…Cablevision charges you for ABC7 and then keeps ALL the money.

The way I see it, it’s inevitable that the other local [free] stations would eventually follow suit and demand payment to view their programs and cablevision will continue to keep all the money in their pocket.

So where and when does this stop. When do we put our foot down and say, enough is enough. If they lose the viewers, they must lose the revenue as well. When is something better than nothing. With today’s time, where ever penny we have is accounted for, where are we going to come up with more than what we have.

Mar 02, 2010 9:49pm EST  --  Report as abuse
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