3.1M Customers Face Oscar Night Without Broadcast

NEW YORK -- Cablevision subscribers were scrambling Sunday to hook up antennas or find live TV on the Internet in order to watch the Academy Awards after ABC's parent company Walt Disney Co. switched off its signal in a dispute over fees.

The standoff affected 3.1 million subscribers to Cablevision Systems Corp. in parts of New York, New Jersey and Connecticut.

In dueling statements, the companies traded blame for the stalemate ahead of one of the most-watched nights of television. It was the first time in a decade that a major broadcast station went dark in a dispute with a cable company.

"Cablevision has once again betrayed its subscribers," said Disney spokeswoman Charissa Gilmore. "Cablevision pocketed almost $8 billion last year, and now customers aren't getting what they pay for ... again."

Cablevision said the stall in negotiations should be blamed on Disney CEO Bob Iger. "It is now painfully clear to millions of New York area households that Disney CEO Bob Iger will hold his own ABC viewers hostage in order to extract $40 million in new fees from Cablevision," said Charles Schueler, a Cablevision executive vice president.

ABC said Sunday afternoon that it had sent Cablevision a new proposal and was awaiting a response. "The ball is in their court," said WABC-TV general manager Rebecca Campbell. No details on the new proposal were provided.

ABC's signal can still be pulled from the air for free with an antenna and a new TV or digital converter box. But Cablevision customers fumed over being the losers in a fight between two corporations.

"It's not fair," said Ranee Gaynor, who said Cablevision is the only cable provider available in her Bronx neighborhood. "We don't have a choice."

Gaynor said she would try to watch Sunday night's Academy Awards show on the Internet. "Either that or go to someone's house in Manhattan," she said.

Juliana Mapson of Brooklyn said she might try to hook up an antenna before the show started.
"What can I do?" she asked. "I don't understand why they couldn't come to some conclusion."

The dispute is another example of how networks are struggling to find profits as advertising revenue dwindles and programming costs grow. Networks are transmitted freely over the airwaves, but expensive event programming has led the companies behind them to increasingly demand fees from cable TV and satellite operators for retransmitting those signals.

Cablevision has argued that Disney is seeking an additional $40 million a year in new fees, even though the company pays more than $200 million a year to Disney.

Disney counters that Cablevision charges customers $18 per month for basic broadcast signals but does not pass on any payment for ABC to Disney.

The dispute is similar to a standoff at the end of last year between News Corp. and Time Warner Cable over how much Fox television station signals were worth. That tussle, which threatened the college football bowl season and new episodes of "The Simpsons," was resolved without a signal interruption.

Cablevision also feuded with Scripps Networks Interactive Inc. in a January dispute that temporarily forced the Food Network and HGTV off the service. Neither side provided terms of an agreement that restored the channels after three weeks.

Disney is asking Cablevision to pay about $1 per subscriber per month, the same amount that News Corp. demanded from Time Warner in their dispute. Some analysts think News Corp. eventually accepted about 50 cents per subscriber.

Derek Baine, a senior analyst at SNL Kagan, said that if all four networks charged $1, that would total $4 a month in new fees. Most cable companies couldn't absorb that cost increase and would have a hard time passing them onto consumers, he said.

"That's a lot of money," Baine said. "They're just playing chicken here."

Some consumer groups have urged Congress and the Federal Communications Commission to step in and limit the ability of broadcasters to pull their transmissions off cable systems during contract disputes.

"The companies involved always try to leverage the big events and consumers are always caught in the middle," said Art Brodsky, a spokesman for Public Knowledge, a nonprofit consumer advocacy group.

FCC spokesman William Lake said Sunday that the agency has been in touch with both companies and was monitoring the situation closely.

Lawmakers including U.S. Sen. John Kerry and U.S. Rep. Nita Lowey said Disney and Cablevision should agree to binding arbitration if they cannot resolve the dispute on their own.

"It is imperative that consumers be held harmless during this process by having the signal restored immediately," said Lowey, D-N.Y.

Cablevision said in a statement late Sunday that it would agree to arbitration. A Disney spokeswoman did not return calls seeking comment.

Disney's previous contract with Cablevision expired more than two years ago, but it was extended month by month as talks continued. Under previous arrangements, Disney was paid for cable channels such as ESPN and Disney Channel, but gave its ABC broadcast signal away for free, a situation that most broadcasters are now trying to change.

"We can no longer sit back and allow Cablevision to use our shows for free while they continue to charge their customers for them," WABC's Campbell said.

WABC-TV is the most-watched TV station in the country, said Disney, which is based in Burbank, Calif.