Viacom Poised to Pull Nets From TWC in Fee Fracas

Time Warner Cable subscribers could be ringing in the New Year without MTV, as Viacom prepares to pull its family of 19 cable networks from the operator’s channel lineup in the wake of carriage stalemate.Effective 12:01 a.m. Jan. 1, Time Warner subs across the U.S. will be denied access to the likes of MTV, VH1 and Nickelodeon, should an eleventh-hour affiliate deal fail to materialize.Once the nets are pulled, Viacom will begin running a 30-second on-air announcement alerting Time Warner subs to the blackout. And while all carriage disputes are bi-lateral, the Viacom spot lays the blame for the stalemate at the feet of the MSO.“Time Warner has dropped your favorite channels and shows,” reads an off-screen narrator, in a clip cut to appear like a red-band movie trailer. The ad goes on to inform the audience that no Viacom means “no Nickelodeon, no MTV, no Comedy Central, no VH1, no Spike TV, no Noggin, no TV Land.” After each negation, familiar personalities from the Viacom nets, including Comedy Central’s Stephen Colbert and MTV’s Lauren Conrad, appear to react strongly to news of the blackout.“You lost 19 of your channels,” the narrator concludes. “Call Time Warner Cable now and... demand that they put your favorite channels back on the air.” Manhattan-based viewers are then directed to dial the telephone number of Time Warner Cable’s primary customer service center on 23rd St. National spots will be tagged with a toll-free (1-800) number. On Wednesday morning, Viacom will begin running spots and crawls alerting TWC subs that a black-out may be in the offing.If and when the channels do go dark, viewers can also register their displeasure at the microsite IWantMyChannelsBack.com, which will go live Thursday morning. At present, the URL redirects browsers to Viacom’s corporate home page.Calls to TWC were not returned late Tuesday evening. Meanwhile, the frequently over-utilized customer service line in New York suggested that callers were in for a 60-minute wait before they’d be connected with a TWC customer service rep.A Viacom spokesman said that while only Comedy Central and Nickelodeon were up for renewal, all of the company’s cable networks would be affected by the standoff.In a follow-up statement, Viacom characterized the blackout as “another example of a cable company overreaching for profit at the expense of its viewers.” The document went on to note that while Viacom has “negotiated equitable license agreement renewals, or are in the final stages of renewals, with virtually every cable and satellite carrier...Time Warner Cable has dismissed [its] efforts at a fair compromise and has effectively chosen to deny its customers some of the most popular TV shows on the air.”Talks between both sides are believed to be ongoing, although according to the Viacom rep, the New Year’s Eve holiday may present a unique problem for Viacom employees based in the corporation’s flagship office at 1515 Broadway. Office buildings in Times Square are generally locked down before 2:00 p.m. on Dec. 31, as the NYPD prepares to secure the area that plays host to the nation’s largest New Year’s celebration.Staffers who don’t escape 1515 by curfew run the risk of being stuck inside the building until after the party lets out in the wee hours of Friday morning.Should an eleventh-hour deal not be worked out, the blackout is expected to impact all 13.3 million TWC subs. The cable operator quietly began preparing for such a contingency on Dec. 15, when it issued a legal notice in its Kansas City, Mo., footprint, advising consumers that “agreements with programmers and broadcasters to carry their services and stations routinely expire from time to time,” before warning that the Viacom agreements were set to expire “soon.”Also set to expire as of the 15th were TWC carriage deals with: E! and Style, NBA TV and Weather Channel.Viacom and TWC hashed out their current carriage agreement in December 2006, in a deal that encompassed the MTV Networks and BET, while providing expanded distribution for Logo. As digital rights issues have become progressively thornier, the time-honored practice of securing multiyear carriage seems to have gone out of favor. As is generally the case, pricing lies at the heart of the dispute. Viacom is asking for a sub-fee increase of 25 cents per month, bringing its total package to about $3 a head. In a period of tightening ad sales revenues, cable nets may increasingly agitate for richer affiliate pacts to help balance the shortfall.Viacom’s domestic affiliate revenue grew 13 percent in the third quarter of 2008, driven by both rate increases and subscriber adds. According to Viacom president and CEO Philippe Dauman, affiliate fees “constitute about 30 percent of the company’s media networks revenues and just under 20 percent of total Viacom revenues.” On Nov. 3, Dauman told investors that he would be gunning for higher sub fees, saying that as a rule, the MTV Nets “are not highly priced.” Dauman specifically referenced Comedy Central, which he characterized as offering “rates [that] are very low compared to the [ratings] status that they have achieved today. ... We have a lot of value to bring to the party when we renegotiate our affiliation agreements.”

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Viacom Poised to Pull Nets From TWC in Fee Fracas

Anthony Crupi

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Anthony Crupi