Disney-Cablevision Standoff May Hurt Oscars Viewership
If Retransmission Fee Battle Not Resolved by Sunday, 2.5% of Event's National Audience Could Be Shut Out
Brian Steinberg
Advertising Age
Published: March 03, 2010

        
NEW YORK (AdAge.com) -- It's the phrase no advertiser wants to hear: "And the Oscar goes to ... everyone but Cablevison's 3 million New York-area subscribers!"

Ad buyers say there is an emerging concern that the current showdown between Walt Disney and Cablevision Systems could affect the ultimate viewership of what is often the second-biggest event on broadcast TV, ABC's annual star-studded Oscars broadcast. Disney and Cablevision earlier this week made public a long-brimming impasse over retransmission rights, which could leave Cablevision subscribers without access to the network's New York station, WABC, as of 12:01 a.m. on Sunday, March 7.

That's the same day the Oscars ceremony, where a 30-second ad goes for $1.3 million to $1.5 million, is set to air.

"It will make a difference," said Larry Novenstern, exec VP-director of national and local broadcast at Publicis Groupe's Optimedia, who estimates as much as 2.5% of the national audience for the event could be lost. "Not a huge one, but it will definitely make a difference." The Oscars reached approximately 36.3 million viewers in 2009, according to Nielsen.

The threat to the Oscars is just one piece of potential fallout should Disney and Cablevision remain at odds past this weekend. Scuffles over retransmission fees -- money paid by cable operators to TV networks -- have taken on new importance as emerging mobile devices and other technologies allow TV viewers to graze on video in any number of places, not just the boob tube. Broadcast networks, accustomed for decades to thriving largely on ad revenue, have now begun to cast about for other money streams as advertisers start to spread their wealth over a broader array of venues. In recent months, Cablevision has squared off against Scripps Networks, and News Corp. with Time Warner Cable.

Satisfying advertisers
But ABC's battle with Cablevision threatens to cut off access to the network from a highly desirable segment of the viewing public: residents of the New York metropolitan area, which includes parts of Connecticut.

ABC is certainly cognizant of the potential the standoff has to reduce a small percentage of the Oscars' viewership, according to one person familiar with the situation. The network intends to make sure advertisers are satisfied, even as it hopes to avoid a scenario in which Cablevision subscribers aren't able to watch the Oscars through their cable service.

One ad buyer said he will likely wait until the broadcast is complete and the audience tallied to determine whether his clients need to be concerned.

"I don't think the possibility of not having Cablevision would harm [the Oscars broadcast] that much, but obviously, it is in some major markets and in the New York area, so it would be of some concern," said Andrew Donchin, director of investment at Aegis Group's Carat. "I would hope that the whole thing gets resolved."

In the meantime, both parties are hurling invective at each other. "For two years, WABC has been working in good faith to try and reach an agreement that acknowledges the station's value financially and as a key resource to the community. This is value Cablevision already charges their customers up to $18 each month for access to," Rebecca S. Campbell, president-general manager, WABC-TV, said in a prepared statement.

On Tuesday, Cablevision had similar remarks to make about Disney. "We pay more than $200 million a year to ABC Disney for their programming, and now they say they will pull the plug unless Cablevision pays $40 million more in new fees for the exact same channels. It is not fair to force Cablevision customers to pay a new TV tax for programming ABC Disney gives away free, both over-the-air and on the internet," said Charles Schueler, exec-VP, communications, at Cablevision. "In tough economic times, it is shameful that ABC Disney would hold viewers hostage by threatening to pull the plug, and we urge them to work with us to reach a fair agreement."

These fights draw lots of scrutiny because they involve colorful media companies hurling mud at each other through incendiary advertising. But in most cases, the two warring parties find ways to mend fences -- out of fear of upsetting or offending consumers and viewers who pay money to watch their favorite TV programs.

Disney yanks WABC off Cablevision
Action comes less than 24 hours before Oscars
By CYNTHIA LITTLETON, MICHAEL SCHNEIDER
Variety.com
9.08 pm PST March 6

ABC went dark Saturday night on New York-area Cablevision systems.
The static came as ABC and Cablevision were not able to come to an retransmission agreement by the midnight Saturday deadline imposed by Disney.

The Alphabet's WABC-TV was in the middle of a season two off-net repeat of "Lost" -- "Three Minutes," which centers on Michael's decision to betray his fellow castaways -- when the cord was yanked.

WABC replaced the feed it sends to Cablevision with a sternly-worded on-screen message: "Cablevision betrayed you again. First HGTV and Food Network, now they lost ABC 7. Enough is Enough. Go to SaveABC7.com to switch service now."

It didn't take long for Cablevision to block out that message -- but in the process, several Cablevision subscribers reported online that the MSO accidentally also blocked out WNBC and WCBS, among other channels, for up to 15 minutes.

In its on-screen note to viewers, Cablevision even goes as far as to suggest that audiences watch ABC fare via Hulu.

"ABC has pulled WABC-7," Cablevision's replacement message now reads in the channel 7 slot. "Cablevision pays ABC's parent company over $200 million per year. The price you pay for TV matters. ABC is demanding $40 million more per year. We wanted to keep WABC-7 on the air. Pulling WABC off Cablevision was wrong. And we're not the only ones to think so.

"We are working hard to get WABC back on the air. ABC has rejected our offers. We have agreements with CBS, NBC, Fox and Univision. We apologize for their actions. Call 1-877-NO-TV-TAX. Watch WABC-7 free over the air with a digital antenna. View ABC programming at Hulu.com or ABC.com. Thank You."

In her statement -- sent moments after the screen went dark -- WABC prexy/GM Rebecca Campbell said the move followed "two years of negotiations, during which we worked diligently, up to the final moments, to reach an agreement."

"Cablevision pocketed almost $8 billion last year, and now customers aren't getting what they pay for…again," she wrote. "It's time for Jim Dolan and the Dolan Family Dynasty to finally step up, be fair, and do what's right for our viewers."

In response, Cablevision demanded that Disney return WABC to the provider while the negotiations continue.

"It is now painfully clear to millions of New York area households that Disney CEO Bob Iger will hold his own ABC viewers hostage in order to extract $40 million in new fees from Cablevision," said Cablevision exec VP of communications Charles Schueler. "We call on Bob Iger to immediately return ABC to Cablevision customers while we continue to work to reach a fair agreement."

Leading up to the signal scrub, WABC's 11 p.m. newscast featured several advertisements that touted Cablevision rival Verizon FiOS as an alternative to receive the station's signal.

Specifics about the deal were still sketchy Monday, and some deal points were still being hammered out. Insiders indicated that the carriage agreement for WABC would run three to four years and start out at a monthly fee of at least 35¢-40¢ per subscriber, rising to at least 60¢-65¢ by the end of the term.

c & p from an East Coast website, posted by 'Nutmegger'
                                                      
Speaking as a CONNECTICUT CABLEVISION subscriber affected by this pissing contest, all is not lost! – We can still watch the Oscars via the local CT affiliate (WTNH), much of NJ can catch the broadcast via the Philadelphia affiliate (WPVI), Manhattanites may be out of luck.

Would I switch providers over this? No way. Satellite is not an option given the super dense tree coverage in our town, Verizon Fios has no local news outlet – a la Cablevision. Don’t get me wrong, I’m no Cablevision shill – their prices are crazy! But for most of Fairfield County at least, Cablevision offers the best option for tv – and they have the most HD channels, and I’m not going to turn my life upside down switching providers (Cablevision also provides the home’s phone and Internet access) while a bunch of billionaires hold the rest of us hostage to their hardball tactics.

The only real screwing is that I rely on WABC for HD.

Cablevision, Disney/ABC strike deal
WABC is back on New York cable systems
By CYNTHIA LITTLETON, MICHAEL SCHNEIDER
Variety.com
March 7

It came down to the wire, but New York-area Cablevision viewers got their Oscar fix.
Disney/ABC restored service of its New York flagship, WABC, to Cablevision customers 10 minutes after the Oscars began, ending a day-long standoff.

"We've made significant progress, and have reached an agreement in principle that recognizes the fair value of ABC7, with deal points that we expect to finalize with Cablevision," said WABC prexy/GM Rebecca Campbell. "Given this movement, we're pleased to announce that ABC7 will return to Cablevision households while we work to complete our negotiations."

That means the affected 3 million subscribers were able to watch the Academy Awards live along with the rest of the country.

"We are happy to report that WABC Channel 7 has returned to Cablevision's 3 million New York area homes," said Cablevision communications exec VP Charles Schueler. "We are very grateful to our customers for their support and pleased to welcome ABC back."

Terms of the deal were not immediately revealed. It's believed that ABC was asking for around $1 a subscriber, while Cablevision was willing to give only a fraction of that.

Splitting the difference, Disney and Cablevision likely agreed to around 65 cents a sub.

"It is a deal that is fair to our customers and in line with our other programming agreements," Schueler said.

And even though crisis, for the most part, was averted in this case, more retransmission smackdowns are likely to take place later this year.