During last month’s earnings call, Disney CEO Bob Iger couldn’t have been clearer about his willingness to shut off access to distributors unwilling to pay retrans fees. “We’re pretty resolute,” Iger told analysts—and by extension, cable and satellite operators. Just three weeks later, Disney (NYSE: DIS) is trying to show that resolution, launching an intense campaign today to warn Cablevision (NYSE: CVC) subscribers that they could lose access to local station WABC-TV, Ch. 7, at 12:01 a.m. Sunday.
In an open letter to subs, Rebecca Campbell, president and GM of WABC, claims the station has been trying to negotiate with the Long Island cable operator for two years: “Despite our best efforts, it has now become clear that Cablevision has no intention of coming to a fair agreement. We can no longer sit back and allow Cablevision to use our shows for free while they continue to charge their customers for them.”
Cablevision quickly fired back, with a sharp statement from top spokesman Charles Schueler:
“It is shocking that in these difficult economic times, ABC Disney is threatening to remove WABC unless Cablevision and its customers pay $40 million in new fees for programming that it offers today for free, both over-the-air and online. It is not fair for ABC Disney to hold Cablevision customers hostage by forcing them to pay what amounts to a new TV tax. We urge ABC Disney not to pull the plug and instead work with us to reach a fair agreement.”
Cablevision already has shown a willingness to let a provider drop off the system during a fee dispute. Its subscribers started the year without Food Network and HGTV after Scripps Interactive (NYSE: SNI) pulled the signals when it couldn’t agree on a fee increase. Cablevision tried the same bad economy-greedy media logic during that dispute; the two finally reached an agreement after Scripps put some of the shows on local TV. At the same time, Scripps left Food and Great American Country up on Time Warner Cable (NYSE: TWC) after that deal expired because the two were in serious negotiations. News Corp (NYSE: NWS) and TWC averted a showdown over Fox by working past the midnight Dec. 31 deadline to make a deal for the Fox television stations, Fox, Fox Cable Networks and Fox’s Regional Sports Networks. (TWC also was negotiating for Bright House Networks.)
When Iger was asked about retrans last month, he said Disney would prefer to avoid a takedown and “we’ll do whatever we possibly can through negotiations to avoid that. But we also believe that we have an obligation to derive value from the great investment that we make in these programs, whether they’re local in nature or whether they’re national in nature. We have every intention of doing just that.”
‘Free’ TV” Unlike Scripps, which wanted an increase for cable networks that had grown in popularity since the last agreement, WABC is asking for a payment to let Cablevision continue to offer its signal as part of the operator’s package. Cablevision’s Schueler and WABC’s Campbell agree that the channel is available free over the air; they disagree over what that means to consumers. One advantage of pay video for some subscribers is the ability to get local channels—and, in many cases, their HD signals, without antennas. Cablevision gets paid for that basic service (and extra for the HD offering when it applies) but WABC, which claims to be the most-watched TV station in New York, doesn’t get paid by the operator.
Cablevision argues that viewers can get the same content online for free. Sort of. ABC’s soaps primetime shows are on ABC.com and Hulu but not in real time—ie a 24-hour delay for the next installment of Lost. The network’s award shows aren’t streamed live. That includes the Oscars, set for next Sunday about 18 hours after that deadline.
WABC is offering instructions on using an antenna. That won’t work in all cases. Switching providers is another option but there’s no guarantee that operator is secure across the board on the retrans front.
