Oscar fans may lose in Cablevision-ABC fee dispute

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Some New Yorkers hoping to watch the Oscars could see black screens instead of golden statues on Sunday.

This week Disney and Cablevision began warning the cable operator's 3.1 million New York-area subscribers that their ABC station may go dark Sunday, Mar. 6, at 12:01 a.m. because of a fee dispute.

The Academy Awards broadcast, one of television's most-watched live events, is set to air on ABC that night.

Disney (DIS, Fortune 500) wants Cablevision to pay a fee for the right to deliver its ABC broadcast channel to the cable operator's subscribers, which would amount to an additional $40 million a year in new fees, said Cablevision spokesman Charles Schueler in a prepared statement.

Cablevision (CVC, Fortune 500) currently pays Disney more than $200 million a year to carry its cable networks, which include ESPN, the Disney Channel and ABC Family.

A Disney spokesman notes that Cablevision charges customers up to $18 a month to receive just the basic broadcast networks -- ABC, NBC, CBS, Fox and PBS -- but that Disney does not share in any of that revenue.

Cablevision contends that Disney's move will "force Cablevision customers to pay a new TV tax for programming [that] ABC Disney gives away free, both over-the-air and on the Internet."

Rebecca Campbell, president and general manager of WABC-TV, shot back in a statement: "We can no longer sit back and allow Cablevision to use our shows for free while they continue to charge their customers for them."

Following the money

The stalemate is similar to a heated battle between News Corp. (NWS, Fortune 500) and Time Warner Cable (TWC) over paying to carry the Fox network. The companies came to an agreement hours after the Dec. 31 deadline, but programming was not disrupted. The terms of the agreement were not disclosed.

The disputes are part of a sea change in the television industry's business model, as programming choices expand and advertising revenues plummet.

Unlike cable networks, which both collect advertising revenues and subscriber fees from pay-TV providers, broadcast networks rely solely on ad revenue. But as that money is drying up, they are in search of new sources of revenue.

For their part, cable providers say they are cash-strapped as a result of costly efforts to upgrade technology in order to fend off satellite and telecom TV providers as well as Web-based programming.

The Disney-Cablevision contract expired more than two years ago, a Disney rep confirmed. The companies have extended the agreement each month as talks continue.

Disney set up a Web site at www.saveabc7.com while Cablevision's site is at http://cablevision.com/abcTo top of page

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