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Disney, Time Warner Cable strike new deal

September 2, 2010 |  4:22 pm

After several weeks of tense negotiations, Walt Disney Co. struck a new deal to keep its broadcast and cable channels on Time Warner Cable, one of the nation's largest pay-TV distributors with more than 14 million subscribers nationwide with markets including New York City and Los Angeles.

At issue were fees that Disney collects from Time Warner for access to its various outlets including its ABC stations, ESPN, ABC Family and Disney Channel. The contract expired at 12:01 a.m. Thursday, but a deal was announced by midafternoon without viewers losing any programming.

In a statement,Time Warner Cable Chairman Glenn Britt hailed the deal, saying "we're pleased to have reached an agreement without any interruption of service."

Disney Media Networks co-chairmen George Bodenheimer and Anne Sweeney similarly applauded the new contract, saying it "demonstrates our commitment to our distribution partners and our ability to work with them."

Unlike previous spats between distributors and programmers where the rhetoric quickly became heated, talks between Time Warner Cable and Disney remained amicable. Both sides had ran advertisements alerting consumers of the situation and stating their positions, but neither side used particularly nasty attack ads the way Fox and Time Warner did during a similar dispute late last year.

Disney was seeking payments for its local television stations including WABC-TV New York and KABC-TV Los Angeles, as well as increases for some of its cable networks, including Disney Channel and ABC Family. The entertainment giant is believed to have received as much as 50 cents a subscriber per month for its local stations -- an important win for Disney, which is looking for new sources of revenue to support its broadcast-television programming.

Disney also got increases for some of its other cable properties ABC Family and Disney Channel.

Disney owns some of the most expensive cable channels including ESPN, which distributors pay in the neighborhood of $4.50 a subscriber per month to carry, according to researcher SNL Kagan.

In the past, cable and satellite companies have resisted paying programmers to carry broadcast channels because such channels are available for free to people who don't subscribe to a pay-TV service. Instead, distributors have agreed to carry new cable channels and pay for those. For example, ESPN2 was launched in part because ABC could not persuade cable operators such as Time Warner to pay for its broadcast stations.

Now, though, most cable and satellite operators feel there is an overflow of networks, and broadcasters are desperate to create new revenue streams. News Corp.'s Fox and CBS both have indicated they had success negotiating cash payments from cable operators for their broadcast stations.

Time Warner Cable also agreed to carry Disney Junior, a new 24-hour channel for preschool-age children, which debuts in 2012 in the slot held currently by SoapNet, a channel consisting primarily of reruns of soap operas.

ESPN3.com, a live sports network delivered via high-speed Internet access, will also be provided to Time Warner Cable subscribers who pay to receive ESPN. Disney attempted, unsuccessfully, to get the cable company to pay a separate fee for ESPN3 based on the number of its broadband subscribers regardless of whether they visited the site. That was a key deal point for Time Warner Cable.

ESPN and sister channels, ESPN2 and ESPNU, will also be available to Time Warner Cable subscribers online and through Internet-connected mobile devices such as Apple's iPad, through a new authenticated service that verifies the viewer is a Time Warner Cable customer.

As part of the deal, Time Warner Cable will also carry ESPN Goal Line, a new specialty channel that, like the NFL Network's Red Zone channel, will show the big highlights of college football games. A similar channel called ESPN Buzzer Beater, which would cover college basketball, is in the works.

Subscribers will also get on-demand access to ABC, Disney Channel  and Disney XD shows such as "Grey's Anatomy," "Desperate Housewives," "Handy Manny," "Suite Life on Deck" and "Phineas and Ferb."

-- Joe Flint and Dawn C. Chmielewski

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