Disney allows Cablevision to resume showing WABC-7 as revenue negotiations continue

Robert Iger, Walt Disney Co. chief executive, has been the target of claims by Cablevision that he holds their subscribers
Robert Iger, Walt Disney Co. chief executive, has been the target of claims by Cablevision that he holds their subscribers "hostage." (Jonathan Alcorn/bloomberg News)
  Enlarge Photo    
By Cecilia Kang
Washington Post Staff Writer
Monday, March 8, 2010

ABC returned to the televisions of Cablevision's 3 million New York area subscribers late Sunday, allowing viewers to catch most of the Academy Awards. But the companies didn't say whether they had ended their tense and bitter impasse over how much the cable operator should pay Walt Disney Co., the parent company of ABC, for transmission fees.

Cablevision made the announcement a full day after the ABC channel went dark for Cablevision subscribers, angering viewers and sparking criticism from lawmakers and regulators for allowing the corporate dispute to affect consumers.

The move was the latest dispute between broadcasters and their cable and satellite partners as the media industry grapples for new revenue models in a shifting and more challenging business landscape.

Cablevision said Sunday afternoon that it is willing to seek a third-party negotiator to arbitrate new talks. ABC said it has put forth a counteroffer to try to bridge the impasse but didn't comment on whether it is willing to seek binding arbitration, as recommended by lawmakers.

Walt Disney and Cablevision have reached an agreement in principle to run WABC-7, the local station. "We've made significant progress," said Rebecca Campbell, president and general manager of WABC. "Given this movement, we are pleased to announce that ABC-7 will return to Cablevision households while we work to complete our negotiations."

"Consumers should not suffer due to the inability of these two companies to successfully negotiate a deal," said William Lake, media bureau chief of the Federal Communications Commission in a statement. "We urge both parties to quickly reach a resolution for the benefit of viewers."

The corporate battle became personal and bitter through a social media campaign on Twitter and through television, newspaper and online advertisements. ABC encouraged Cablevision subscribers to switch providers and called the cable operator's owners "greedy." Cablevision blamed ABC for leaving their subscribers in the dust, saying Disney chief executive Robert A. Iger was holding viewers "hostage" to extract $40 million in new fees from the cable operator.

The feud is the latest between broadcasters and paid television providers. Last year, Time Warner Cable and News Corp. threatened a similar impasse, but ended a weeks long standoff over "retransmission" fees for Fox channels on New Year's Day.

Legal experts predict more battles as broadcasters seek a greater share of revenue from paid television providers, who have traditionally carried broadcast shows for free in exchange for carrying additional broadcast channels on their cable and satellite platforms. With advertising revenues shrinking for broadcast television and more Americans getting their favorite broadcast shows through subscriptions, media companies are scurrying to find new business models and want a greater portion of the lucrative fees drawn from cable subscribers.

"Things are in flux in the TV business," said Marvin Ammori, a professor of telecom law at the University of Nebraska. "People will look to each deal as developing evolving industry standards, both for deals with other parties, and for years to come. So the business disputes are more likely and the stakes of each deal are even higher."

On Twitter, subscribers vented their frustrations with both Cablevision and ABC.

And the companies exchanged punches through the media.

"It is now painfully clear to millions of New York area households that Disney chief executive Bob Iger will hold his own ABC viewers hostage in order to extract $40 million in new fees from Cablevision," said Charles Schueler, Cablevision's executive vice president of communications.

Walt Disney, the parent company of ABC, said Cablevision isn't paying fair rates for ABC content, even as it pockets billions of dollars a year in revenue.

"Now the only way for their subscribers to get ABC7 is to ditch Cablevision and switch to a provider that cares about them," Rebecca Campbell, president and general manager of WABC-TV, said in a statement.

© 2010 The Washington Post Company