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Cablevision, ABC settle fee feud - Oscars back on for New Yorkers

By Julianne Pepitone, staff reporter

NEW YORK (CNNMoney.com) -- Cablevision customers in the New York area were able to start watching the Oscars about 15 minutes into the start of the program Sunday, when ABC restored its local affiliate's signal after pulling it due to a fee dispute.

After negotiations collapsed between Cablevision and ABC's owner, the Walt Disney Co., WABC was yanked from Cablevision's channel selection early in the morning. The stalemate continued until about 8:45 p.m. ET.

It was looking like Cablevision's 3.1 million subscribers in the greater New York City area would not be able to view the Academy Awards, one of television's most-watched live events, until the companies reached their late deal. Terms of the agreement were not disclosed.

Charles Schueler, Cablevision's executive vice president of communications, said in a statement, "We are happy to report that WABC Channel 7 has returned to Cablevision's 3 million New York area homes. We are very grateful to our customers for their support and pleased to welcome ABC back."

"We've made significant progress, and have reached an agreement in principle that recognizes the fair value of ABC7," WABC-TV president and general manager Rebecca Campbell said in a statement. "Given this movement, we're pleased to announce that ABC7 will return to Cablevision households while we work to complete our negotiations."

The feud began when Disney (DIS, Fortune 500) said it wanted Cablevision to pay for the right to deliver its ABC broadcast channel to its subscribers, which would amount to an additional $40 million a year in fees.

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

Cablevision charges customers up to $18 a month to receive just the basic broadcast networks -- ABC, NBC, CBS, Fox and PBS, according to Disney, which said it did not share in any of that revenue.

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

Campbell shot back with her 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."

The debate was 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 that 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 revenue and subscriber fees from pay-TV providers, broadcast networks rely solely on ad income. 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 -- and fend off satellite and telecom 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 had set up a Web site at http://www.saveabc7.com/ while Cablevision's site is at http://cablevision.com/abcTo top of page

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