Satellite leader DirecTV is threatening to knock the ABC Family channel from its lineup as the battle between TV distributors and program suppliers escalates.
The El Segundo-based company is the latest major TV distributor to refuse to pay the hefty rate increase for ABC Family demanded by the channel's owner, Walt Disney Co. According to top industry executives, the channel's modest popularity doesn't warrant the 35% hike, given its rather tiny group of loyal viewers.
In fact, DirecTV said that after it began running a message "crawl" Thursday alerting viewers that a contract dispute could force it to scrap the channel, only five of its 12 million subscribers nationwide called to complain.
"Dropping a channel is not something we do often or do lightly," said Michael Thornton, senior vice president of programming acquisition at DirecTV. "It's a last resort. But our big issue as a company and as an industry is controlling the steep rise in programming costs. We can't saddle our subscribers with these cost increases."
Disney said an increase in ABC Family's ratings since Disney bought the channel in late 2000 justified the higher rate.
"We are surprised and disappointed that DirecTV has chosen to threaten their viewers with the loss of ABC Family," said Eric Hollreiser, a spokesman for Disney's ABC Cable Networks Group.
Disney sources accused DirecTV of issuing the threat to apply pressure ahead of a contract negotiating session scheduled for next week. DirecTV said it simply wanted to give subscribers fair warning of what might happen. The disagreement could be resolved before the contract expires at the end of the month, preventing any disruption in service.
The conflict is the most recent of several between pay TV distributors and their program suppliers that is increasingly disrupting viewers' habits.
Time Warner Cable subscribers in Florida and Minnesota, for example, have been unable to watch hometown teams' games on Fox Sports Network channels since the beginning of the year. Fox pulled that programming after Time Warner refused to pay rate increases ranging from 60% to 100%.
Cable and satellite distributors have drawn a line in the sand this year in an attempt to rein in runaway programming costs that are eroding their profit margins -- and forcing them to raise prices far faster than the pace of inflation.
