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Viacom May Pull Channels in TW Dispute

By Ryan Nakashima
Associated Press, Dec 31 2008, 5:50 AM ET

LOS ANGELES (AP) — "SpongeBob SquarePants" may be getting squeezed off of Time Warner Cable.

Media giant Viacom Inc. said its Nickelodeon, MTV, Comedy Central and 16 other channels will go dark on Time Warner Cable Inc. at 12:01 a.m. Thursday if a new carriage fee deal is not agreed upon by then.

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The impasse over carriage fee hikes would mean "SpongeBob" and other shows like "The Daily Show" will be cut off to 13 million subscribers, said spokesman Alex Dudley, a vice president at Time Warner Cable, the nation's second-largest cable operator.

Viacom has asked for fee increases of between 22 percent and 36 percent per channel, an amount that could increase customers' cable bills, Dudley said. Viacom spokeswoman Kelly McAndrew said the requested increase was in the very low double-digit percentage range.

"The issue is that they have asked for an exorbitant increase in their carriage fees and their network ratings are sagging," he said. "Basically we're trying to hold the line for our customer."

Viacom said the increases would cost an extra 23 cents a month per subscriber - which works out to $35.9 million more in total. It said that Americans spend a fifth of their TV time watching Viacom shows but its fees make up less than 2.5 percent of the Time Warner cable bill.

"We make this request because Time Warner Cable has so greatly undervalued our channels for so long," it said.

"Ultimately, however, if Nickelodeon, Comedy Central, MTV and the rest of our programming is discontinued - over less than a penny per day - we believe viewers will see this behavior by their cable company as outrageous," it said.

Tense negotiations are continuing at the highest level, Dudley said.

Viacom accused Time Warner Cable of not negotiating.

"It is our sincere hope that they will come to the table and negotiate a deal," said McAndrew. The network operator also intends to tell viewers about the dispute in TV ads in 11 major markets.

Part of the disagreement is that most of the popular shows are rerun on Web sites where Viacom collects advertising revenue that it does not share with Time Warner, Dudley said.

"We don't think that's fair," he said. "They're trying to have their cake and eat it too online, where anybody can get it for free."

Viacom has staked much of its revenue-growth prospects on its ability to extract higher carriage rates out of its cable and satellite affiliates despite an ad slowdown and weak ratings.

In the third quarter, media network revenue, which accounts for about two-thirds of the total, grew 6 percent to $2.1 billion, despite global ad revenue falling 2 percent, largely because of double-digit percentage growth in affiliate fees and the success of its "Rock Band" video game.

Viacom shares rose 69 cents, or 3.7 percent, to close at $19.26 on Tuesday, while Time Warner Cable shares added $1.56, or 7.7 percent, to $21.76.

The channels that would be affected are: Comedy Central, CMT: Pure Country, Logo, Palladia, MTV, MTV 2, MTV Hits, MTV Jams, MTV Tr3s, Nickelodeon, Noggin, Nick 2, Nicktoons, Spike, The N, TV Land, VH1, VH1 Classic, and VH1 Soul.

Comments (3) - Post a comment

Amy Brown posted 188 days, 22 hours, 57 minutes ago
Leave it to the media giant Viacom to screw the American people! No television viewer wants their cable rates to increase... especially NOW! I say let them go dark! A life without SpongeBob and Jon Stewart just might make it... "A wonderful life".
Category5 Nicknameposted 188 days, 22 hours, 43 minutes ago
Viacom's position that Americans spend 20% of their time watching Viacom programs and there fore is entitles to more money is the most distressing. It would seem that despite Viacom's assurances to the DOJ that its acquisitions of CBS, Kingworld, Paramount TV and MTV Networks would not create an anti-trust issue, they seem fully committed to leveraging their size in order to hold distributors and consumers hostage. I am not particularly interested in paying more for cable so that Sumner can manage his debt obligations to JP Morgan.
Andrew Boggs posted 188 days, 21 hours, 39 minutes ago
Its amazing how both of these entities are shooting themselves in the foot. Either can ill afford to lose audience. For Viacom to demand more money for carriage rights in a major recession is unthinkable and downright dangerous to Viacom itself. Reduced exposure means reduced audience and reduced revenue, and how long can the company survive with such a great fiscal loss. Meanwhile Time-Warner Cable (TWC) is dependent on offering more viewer choices, lose that and people will simply decide that cable in a down economy is a luxury they can do without Somewhere along the line both entities seem to have forgotten that as digital television becomes a reality and analog is laid to rest, an over-the-air television broadcasting channel will be able to broadcast a couple digital channels within its carrier - and they will be looking to find ways to fill up or lease that extra space. You can bet Viacom, parent owner of CBS will be looking into offering programming to those stations. For Time-Warner, it will not be a good thing - people have more choices now than ever before - satellite, internet, over-the-air HDTV, narrowcasting on cell phones and other avenues unfolding in the years ahead. The moment all these program sources leave cable, the more it becomes a ghost town as viewers flock to more reasonable costing programming sources. Right now, as the recession deepens, free over-the-air programming in high definition is looking better and better! - Andrew, MALL727.net -
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