19 cable channels saved in late deal
Viacom threatened to pull ‘Dora the Explorer' and ‘Colbert Report' from Time Warner. But the dispute over fees was ended early this morning.
A last-minute deal announced early this morning will keep “SpongeBob SquarePants,” “The Daily Show” and other favorites on Time Warner Cable in Charlotte.
The company said it has reached a deal with Viacom Inc. on fees, avoiding a blackout of 19 cable channels including MTV, Nickelodeon and Comedy Central.
The two sides, citing disagreement over fee hikes, had threatened a damaging blackout at midnight.
Shortly after the sides agreed to extend a midnight deadline by an hour, Time Warner Cable spokesman Alex Dudley said they agreed on a new contract.
Details of the deal were not immediately available.
Time Warner, which provides cable, phone and Internet services, has about 1.9 million customers in the Carolinas, including about 400,000 in the Charlotte region.
The impasse would have meant Viacom's channels would be cut off to 13 million subscribers, said Alex Dudley, a Time Warner Cable vice president. The nation's second-largest cable operator primarily serves people in the Carolinas, New York, Ohio, Southern California and Texas.
Time Warner chief executive Glenn Britt had earlier called Viacom's demand for a 12 percent increase in fees – an extra $39 million on top of the estimated $300 million it pays Viacom annually – extortion and outrageous given the recession.
“We can't abide their attempt to make up their lost revenue on the backs of Time Warner Cable customers,” Britt said in a statement.
Viacom countered that the requested increase amounted to an extra $2.76 annually per subscriber.
The company 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,” Viacom 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.”
Interviewed Wednesday, local viewers had mixed emotions to the fight. Some people wanted their MTV and other shows, while others didn't want to think about another cable bill hike.
Huntersville resident Pamela Young said it would be horrible if her cable bill rose because of the dispute. “They're always going up,” she said. “It encourages people to look at Dish (Network) type stuff.”
Lisa Fan, 14, and Angel Ly, 16, both of Charlotte, said they'd be sad if shows they watch disappear, but their parents would likely pay the higher rates.
No more Nickelodeon programs would have a big impact on Charlotte resident Tom Watts' family. He said his kids watch shows there all the time.
His daughter, Peyton, 8, said if she couldn't watch “iCarly” on Nickelodeon, she would “most definitely be upset.” Her friend, Ramsay Stroup, also 8 of Charlotte, nodded in agreement.
Without those shows, Ramsay said, “We'd have to watch the news. Boo-hoo.”
On Wednesday, Viacom ran crawls at the bottom of its shows urging people 18 or older to call Time Warner.
For instance, during a SpongeBob episode where SpongeBob and best buddy Patrick were chasing jellyfish, the crawl said, “Alert! Alert! Alert … Starting tonight you will lose Nickelodeon and 18 other channels from your TV … You can stop this!”
Today's Charlotte Observer has a full-page color ad of Nickelodeon character SpongeBob. The ad read in part, “Why is SpongeBob freaking out?” and prematurely said he had been removed from the air.
Time Warner had received dozens of calls from Charlotte area residents Wednesday, spokeswoman Melissa Buscher said.
Part of the disagreement was 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 rates out of its cable and satellite affiliates despite an ad slowdown and weak ratings.