Viacom and Time Warner Cable settle carriage fee dispute

The two warring media moguls, Viacom and Time Warner Cable have reached an agreement on carriage fee yesterday. With the agreement millions of viewers of the 19 cable channels that Viacom had threatened to pull out, including the popular Nickelodeon, MTV, VH-1 and Comedy Central from the Time Warner Cable network, will be able to watch their favorite channels unhindered.

Viacom had warned that these channels would go blank on Time Warner Cable from 1 January 2009 if a new carriage fee deal was not agreed upon by then. (See: Viacom threatens to yank its channels off Time Warner's network over new terms)

Viacom was seeking a fee increase of less than 25 cents per month per subscriber from the second-largest US cable operator, Time Warner Cable, which responded saying that it was not the right time to impose a fee hike on customers in view of the ongoing recession in the US.

Viacom said the increases would cost an extra 23 cents a month per subscriber or $2.76 annually, which would ad another $35.9 million to the estimated $300 million Time Warner pays Viacom annually. It said that Americans spend a fifth of their TV time watching Viacom shows but its fees make up less than 2.5 per cent of the Time Warner cable bill.

The blackout by Viacom, which would have affected 13.3 million subscribers of Time Warner Cable, had viewers of the popular serials like SpongeBob SquarePants and Dora the Explorer and channels like MTV and Nickelodeon, furious at the cable price war between the two media giants.

Viacom had said earlier that ''Time Warner Cable's continued rhetoric and posturing is disappointing and unproductive. We have made it clear that we welcome a credible and meaningful discussion that respects our viewers and the value our programming brings to Time Warner Cable. We remain ready and willing to engage. It's time for serious talk - before the viewers become the victims.''

Both the companies hammered out an agreement after a da-y long meeting after accusations of greed being flung at each other, but both of them agreed to resolve their price war after irate customers jammed the lines of the call centres of Time Warner Cable demanding that their favorite channels be up and running.

Viacom had earlier launched an aggressive media campaign both in print as well as television that targeted kids on the impending blackout of their favorite TV channels.

"We are pleased that our customers will continue to be able to watch the programming they enjoy on MTV Networks," said Glenn Britt, president and CEO of Time Warner Cable. "We are sorry they had to endure a day of public disagreement as we worked through this negotiation."

Philippe Dauman, president and CEO of Viacom said, "We've been partners with Time Warner Cable for a long time, and we're happy to be renewing that partnership for the benefit of their customers and our loyal viewers. It's gratifying that we could reach an agreement that benefits not only our audiences but that is also in the best interest of both of our companies."

Both parties have refused to divulge financial details of the agreement but media reports suggest that Time Warner had caved in and agreed to the increased fee demanded by Viacom.