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Disney, Cablevision reach deal on ABC as Oscars begin

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They settle a dispute over a new contract in time for 3.1 million New York-area subscribers to catch most of the awards show.

March 08, 2010|By Joe Flint, Meg James and Matea Gold

Reporting from Los Angeles and New York — A week of brinkmanship ended Sunday when Walt Disney Co. and Cablevision Systems Corp. settled their dispute over a new contract, a breakthrough that allowed viewers in 3.1 million homes in the New York area to watch the Academy Awards -- starting 13 minutes into the telecast.

The post-deadline tentative accord came after the two companies spent a week exchanging barbs that led to Disney stripping its ABC signal from Cablevision's systems early Sunday. Many Cablevision customers spent the day trekking to electronics stores to buy digital rabbit ears so they wouldn't miss the Oscars.

The resolution marked a victory for Disney Chief Executive Bob Iger, who orchestrated the gambit to bring Cablevision to the table and work out an agreement as the clock ticked down to one of television's biggest ratings grabbers.

The standoff underscored the challenges confronting media companies. Faced with rising programming costs and lower profits, broadcasters such as Disney's ABC believe their survival depends on extracting payment for their signals. Cable networks such as Disney's ESPN have always commanded fees from cable operators, but broadcast networks have struggled to get paid for their programming.

Rebecca Campbell, general manager of Disney's WABC-TV in New York, said in a statement that the agreement "recognizes the fair value" for carriage of the station on Cablevision's systems, although "deal points" had yet to be finalized.

Cablevision executive Charles Schueler said the deal was "fair to our customers" and "in line with our other programming agreements."

After Disney pulled its ABC signal, Cablevision subscribers scrambled to buy over-the-air antennas.

Mason Woodford, a sales associate at a Radio Shack in Patchogue on Long Island, said the store's phone had been ringing off the hook all day. "People keep calling and asking, 'Do you have anything that can help me get Channel 7?" he said. His store had just three digital antennas Sunday, and it quickly sold out.

"They're normally not in demand," he said.

Cablevision said earlier that Disney had been demanding an extra $40 million a year to let it carry WABC, or about $1 per customer each month. Disney disputed that figure but declined to elaborate. People close to the talks say Cablevision had made an offer of 25 cents per subscriber.

Terms of the tentative deal were not disclosed, and there were differing accounts of the value of the contract. One person familiar with the deal said it came out to about 55 to 65 cents per subscriber; another said the figure was closer to 27 to 37 cents. Neither person was authorized to discuss the details of the agreement.

Cable companies have been loath to pay more money for content because subscribers are already upset about rising cable bills. Cable operators also face competition from telephone companies such as Verizon Communications Inc. and satellite providers DirecTV and Dish Network Corp., which offer similar services.

Jeffrey Cole, director of USC's Center for the Digital Future, said broadcast networks such as ABC are trying to avoid suffering the dire fate of the newspaper and music industries, which have been ravaged by providing free content on the Internet. After giving away their programming, broadcasters now are demanding payments.

"The networks have boxed themselves into a corner because they previously did not charge for their signals," Cole said. "This game of chicken is going to continue. You had Fox stepping up to the plate a few months ago, and now it is ABC's turn."

Although ABC and Cablevision have been at loggerheads for about two years, it became contentious only recently when ABC issued an ultimatum to Cablevision that it would pull its signal before the Oscars if a deal wasn't reached.

A few weeks ago, senior executives from Cablevision, including CEO Jim Dolan and Chief Operating Officer Tom Rutledge, flew to Los Angeles to meet with Iger and his top television executives, Anne Sweeney and George Bodenheimer.

Almost until the last moment, however, Disney's efforts to meet with Cablevision had been rebuffed, a person close to the situation said. Instead, the two sides communicated primarily by e-mail and fax.

joe.flint@latimes.com

meg.james@latimes.com

matea.gold@latimes.com

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