What would happen to New York if The Daily Show went off the air? Where would hipsters get their daily Moment of Zen? No Spongebob Squarepants either – which means the Upper East side mommies would actually have to talk to their kids. A dispute between Time Warner Cable and Viacom (s VIA.b) over fees is going to impact Time Warner Cable (s TWX) customers in New York, Los Angeles, Dallas and several other cities on January 1. The channels likely to go off the air include Nickelodeon, Comedy Central, VH1 and MTV.
At the crux of the problem: Viacom wants to increase the rights fees to its 19 channels. Time Warner Cable says this is a bad time to be asking consumers to pay more money to watch television. Given the state of the economy, TWC seems to have a point. To this Viacom counters in a press release:
The renewal we are seeking is reasonable and modest relative to the profits TWC enjoys from our networks. We have asked for an increase of less than 25 cents per month, per subscriber, which adds up to less than a penny per day for all 19 of MTV Networks’ channels. We make this request because TWC has so greatly undervalued our channels for so long. Americans spend more than 20% of their TV viewing time watching our networks, yet our fees amount to less than 2.5% of what Time Warner generates from their average customer.
The increase is going to be about $3 a month for the subscribers. TWC says that Viacom is trying to get more money out of its pockets because the advertising market has tanked. “The root of this is that the advertising market has gone soft and Viacom is desperate,” Alexander Dudley, a spokesman for Time Warner Cable, told The New York Times.
Dudley wasn’t shy about spanking Viacom in public. He told The Los Angeles Times:
They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers.
Snap! There have been troubles between content owners and carriage providers recently. Echostar (s DISH) and Viacom got into each other’s faces in 2004. TWC and ABC have tussled over price issues. Except this time around, Viacom has Jon Stewart and Stephen Colbert on its side.
Time Warner Cable says it is going to respond by telling people where to watch these very channels online — using, of course, its broadband pipes.
“We will be telling our customers exactly where they can go to see these programs online,” Mr. Dudley said. “We’ll also be telling them how they can hook up their PCs to a television set.
Viacom Networks’ Full Statement:
The move by Time Warner Cable to force such channels as Nickelodeon, COMEDY CENTRAL and MTV off the air is another example of a cable company overreaching for profit at the expense of its viewers.
The renewal we are seeking is reasonable and modest relative to the profits TWC enjoys from our networks. We have asked for an increase of less than 25 cents per month, per subscriber, which adds up to less than a penny per day for all 19 of MTV Networks’ channels.
We make this request because TWC has so greatly undervalued our channels for so long. Americans spend more than 20% of their TV viewing time watching our networks, yet our fees amount to less than 2.5% of what Time Warner generates from their average customer.
Throughout the country, we have negotiated equitable license agreement renewals, or are in the final stages of renewals, with virtually every cable and satellite carrier. Nevertheless, Time Warner Cable has dismissed our efforts at a fair compromise and has effectively chosen to deny its customers some of the most popular TV shows on the air.
As a result, we are sorry to say that for Time Warner Cable customers our networks will go dark as of 12:01 on January 1st, denying Time Warner customers shows like Dora the Explorer, SpongeBob SquarePants, The Daily Show with Jon Stewart, The Colbert Report, and The Hills.
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. Time Warner Cable subscribers who are being handed a January 1st $3 monthly increase in Raleigh, Orange County, Los Angeles, and New York City are simultaneously facing the removal of beloved shows across 19 channels.
We find it a shame that Time Warner Cable remains unreasonable at this time. We hope its leadership will have a change of heart and will seek to negotiate a fair renewal agreement. “
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