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  12-31-2008, 12:31 PM
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LOS ANGELES "SpongeBob SquarePants" might get squeezed off Time Warner Cable.

Media giant Viacom Inc. said its Nickelodeon, MTV, Comedy Central and 16 other channels will go dark for 13 million subscribers at 12:01 a.m. Thursday if a new carriage fee deal with Time Warner Cable Inc. is not agreed upon by then.

The impasse would mean "SpongeBob" and other popular shows like Jon Stewart's "The Daily Show" and Stephen Colbert's "The Colbert Report" will be cut off on the nation's second-largest cable operator. Time Warner Cable primarily serves people in New York state, the Carolinas, Ohio, Southern California and Texas.

Viacom has asked for fee increases of between 22 percent and 36 percent per channel, or a total of $39 million more, an amount that could increase customers' cable bills, said Time Warner Cable spokesman Alex Dudley.

"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 spokeswoman Kelly McAndrew disputed the figure, saying Viacom requested an increase in the very low double-digit percentage range.

Viacom said the increases would cost an extra 23 cents a month per subscriber. 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," Viacom 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," Viacom said.

Time Warner Cable's Dudley said Viacom rejected his company's proposal to extend the contract while the sides continue to negotiate.

Instead, Viacom appealed directly to Time Warner Cable's customers, with TV ads in major markets. In Wednesday's New York Times, the company ran a full-page, color advertisement with Nickelodeon's animated bilingual heroine "Dora the Explorer" crying and clinging to her monkey pal, Boots.

"Why is Dora crying?" the ad asks. "Time Warner Cable is taking Dora off the air tonight!" The ad urges viewers to call Time Warner Cable and demand that their favorite shows remain on the air.

If the shows go dark after midnight, Time Warner Cable will send people to the Internet to catch episodes. Dudley said the cable operator also will make available a video teaching people how to hook their computers up to the TV to watch online shows a tactic it used during a contract dispute with broadcaster LIN TV in October.

Part of the disagreement is that most of Viacom's popular shows are rerun on Web sites where Viacom collects advertising revenue that it does not share with Time Warner, Dudley said. "We don't think that's fair," he said.

Viacom has staked much of its revenue-growth prospects on its ability to extract higher carriage rates out of its cable and satellite affiliates despite an ad slowdown and weak ratings.

In the third quarter, media network revenue, which accounts for about two-thirds of Viacom's total, grew 6 percent to $2.1 billion, despite global ad revenue falling 2 percent, largely because of double-digit percentage growth in affiliate fees and the success of its "Rock Band" video game.

Viacom shares rose 45 cents, 2.3 percent, to $19.71 in late morning trading Wednesday. Time Warner Cable shares lost 39 cents, 1.8 percent, to $21.37.

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.
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  12-31-2008, 01:42 PM
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  12-31-2008, 02:46 PM
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LOS ANGELES Time Warner Cable Inc. said Wednesday it reached a deal with Viacom Inc. on carriage fees, avoiding a blackout of 19 cable channels including MTV and Comedy Central.

The two sides, citing disagreement over fee hikes, had threatened a damaging blackout at midnight Eastern time that would have cut off shows such as "SpongeBob SquarePants" and "The Colbert Report" to about 15.7 million subscribers.

Shortly after agreeing to extend a midnight deadline by an hour, Time Warner Cable spokesman Alex Dudley said the sides agreed on a new contract.

The handshake deal meant the channels will not go dark and a joint statement was expected within the hour, Dudley said.

Viacom had mounted an advertising onslaught warning customers of the possible blackout, taking out ads in major newspapers and Web sites from The New York Times and TVGuide.com featuring a tearful "Dora the Explorer" crying and clinging to her monkey pal, Boots.

"Why is Dora crying?" the ad read. "Tonight you will lose Nickelodeon and 18 other channels from your TV." It then prompted people to call their cable company to complain.

The dispute would have affected some 13.3 million Time Warner Cable subscribers, mainly in New York state, the Carolinas, Ohio, Southern California and Texas; and 2.4 million customres of Bright House Networks in Michigan, Indiana, California, Alabama and Florida.

Time Warner Chief Executive Glenn Britt on Wednesday had called Viacom's demand for a 12 percent increase in fees an extra $39 million on top of the estimated $300 million it pays Viacom annually extortion and outrageous given the recession. Viacom countered that the requested increase amounted to an extra $2.76 annually per subscriber.

Details of the deal were not immediately available.

Viacom had argued that Americans spend a fifth of their TV time watching Viacom shows but its fees made up less than 2.5 percent of the Time Warner cable bill.

Spokeswoman Kelly McAndrew said that despite ranking high in the ratings, Viacom's cable networks' average daily license fee was 65 percent lower than that of networks run by The Walt Disney Co., News Corp.'s Fox, Time Warner Inc.'s Turner Broadcasting System and Discovery Communications Inc.

Analyst Michael Nathanson with Bernstein Research said Viacom's channels had been "underpriced relative to their peers."

Public carriage fee disputes of this scale between a programmer and a cable operator are not that common, especially when there's a threat of a blackout, said Derek Baine, senior analyst at SNL Kagan in Monterey, Calif. Typically, both sides agree on contract extensions as they negotiate on terms, he said, and any blackouts don't last long because TV operators get calls from outraged customers.

One prominent carriage fee fight in recent years was in 2004, between Viacom and EchoStar, the former name of Dish Network Corp. Shows were dropped for two days.

In October, Time Warner Cable wrestled with LIN TV Corp., which operates local TV stations affiliated with NBC, CBS, Fox and CW. But this time, Time Warner Cable faced Viacom, the largest cable programmer, not a small independent with a handful of channels.

The channels in the dispute were Comedy Central, Logo, Palladia, MTV, MTV 2, MTV Hits, MTV Jams, MTV Tr3s, Nickelodeon, Noggin, Nick 2, Nicktoons, Spike, The N, TV Land, VH1, VH1 Classic, VH1 Soul and CMT: Pure Country.

Viacom shares rose 88 cents, or 4.5 percent, to close at $20.12 on Wednesday, while Time Warner Cable shares fell 31 cents, or 1.4 percent, to $21.45.
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  01-01-2009, 04:50 PM
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Local channels were in trouble in some markets too. My parents local tv stations were covered in anti-DISH ads, and the channels urged folks to switch to local cable. At about 2 a.m. today, they announced that a deal had been struck, with minimal to zero blackouts.

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