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Feud between Cablevision and Disney escalates

March 2, 2010 |  2:14 pm

The battle between Cablevision Systems Corp. and Walt Disney Co.'s ABC over a deal to carry the network's New York City television station on the cable operator's systems escalated Tuesday.

DOLAN In a statement, Cablevision said it already pays $200 million annually to ABC's parent company Disney to carry its various cable networks, including ESPN, Disney Channel and ABC Family, and doesn't think it's fair that the media giant now wants another $40 million to carry WABC-TV New York. Cablevision has systems serving most of the five boroughs and Long Island as well as parts of Connecticut and about 3.1 million subscribers

An ABC spokesman said the $40-million figure, which translates to about $1 per-subscriber, per-month, is "absolutely not true."

As for Cablevision noting that it already pays Disney $200 million for its other cable channels, the spokesman said: "Cablevision can try to bring in other deals that they negotiated in good faith, but at the end of the day they have no bearing."

If all this sounds familiar, it's because there was a very similar battle late last year between Fox and Time Warner Cable. In that case, the situation was resolved before any television signals were dropped.

ABC has said it would pull the signals on Sunday. If it does, the network's coverage of the Oscars will not be available to Cablevision subscribers.

Cablevision also released a blistering ad suggesting why Disney wants so much money from Cablevision. "Maybe it's because the ABC network is losing millions, or maybe they want our customers to prop up their struggling theme parks or maybe it's to fund the high salaries and bonuses paid to their senior executives," the ad said.

ABC said Monday that it wants a piece of the money that Cablevision charges subscribers to get the bare-bones basic cable package that includes local television signals. That costs subscribers about $18 a month. Every cable operator charges customers to get those signals.

"We can no longer sit back and allow Cablevision to use our shows for free while they continue to charge their customers for them," WABC General Manager Rebecca Campbell said in a statement Monday.

Cablevision countered that ABC gives its programming away for free via over-the-air television and on the Internet. 

Negotiations between the two companies went public late Monday after an agreement couldn't be reached. Cablevision Chief Executive Jim Dolan and Chief Financial Officer Tom Rutledge recently met with Disney CEO Bob Iger and the company's two top television executives, Anne Sweeney and George Bodenheimer.

Although Campbell was not part of those talks, she has become the public face that WABC parent Walt Disney Co. is putting on the feud.

Speaking at an investment conference early Tuesday, Dolan called Disney's threat "purely a bullying move" that could invite government scrutiny.

The issue of cable operators paying to receive broadcast signals has been around for almost 20 years. In the past, cable operators refused to pay for local television signals, so the media companies that owned them created cable networks that cable operators would pay to carry. For example, ABC created ESPN2 and cable operators paid to carry that instead of paying for the local TV stations. News Corp. did the same thing with FX.

While that saved face for the cable industry at the time, it also allowed broadcasters to build strong cable units and gave them more leverage over distributors. Odds are if the cable operators had agreed to just pay for the local signals back in the 1990s, much of what is happening now would've been avoided.

-- Joe Flint

Photo: Cablevision CEO Jim Dolan. Credit: Evan Agostini / Getty Images