Viacom, Time Warner Cable trade barbs as contract deadline nears
With a midnight deadline looming, Viacom Inc. and Time Warner Cable Inc. exchanged shots in their high-stakes contract dispute that could leave millions of cable customers searching in vain for "Dora the Explorer," "SpongeBob SquarePants," or Jon Stewart.
"Christmas is over, but Viacom is still playing Scrooge, threatening to pull its MTV Networks off of Time Warner Cable at midnight tonight unless we ask our customers to pay exorbitant price increases," Time Warner Cable Chief Executive Glenn Britt said today in a statement.
Viacom has demanded that Time Warner Cable pay an extra 12% to carry its package of 19 channels including MTV, VH-1, Nickelodeon, Comedy Central, Spike and TV Land. Time Warner has refused, saying the increase amounts to an additional $39 million a year on top of the hundreds of millions of dollars that it already pays Viacom.
"Huge price increases like what Viacom is demanding threaten the ultimate value of cable TV," Britt said.
Barring a last-minute New Year's Eve resolution, Viacom plans to withhold its programming beginning at midnight when the two companies' current contract expires. Viacom has placed newspaper advertisements, with a tearful "Dora the Explorer," and is running TV spots encouraging customers to call Time Warner cable to complain.
Nearly 2 million households in the Los Angeles area would be affected in the programming blackout. Time Warner has 12.3 million subscribers nationwide.
Late Tuesday, Time Warner asked Viacom for an extension that would allow the cable company to continue providing the Viacom channels while the two sides hammer out a new agreement. Viacom refused, saying that it has been willing to negotiate for weeks now, and that Time Warner Cable executives have been unresponsive.
Viacom Chief Executive Philippe Dauman canceled his vacation and was at work poised to begin "meaningful talks" should Time Warner come up with a better offer, a Viacom spokeswoman said.
"We've been attempting to negotiate in good faith but they seem to have taken it to the brink," Dauman said in an interview Tuesday. "Unfortunately, we are now at an impasse."
Television consultant Larry Gerbrandt of Media Valuation Partners in Beverly Hills said both sides had much to lose.
"If they go off the air, no one wins," Gerbrandt said. "Customers will get upset at Time Warner and they could lose subscribers, and Viacom will lose important advertising revenue."
