Time Warner Cable Urges U.S. to Block TV Blackouts (Update5)
March 09, 2010, 8:18 PM EST(Adds Time Warner Cable statement in second paragraph.)
By Kelly Riddell and Todd Shields
March 9 (Bloomberg) -- Time Warner Cable Inc. plans to ask U.S. regulators to block broadcasters from cutting signals during fee disagreements, aiming to avoid disruptions such as Walt Disney Co.’s blackout of the Academy Awards.
The company said today in a statement that it plans to submit a petition to the Federal Communications Commission this week. Time Warner Cable will ask the FCC to consider arbitration and force broadcasters to maintain their signals during disputes.
Time Warner Cable, which trails only Comcast Corp. in U.S. subscribers, is set to negotiate carriage fees with Disney when their agreement ends in August. Disney pulled its signal on March 7 in a spat with New York-area provider Cablevision Systems Corp., blacking out the first 13 minutes of the Oscars for more than 3 million customers in New York, Connecticut and New Jersey.
Disney restored the WABC-TV signal to Bethpage, New York- based Cablevision after the two came to a preliminary agreement that night. Burbank, California-based Disney may use the tactic again if it can’t reach a deal with Time Warner Cable once their agreement expires in August, according to analysts such as Wunderlich Securities’ Matthew Harrigan.
DirecTV, Verizon
DirecTV, the largest U.S. satellite-TV provider, and Verizon Communications Inc., the second-largest U.S. phone company, also signed the petition, as did Cablevision and rural cable provider Mediacom Communications Corp.
Time Warner Cable, which has about 13 million U.S. subscribers, rose 10 cents to $49.10 at 4 p.m. in New York Stock Exchange composite trading. Disney advanced 12 cents to $33.31.
The American Cable Association signed the petition, Ted Hearn, a spokesman for the Pittsburgh-based trade group for small cable operators, said in an e-mail. The association also sent a letter to Congress urging change in retransmission policy, signed by Cablevision, Charter Communications Inc. and Dish Network Corp. among others.
The Cablevision-Disney dispute drew the attention of lawmakers and the FCC, which was in contact with the companies and urged them to reach a deal. Massachusetts Senator John Kerry asked Cablevision and Disney to seek arbitration if talks reached an impasse. Cablevision favored arbitration.
FCC Authority
In 2007, the FCC said it didn’t have the authority to require binding arbitration in a fee dispute between Sinclair Broadcast Group Inc. and Mediacom. Senators Daniel Inouye of Hawaii, a Democrat, and Ted Stevens of Alaska, a Republican, disagreed and wrote in a letter to the agency that it does have the right to arbitrate in retransmission disputes. The senators were leaders of the committee that oversees the FCC.
Zenia Mucha, a Disney spokeswoman, didn’t immediately return a message seeking comment. FCC spokeswoman Jen Howard declined to comment.
News Corp.’s Fox threatened to pull the plug on New York- based Time Warner Cable in December as the two sides negotiated programming fees. They forged a deal the day after their contract expired, saving viewers from losing access to sporting events such as the Sugar Bowl on New Year’s Day.
“The recurring threats of blackouts, high-stakes public ‘showdown’ negotiations, and recent economic analyses have all confirmed what programming distributors have known for years: the retransmission consent regime is broken,” Time Warner Cable said in the statement.
Broadcasters have said stations deserve compensation for supplying TV’s most-watched shows, including “NCIS,” “Sunday Night Football” and “Desperate Housewives.” In the past, the networks traded those rights to gain distribution for new cable channels, like Disney’s ESPN2, or higher fees for their existing cable networks.
Cable operators have balked at the fees because people can typically watch these programs for free on TV Web sites such as Hulu.com or over-the-air broadcast. Distributors also argue broadcasting fees are included in what they pay for larger bundles of programming and by agreeing to carry some cable channels that don’t merit distribution because of low ratings.
--Editors: Julie Alnwick, James Callan
To contact the reporter on this story: Kelly Riddell in Washington at kriddell1@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net
To contact the editors responsible for this story: Julie Alnwick at jalnwick@bloomberg.net; Larry Liebert at lliebert@bloomberg.net
