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Cable Technology Feature Article

August 30, 2010

Time Warner / Disney Expected to Reach Agreement in Rate Dispute

By Susan J. Campbell, TMCnet Contributing Editor

The ongoing battle between Walt Disney Co. and Time Warner (News - Alert) Cable Inc. seems to have taken a more civil edge as both companies appear to be working together to reach a mutually beneficial resolution in their battle over programming fees. 

According to an Associated Press (News - Alert) report, the companies have jointly announced they are making significant progress in the attempt to resolve their issues. The two power players have less than a week left to renew a contract that allows customers access to channels such as ESPN (News - Alert)

The websites of both companies issued the same statement: "We are now focusing all our attention on a successful conclusion of these efforts prior to the Sep. 2 deadline."

Both companies launched marketing campaigns this summer that were designed to bring the viewing public to their own side of the debate. Now, such ads are being pulled in an effort to demonstrate good faith. The companies are working toward an agreement that would ensure they could avoid blacking out any TV networks.

Scuffles between subscription television providers and media companies that own the TV networks are nothing new. The challenge this year is that when the recession hit, TV advertising budgets were slashed and television networks wanted to increase the fee per subscriber to offset the shortfall. Cable TV companies have resisted, claiming higher fees will get passed along to customers – many of whom were facing budget crunches of their own.

One very publicized stand-off occurred between Cablevision Systems (News - Alert) Corp and Disney occurred in March when Cablevision lost its ABC stations in New York. This blackout occurred just hours before the Oscars were set to broadcast. The two sides were able to reach an agreement that night on a tentative deal and broadcasting was returned 15 minutes into the Oscars program.

In other Time Warner news, TMC (News - Alert) reported that despite the fact that revenues in the U.S. VoIP market continue to grow, Time Warner Cable is losing share, according to a recent piece featured on The Street. On the upside, Time Warner has enjoyed growth on the digital subscriber side of the second quarter of 2010. Overall, however, capital expenditures have declined, as well as general and administrative expenses.

Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

Edited by Stefania Viscusi