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Time Warner Cable says 'Disney is the problem' [Updated]

With less than a week to go before their programming contract expires, the rhetoric between Walt Disney Co. and Time Warner Cable is starting to heat up.

At issue are fees that Time Warner, the nation's second-largest cable operator and the dominant pay-TV company in Los Angeles, pays Disney to carry its various networks and channels, including KABC-TV here as well as ESPN, ABC Family and Disney Channel.

Battles between programmers and distributors are becoming quite common, and usually agreements are reached without consumers losing any channels. Fox and Time Warner had a heated fight that was resolved without any signals being pulled, even though a new deal wasn't struck until after the old contract had expired.

However, Disney hasn't been afraid to see its channels go away. Earlier this year, its channels were pulled from Cablevision Systems Corp. in a fee dispute that left viewers without the first half-hour of the network's telecast of the Oscars until a new pact was finalized. Satellite broadcaster Dish Network also stopped carrying some Disney channels earlier this summer.

[Updated at 3:30 p.m.: Disney countered that Dish was not authorized to carry the dropped channels in the first place and pointed to a favorable ruling it received in a legal battle against the satellite broadcaster. Disney also said it had been extending its deal with Cablevision for two years before finally pulling its signal.]

That Disney doesn't mind playing hardball isn't lost on Time Warner.

"If they’ve done it with those two and they’re threatening to do it to us, there’s a definite pattern emerging," executive Jeff Simmermon said in a blog post on the Time Warner website. Disney has been running advertisements alerting consumers of the potential loss of its channels and offering a website that will detail what alternative providers are available.

"Switching providers isn’t going to get rid of a problem with Disney when Disney is the problem," Simmermon wrote.

An ABC spokesman said Disney "remains committed to negotiating a fair agreement that recognizes the value of our channels."

In a report issued Friday, Janney Montgomery Scott analyst Tony Wible said he thinks Disney can get between 40 cents and 60 cents per subscriber for its local ABC television stations.

In the past, broadcasters such as Disney's ABC leveraged carriage of their local TV stations to launch new cable networks: Cable operators didn't want to pay to carry local television stations because said stations are available to consumers for free already. Instead, cable and satellite distributors agreed to carry new cable networks and pay for those so they could say that they technically weren't paying for a broadcast station. That's how Disney launched ESPN2 and Fox launched FX.

Now, though, no one is really clamoring for new cable channels, and broadcasters are desperate for a second revenue stream. Cable operators already charge consumers a fee to get local signals, so broadcasters figure they should be compensated. 

Disney already owns some of the most expensive cable networks around including ESPN, which costs distributors more than $4 per subscriber, according to Wible. The Disney Channel costs almost $1 per subscriber, and ESPN2 costs almost 60 cents per subscriber.

While it's likely that neither side wants to see the channels come off, it might help if both could agree on when exactly the deal expires. Time Warner Cable indicated to Company Town that the agreement ends at 11:59 p.m. on Sept. 1, and Disney said it is up at 12:01 a.m. on Sept. 2. How about making it easier on all us reporters stuck covering this and having the next agreement expire in the middle of the afternoon?

-- Joe Flint

Comments () | Archives (12)

So if the contract goes up? How do I get out of my Time Warner contract? I'd much rather use high speed internet for most shows and pay for a subscription to ESPN3.... So tired of a ridicously high tv bill 70+ per month for nothing special just DVR.

I have difficulty mustering sympathy for Time Warner Cable in this situation. Their advertisements basically state that if TWC gives in to Disney, then it will result in rate increases to already overburdened customers held hostage by the conversion of broadcast television to digital cable. Why can't TWC absorb the cost and its executives skip a pay raise or bonus this year, instead of maintaining its status quo?

I can do without ABC/Disney channels. Their programs are of little interest to me. I do not want to add monies to their coffers so they can pay outrageous amounts to their upper management people and have unpleasant programming.
ABC/Disney is exhibiting corporate greed in a slow economy.
I enjoy my TW cable programs -- at least they are inventive and entertaining.

As the most expensive channels, I wish the ESPN channels would be in an add-on bundle for people who want them, so the rest of us who aren't sports fanatics could have $5/month ($60/year) lower bills.

Disney has little leverage when it is always the first to offer its programming on alternate platforms. That is good to the viewer, yet not so much for their business.

KD, Before you think ESPN3 will get you the same programming you see on ESPN, think again. You won't see MNF, Sports Center, or most of the shows you watch on cable or satellite. What you will see are the same commercials run two or three times a break at ear piercing decibles. And, ESPN3 comes free with a premiere DSL plan. No wonder.

It's always the same old story with Time Warner Cable. Glenn Britt is too cheap to negotiate. That's why we don't have the NFL Network and why we lost HDNet and HDNet Movies. The NFL wanted to charge TWC $0.02 per viewer per game. With an eight game schedule, that would amount to the exorbitant sum of $0.16 per viewer. Britt refused. The NFL then offered to have the matter arbitrated. Again, Britt refused.
This "Roll Over Or Get Tough" scam that TWC is running is a farce. Both times they've run it, I've voted and left comments in the 'Discussion' area. The only comments they publish are the three or four favorable "Get Tough" comments. The results of the voting are never published. They simply announce that viewers voted "Get Tough".
Here in Texas, TWC is virtually un-regulated. They appealed the decision to appoint the Texas Public Utilities Commission which left the PUCT powerless to do anything other than direct complaints to TWC in the form of inquiries, to which TWC is under no obligation to respond.
Time Warner Cable is a monopoly in this area and they conduct business as such... with total disregard for their customers.
I could go on and on. I've had TWC for over six years (I'm unable to put up a satellite dish or I'd have done so years ago), and I've had nothing but problems. It's time the FCC ordered an arbitration process to resolve these endless disputes between content providers and cable providers. I know for a fact (I have the email) that Senator Kay Bailey Hutchison has written to the FCC suggesting just that.

In Cincinnati Time Warner is the only cable company. I run a moving company and I tell all our customers to keep their receipts from both the installations and if they move and give their cable boxes back.

Time Warner is notorious for over charging, double charging and more. We have had customers return their cables boxes and 2 months later get a $400+ bill because Time Warner lost it. Been unloading our moving truck while a Time Warner guy installed one box and then charged the customer for two because thats what his service ticket said.

I have no sympathy for Time Warner and don't believe a word they say.

KABC-TV here as well as ESPN, ABC Family and Disney Channel are just garbage channels They should be bundled together as a separate package along with the golf and religious crap channels half of the channels offered are redundant garbage any way. Tell Disney to stick it it is insanity to ask for over $4/channel

I've lived in the same building for 15+ years and Time Warner is the 3rd company to hold the cable contract for my area (Windsor Square/Koreatown). Originally, it was Continental, then they were bought by Comcast, then Comcast sold out to TW. Time Warner is by far the worst of the 3, with seemingly random service outages, for both cable tv and high-speed internet. The cable monopolies should never have been allowed to happen. Here's hoping the government doesn't make the same bad decision in terms of the internet - support net neutrality!

I don't watch ESPN, should my provider be paying a per subscriber charge?

I think the solution is to have the subscriber choose their channel lineup and pay the subscriber charge only for the channels they want to watch.
Suppose the pricing model was

Base Fee + exact fee charged to provider per subscriber for the channel line up I want.

I recently decided that cable TV reception is not worth the cost anyway.
However, if I could just pay the per-subscriber fee for only the channels I really want, plus some base cost, It might become worth the cost.

Even if it was just a credit for opt-out (exactly equal to what the provider is charged per subscriber for the station) for the channels I do not watch, it could bring the price down enough to get me to subscribe again.

In July, my Time Warner cable bill in San Diego jumped from $68 per month to $94 per month. There was no change in service, just a huge rate increase. The same day I received the rate increase, I also received a mailer from DirectTV to provide more channels in HD than TW offers, plus a DVR (which I don't have from TW) all for $40. When I called TW to cancel, telling them I was switching to satellite, suddenly my bill dropped back to $68 per month (including Internet). TW is by far the worst cable company I have ever dealt with. I have made it clear to them that if they drop ABC/ESPN/Disney, I will drop them as well.


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