Viacom threatens to yank its channels off Time Warner’s network over new terms
31 Dec 2008
Media giant Viacom Inc. said its Nickelodeon, MTV, Comedy Central and 16 other channels will go blank on Time Warner Cable Inc. from tomorrow if a new carriage fee deal is not agreed upon by then.
In a statement, Viacom said it is seeking a fee increase of less than 25 cents per month per subscriber from the second-largest US cable operator. However, Time Warner hasn't been accommodative.
"Time Warner Cable has dismissed our efforts at a fair compromise," Viacom said in a statement. "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."
Time Warner Cable spokesman Alex Dudley said Viacom was asking for steep fee increases despite the fact that "ratings are sagging" at most of its networks. "It just smacks of desperation from a company that is trying to make up for a failing business model on our subscribers' backs, and we're not going to take it," he said.
The impasse over carriage fee hikes would mean children-favourite "SpongeBob SquarePants" and other popular shows like "The Daily Show" and ''The Hills'' will be cut off to 13 million subscribers.
Viacom has asked for fee increases of between 22 per cent and 36 per cent per channel, an amount that could increase customers' cable bills, Dudley said. Viacom spokeswoman Kelly McAndrew said the requested increase was in the very low double-digit percentage range.
"The issue is that they have asked for an exorbitant increase in their carriage fees and their network ratings are sagging," Dudley said. "Basically we're trying to hold the line for our customer."
Viacom said the increases would cost an extra 23 cents a month per subscriber - which works out to $35.9 million more in total. It 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," it 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.''
With advertising weak, the fees are a crucial source of revenue for cable programmers such as Viacom. The company, which also owns Paramount Pictures, reported a 12 per cent increase in revenue from affiliates to $660 million in the third quarter, accounting for 19 per cent of total sales.
Time Warner Cable is the second-largest American cable provider behind Comcast Corp., with 13.3 million basic video subscribers. It is 84 per cent owned by Time Warner Inc., which is disposing of its take in the pay-television service.
The channels that would be affected are Comedy Central, CMT: Pure Country, Logo, Palladia, MTV, MTV 2, MTV Hits, MTV Jams, MTV Tr3s, Nickelodeon, Noggin, Nick 2, Nicktoons, Spike, The N, TV Land, VH1, VH1 Classic, and VH1 Soul.
