ABC to Cablevision: No Payment for Us, No Oscars for You

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ABC, the network TV unit of Disney (DIS), pulled its WABC signal off of Cablevision (CVC), the cable company that supplies much of the New York City area, at midnight on Saturday. Unless they have old-style antennas (and for those with older TVs, digital converter boxes), the Academy Awards won't be viewable by Cablevision's 3.1 million customers in the Tri-State area.

Disney has argued in public for several weeks that Cablevision charges customers up to $18 a month for its basic broadcast package, and Disney wants its share of those subscriber fees: Currently, Cablevision pays nothing to retransmit broadcast channels to its customers. The cable company says Disney is demanding $40 million a year, or a bit more than $1 per subscriber per month, to air ABC. According to Cablevision, Disney already gets $200 million a year for the rights to offer its cable stations. Disney has disputed both those numbers.

The incident is similar to one between Time Warner Cable (TWC) and the Fox Network on New Year's Day. Fox's parent News Corp. (NWS) wanted to be paid $1 a month per subscriber from Time Warner. The details of settlement between the two companies were not made public, but the per-subscriber fee that Fox eventually received was estimated to be 50 cents a month, rising to 75 cents over the course of a four-year agreement. At the time that the deal was struck, BusinessWeek estimated that over-the-air broadcasters might demand a total of $5 billion a year from the nation's cable companies.

No one should be surprised by these disputes. The TV networks are losing audience, and with it, ad revenue. More people are getting their news from the Internet and cable channels. ABC recently made large cuts to its news staff, and more cuts at the major networks are inevitable.

But the networks still control a large fraction of the content that is broadly popular with viewers.The Academy Awards are only one example. Local TV news is another. All of the over-the-air-networks maintain full prime-time schedules of popular shows.

To a large degree, it appears that Fox won its dispute with Time Warner Cable, and got most of what it wanted financially. Disney may not be so fortunate. Cablevision could be willing to gamble that people won't cancel their subscriptions over the loss of ABC when they have hundreds of other channels to watch. And the Oscars are only one one night.
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