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Oscar showdown: Disney yanks ABC station off New York area cable homes

March 6, 2010 |  9:36 pm

Neither side blinked.

Walt Disney Co. pulled the signal of its New York television station WABC-TV from Cablevision System Corp.'s 3.1 million cable TV homes early Sunday morning Eastern time, right in the middle of a rerun of "Lost."

72392420-1 Disney's move means that unless a last-minute accord is reached, Cablevision subscribers could be unable to watch the Oscars Sunday night on WABC. Cablevision's cable systems cover much of New York City and Long Island, although Manhattan is served primarily by Time Warner Cable. 

Cablevision customers can watch ABC over the air, but only if they have new digital antennas or sign up with an alternative distributor such as DirecTV or Verizon. Some ABC shows are available online but not the Oscars, one of television's most popular events.

The two companies are fighting over fees Disney wants Cablevision to pay for the right to retransmit WABC on local cable systems. Feuds between programmers and distributors are commonplace, but it is rare for a signal to be yanked, let alone hours before a ratings monster like the Oscars. Late last year, News Corp.'s Fox and Time Warner Cable engaged in a bitter fight for several weeks but ultimately  struck a deal before Fox's signal was pulled.

Last week, frustrated by a lack of progress in negotiations over retransmission that have gone on for two years, Disney said it was prepared to pull WABC from Cablevision's systems at midnight Saturday. With the Oscars airing Sunday night, Disney and ABC were clearly hoping to pressure Cablevision into a deal. But Cablevision, a family-owned company founded by Chuck Dolan and now run day-to-day by his son Jim, has shown no indication of playing nice.

Cablevision has said that Disney is demanding $40 million annually for carriage of WABC, which would translate to about $1 per subscriber per month. Disney has denied that figure but has not elaborated on what fee it is seeking. Cablevision has noted that it already pays $200 million to Disney to carry its cable networks, including ESPN, Disney Channel and ABC Family.

At the moment, there the two companies are not in negotiation. Top Disney executives went to New York within the last week but no progress with Cablevision was made.

In a statement, ABC said, "Cablevision has once again betrayed its subscribers. . . . This follows two years of negotiations during which we worked diligently, up to the final moments, to reach an agreement."

Cablevision replied that "it is now painfully clear to millions of New York area households that Disney CEO Bob Iger will hold his own ABC viewers hostage in order to extract $40 million in new fees from Cablevision. We call on Bob Iger to immediately return ABC to Cablevision customers while we continue to work to reach a fair agreement.”

Disney countered that deals for ESPN and other cable networks have nothing to do with a deal to carry WABC. Cablevision, Disney said, already charges its customers a fee to receive the signal of WABC as part of its basic cable package and that it simply wants its rightful share of money that the cable company is already receiving.

Both Cablevision and Disney have a lot to lose in this game of corporate chicken.

By pulling WABC from the 3.1 million homes in the nation's biggest television market, Disney could see the ABC network take a hit in the ratings and thereby suffer in advertising sales.

Cablevision, meanwhile, could lose subscribers to rival distribution services.

Disney's Chief Executive Robert Iger is betting that the short-term hit to ratings and advertising will be worth the creation of a new revenue stream for his ABC broadcast network.

If the signal stays off and customers start complaining, it won't be long before politicians and regulators jump into the fray and threaten action. Sen. John Kerry (D-Mass) has urged the Federal Communications Commission to find a way to ensure that consumers don't get caught up in these spats between media companies.

Rep. Joe Barton (R-Texas), a member of the House Energy and Commerce Committee, told the FCC that the regulatory agency should stay out of the matter and allow Disney and Cablevision to duke it out.

This is the second time in the last few months that Cablevision has gotten into a fee fight with a programmer and stopped carrying a channel. Scripps Networks pulled the Food Network and HGTV from Cablevision on Jan. 1. The two sides later struck deal.

Interestingly a lot of other channels got caught up in the feud as a glitch led to many channels to go dark briefly when ABC's signal went off the screen.

-- Joe Flint

Photo: A screen grab of ABC's signal in Cablevision homes. Courtesy of Melissa P. from Long Island via Twitter.