Viacom threatens to yank programming off Time Warner Cable systems

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Comments

[Gracia]

Does anyone know if this will affect Dish customers because i received a message while watching a show on TV Land and I got this message scrolling during the show.

[laker]

Go ahead, keep pissing off the customer! Don't need the oil, don"t need the loan, don"t need the programming.

Enough is enough.

[Hmmm]

Let me get this straight: Viacom wants to stick the customers with the tab of paying more fees so they can see a bigger bottom line. I think the American people have more things to worry about, for instance, getting/keeping jobs, the economic situation in the country and trying to keep our houses. I'm tired of big companies passing the cost on to us; we don't ever see any relief when the factors driving the costs up (remember the fuel surcharge?) are lowered, so if it's only 25 cents, and menial, then Viacom can absorb it and leave my television channels intact. It's bad enough we've bailed out Wall Street, gotten nickle-and-dimed by the airline industry, bailed out the auto industry, and will fund any bailout that may come our way. I don't think we need to take on anymore debt, especially in a time when we can't afford it. Viacom and Time Warner need to come to an agreement, because if I lose channels, but my bill doesn't decrease, I'm jumping ship. I'm tired of funding big companies!

[Argie]

please don't do this I am one of the time warner customers who watch nickelodeon! This sucks! Please keep nick on! I'm from Queens!

[Craig]

i saw the message scroll across comedy central soon after midnight saying to call timewarner and demand action be taken. however, i did not get the number. does anyone have it?

[will.tanous@wmg.com]

A chapter from the Tanous playbook. Who is actually doing the pulling? And who cares?

Paul

[Stephen Parkinson]

Do these idiots not realize that we are currently in the middle of a recession. People around the country are trying to make the decision between gassing up the car, food on the dinner table, medications or pay the rent.

It's time this madness stopped. It's time that people realized that you have to put in time to earn a "million" dollars. The days of getting rich overnight are coming to an end.

[Will]

The only good channel is Comedy Central that's it, and on top of that everytime I am watching a good show for whatever reason my cable start to act up image freezing etc... only when is big events that millions of ppl watch.

[Boss Hogg]

Time Warner needs to raise their rates thirty dollars to recover a three dollar raise from Viacom? Sure glad I have DreckTV. Much better picture too!

TWC, you suck!

[Al]

Viacom should pay Time Warner for doing its distribution. Any Channel that sells advertising should not charge a monthly fee. Time Warner is right to balk at paying higher fees.

[Jeff Simmermon]

Hi -- I'm actually a spokesman for Time Warner Cable. And while we've been negotiating earnestly and fairly from our side to reach an agreement, we haven't made one or agreed to an extension yet.

This is largely because Viacom is asking for price increases that are nearly triple the rate of increase under our current agreement. They're asking our customers to pay millions of dollars more each year for programming that is not only declining in popularity, but increasingly available for free online. These demands would be laughable in a strong economy, and they're absolutely unacceptable in these tight times.

Jeff Simmermon
Director, Digital Communications
Time Warner Cable

[frank]

Who cares, MTV, VH1, are not music channels anymore, they are reality channels and really don't care if they're taken off the air...Good writtens. Time Warner just hiked our prices for programming that use to be FREE... I hope they crush and burn.

[ChrisYo]

Old Media morons. Just like Les Moonves and everyone else in the old-media world... Constant arguing, can't reach this deal can't reach that deal... Hey guys, have you heard of the internet? All of your "content" is available on it, 24/7/365. Time Warner is also an absolutely horrible cable system (as much as I don't like the corporate devil known as DirecTV, they are leaps and bounds better than Time Warner)...

[ChrisYo]

Old Media morons. Just like Les Moonves and everyone else in the old-media world... Constant arguing, can't reach this deal can't reach that deal... Hey guys, have you heard of the internet? All of your "content" is available on it, 24/7/365. Time Warner is also an absolutely horrible cable system (as much as I don't like the corporate devil known as DirecTV, they are leaps and bounds better than Time Warner)...

[fred]

As if Time Warner Cable didn't suck enough.

[wayne]

IF my family and I lose any channels over this then I will be forced to initiate a petition of people who will be more than happy to switch to Direct TV ! I will post my petetion on line as soon as I lose the first channel. Also, I will encourage as many stock holders to sell as many VIACOM stocks as possible.

[Allen Russell]

HEY! My kids love to watch Nickelodeon, and I like to watch Spike. If Viacom is hard up for cash maybe the execs and management should tighten their belts (take a pay cut or auction some of their lavish things) like the little guy has to do whenever the cable networks raise their rates. If MTV gets pulled that's cool. MTV is a bunch of junk anyway; it's not even music television anymore anyway. So go ahead Viacom pull the channels, I will tell everyone I know to stay away from anything related to Viacom. WTF, FTW DVD! :b

[eddie]

So who is to blame...viacom or twc?my kids really love nick,but shouldwe be mad at twc or viacom whos the one at fault?

[maje']

The only channels i wish we werent loosing was comedy central or Nick, forget the rest, they suck.

[passerby]

Viacom is the one to blame. They have resorted to blackmail and extortion only because they want 3 times more money from Time Warner to cover their failing channels and ratings. Time Warner is trying to protect the customer from extra expense on their bill. If Time Warner gives into Viacom's extortion plan, then the customer will have to pay more. Time Warner is fighting for it's customers.

[erica raye]

This Really SUCKS I have two boys and my Tv Is always on all the channels that are being taken away :( .If this happens I will Stop my Service for cable and just be keeping my Internet. I am very unhappy:( I know these things Happen ,but man if I would've known about this sooner I would've already dropped my service:(

[Mr E. Cetlin]

Time Warner needs to be swallowed up by Comcast anyway :) WE don't have this problem in areas served by Comcast although I do see the message on the channels asking viewers to call TWC and another company. I wonder how many Comcast, Charter, Cox etc. customers are confused by seeing that message on the message on the screen and think THEY will lose tonight?

[Rafa]

what the hell.. nick at night !! nooo.. Verizon FIOS here we come

[Brandi]

Will my account be credited during the blackout?

[Angela Witherspoon]

I don't think it's fare that viacom will be canceiling our channels I myself dont watch all the channels but I do have children who does watch a lot of the channels, Now if this does take place I should be expecting a decrease in my bill.Right!