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Viacom-TWC tussle on shifting ground

Mon, 01/05/2009 - 7:45am
Brian Santo

Viacom’s arguments with Time Warner Cable and Bright House Networks have apparently been resolved, but the episode demonstrated that new competition and new technology are changing the game.

Many media companies are struggling with a loss of ad revenue. From a content owner’s standpoint, that makes carriage fees even more important.

Viacom, in an attempt to pressure TWC and Bright House into paying a 12 percent hike in fees, ran a crawl on 19 of its channels for much of last week stating that Bright House and TWC would lose those channels.

Together, the two MSOs have more than 15.5 million subscribers. Part of the problem is that the message was embedded in Viacom’s programming, and therefore broadcast to well over 80 million viewers, including customers not only of other MSOs but also satellite providers. Viacom repeated the threat in newspaper ads, including some periodicals in markets where TWC and Bright House have no operations.

TWC threatened to make it easier for its customers to access Viacom programming from the Web. Viacom threatened to block TWC subscribers from accessing its Web site, according to The Wall Street Journal.

Viacom’s demand for a 12 percent increase in fees would translate into an extra $39 million on top of the estimated $300 million it pays Viacom annually, the AP reported.

Viacom’s average daily license fee was 65 percent lower than that of networks run by The Walt Disney Co., Fox, Turner Broadcasting System and Discovery Communications, according to a Viacom spokesman quoted by the AP.

The threats and counter-threats show a cognizance that technology is changing the game, and that competition for both viewers and ad revenue is getting increasingly difficult.

On the other hand, that the argument was resolved so quickly suggests that the parties are not quite ready to follow through with the threatened measures; the status quo pertains. Most MSOs are not yet ready to formally provide delivery of content through data channels, nor is it cost effective for them to make that option available to millions of subscribers – yet.

And while Viacom tends to be more pugnacious than most, the company’s willingness to play hardball so clumsily demonstrates how tightly programmers are getting squeezed from two directions.

In other retransmission news:

Fisher Communications, which owns several stations in the Northwest, said it has deals with both Charter Communications and Comcast regarding carriage of its programming. Dish Network dropped KATU-TV (Portland, Ore.) and other Fisher stations after the two sides failed to reach a similar agreement.

Charter Communications and Belo Corp. were reported to have reached a tentative agreement for continued carriage of several Belo stations in Texas.

Cox Communications, meanwhile, is said to have come to an accommodation with Raycom, which owns several stations in the South.

More Broadband Briefs:

• Viacom-TWC tussle on shifting ground 

• Cable opposes Ion's bid for must-carry 

• Broadstripe descends into Chapter 11 

• Digital TV subsidy program running out of money 

• Concurrent upgrades server software for advanced ads 

• Intel, Adobe team up to bring Flash to TVs 

• LG high-def TVs to stream Netflix videos directly 

• Verizon, Alltel deal will close Friday 

• Dutch MSO picks Arris' DOCSIS 3.0-certified EMTA 

• Broadband Briefs for 01/05/09 

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