[Infowarrior] - Viacom threatens withdraw from Time Warner

[Richard Forno]

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/30/AR2008123003496.html?hpid=sec-business

'Colbert,' 'SpongeBob' may go dark on Time Warner
	
By RYAN NAKASHIMA
The Associated Press
Wednesday, December 31, 2008; 12:47 AM

LOS ANGELES -- "SpongeBob SquarePants" may be getting squeezed off of  
Time Warner Cable.

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

The impasse over carriage fee hikes would mean "SpongeBob" and other  
shows like "The Daily Show" will be cut off to 13 million subscribers,  
said spokesman Alex Dudley, a vice president at Time Warner Cable, the  
nation's second-largest cable operator.

Viacom has asked for fee increases of between 22 percent and 36  
percent per channel, an amount that could increase customers' cable  
bills, Dudley said. Viacom spokeswoman Kelly McAndrew said the  
requested increase was in the very low double-digit percentage range.

"The issue is that they have asked for an exorbitant increase in their  
carriage fees and their network ratings are sagging," he said.  
"Basically we're trying to hold the line for our customer."

Viacom said the increases would cost an extra 23 cents a month per  
subscriber _ which works out to $35.9 million more in total. 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," it 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," it said.

Tense negotiations are continuing at the highest level, Dudley said.

Viacom accused Time Warner Cable of not negotiating.

"It is our sincere hope that they will come to the table and negotiate  
a deal," said McAndrew. The network operator also intends to tell  
viewers about the dispute in TV ads in 11 major markets.

Part of the disagreement is that most of the 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. "They're trying to have their  
cake and eat it too online, where anybody can get it for free."

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 the 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 69 cents, or 3.7 percent, to close at $19.26 on  
Tuesday, while Time Warner Cable shares added $1.56, or 7.7 percent,  
to $21.76.

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.

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/30/AR2008123003496.html?hpid=sec-business