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Cable Technology Feature Article

March 08, 2010

Academy Awards Go Dark on Cablevision

By Gary Kim, Contributing Editor

You can accurately describe escalating contract disputes between cable operators and programming networks as evidence of increased financial stress in the multi-channel video business.
Cablevision and ABC, for example, have been embroiled in a contract dispute over Cablevision payments to ABC for carrying ABC networks.
ABC has threatened to withhold access on Sunday, March 7, 2010, and has done so. That means 3.1 million Cablevision customers will likely be unable to watch the Academy Awards show.
That is high-stakes poker, indeed. In past years, in past decades, such disputes would linger until a few days or hours before a shut-off, and then are settled. These days, it is more common for actual disputes to result in terminated access.
Cablevision's “dark” ABC channels are the most-recent example. But Comcast has been in an on-going dispute with DirecTV (News - Alert) about carriage fees for the Versus network, which has been dark on DirecTV for quite some months. That would have been unheard of in past decades. 
Cablevision says Disney is seeking an additional $40 million a year in new fees. 
The issue points out heightened tensions in the multi-channel video business, at least from the perspective of cable and satellite providers, as distributors grapple with slower growth (or negative growth) and potential threats from online and offline alternatives. 
In the telecom business, the heightened business model challenges more typically take the form of investment and employment policies that feed wireless and starve fixed-line voice, while continuing investments in broadband facilities. 
Such contract disputes are only the tip of the iceberg. Financial pressure and recreation of value chains will continue. And that virtually guarantees further strife and conflict. It is hard to say which party wins or loses more in such disputes. The ultimate test is a contract dispute that interferes with the Super Bowl. That's never happened. But the likelihood such challenges will happen is growing as financial stress grows. 

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Kelly McGuire