Jan 2, 2009

Business - Time Warner Could Lose MTV, Nickelodeon

Have you vowed to watch less television in 2009? Time Warner Cable might be able to help you with that.

The cable provider is currently locked in a dispute with Viacom over licensing fees for access to channels like MTV, Nickelodeon, and Comedy Central. If it goes unresolved, Time Warner customers could see their Viacom channels go dark at midnight.

"The renewal we are seeking is reasonable and modest relative to the profits TWC enjoys from our networks," according to a statement from Viacom. "We have asked for an increase of less than 25 cents per month, per subscriber, which adds up to less than a penny per day for all 19 of MTV Networks' channels."

Viacom wants the rate hike because Time Warner "has so greatly undervalued our channels for so long," the company said. "Our fees amount to less than 2.5 percent of what Time Warner generates from their average customer."

Time Warner accused Viacom of extortion, and said the move was an attempt to make up for declining ad dollars.

"Viacom claims their demands equate to 'pennies,' but that is misleading and insulting to our customers, from whom Viacom is trying to extort another $39 million annually – on top of the hundreds of millions of dollars our customers already pay to Viacom each year," Time Warner said in a statement.

"We sympathize with the fact that Viacom's advertising business is suffering and that their networks' ratings have largely been declining" but not when it affects TWC customers, the company continued. "If every channel demanded huge, double-digit increases like what Viacom is trying to force our customers to pay, it would be impossible to keep the price of cable reasonable for our customers." Time Warner already announced a separate rate hike between $3 and $5 in 2009.

Viacom claims that it has secured 2009 licensing renewals "with virtually every cable and satellite carrier" except Time Warner. "As a result, we are sorry to say that for Time Warner Cable customers our networks will go dark as of 12:01 on January 1, denying Time Warner customers shows like Dora the Explorer, SpongeBob SquarePants, The Daily Show with Jon Stewart, The Colbert Report, and The Hills," Viacom said.

Time Warner has a presence in 33 states, and had 13.4 million basic video subscribers and 7.7 million digital video subscribers as of June 30, 2007.

Time Warner asked Viacom to extend its current deal while negotiations continue, but Viacom declined, according to TWC.

Viacom's holdings include UPN, The Paramount Channel, more than a dozen MTV channels, VH1, Nickelodeon, Comedy Central, Showtime, and the Sundance Channel.

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