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Comcast, Cable One Reach Disney Deal

The Walt Disney Co. last week finally reached a retransmission-consent deal with Comcast Corp., and also settled a dispute with Cable One Inc. that almost resulted in Disney Channel being dropped from that MSO's systems.

Last Friday afternoon-after nearly a year of negotiations-Disney and No. 3 MSO Comcast announced they had reached an agreement in principle that includes retransmission-consent for Disney's six ABC owned-and-operated TV stations in Comcast's footprint. Affected markets include Philadelphia, northern New Jersey, Los Angeles, Chicago, Toledo, Ohio, and Flint, Mich. Those areas have 3 million Comcast subscribers.

Beyond retransmission consent, the Comcast-Disney deal is also a comprehensive distribution agreement that covers a variety of Disney cable networks, including ESPN, ESPN2, ESPN Classic, ESPNews, Disney Channel, Toon Disney and SoapNet. Disney and Comcast said terms of the agreement were confidential.

"We are pleased our customers are going to continue to receive the channels they want, including ABC, ESPN and other Disney programming," Comcast Cable Communication Inc. president Steven Burke said in a prepared statement.

A retransmission-consent extension-one of several that Disney had granted Comcast-was set to expire Dec. 31. Comcast's last retransmission-consent agreement with Disney/ABC had reportedly expired in December 1999.

"This is an important agreement and clearly in the best interests of our viewers on all the Comcast systems," Disney president Robert Iger said in a prepared statement.

And earlier last week, an ABC Cable Networks spokeswoman disclosed that top-10 MSO Cable One, which has 700,000 subscribers, had reached a multiyear distribution agreement with Disney. The deal covers not only Disney Channel but also Toon Disney and SoapNet. Terms of the new contract weren't available.

Cable One president Tom Might and Letha Kostecki, general manager of the MSO's Akron system-the key battleground between the cable operator and the programmer-couldn't be reached for comment.

But last week, the operator ran newspaper ads in its Ohio markets and in Pascagoula, Miss., informing the public that negotiations had led to a settlement of its differences with Disney. Disney Channel would remain part of its basic service, the MSO said.

Like the Cable One situation, the Comcast-Disney retransmission-consent negotiations also had involved the issue of Disney Channel being moved to basic, carriage for newer Disney channels such as SoapNet and Toon Disney and license-fee costs for those services.

Pricing for Disney Channel was a particular sticking point in the Cable One negotiations. Disney Channel started as a premium service, but Disney has been converting it to basic over the past few years. As a result, operators that once split subscriber fees with Disney when the channel was a premium offering must now pay a hefty license fee to carry the kids' network on basic.

In a letter to subscribers in markets such as Akron, Ohio, Cable One said it was in a contract dispute with Disney and would no longer carry Disney Channel after Dec. 31. It was unclear exactly how many Cable One systems would have switched out Disney Channel, but at the very minimum it would have involved systems in Ohio and some in Mississippi and Alabama.

"We can no longer afford the yearly increases in the total cost of programming from The Disney Co. and keep monthly cable rates as reasonable as we would like," Cable One said in its subscriber letter. "We buy ESPN, ESPN2 and Disney Channel from The Disney Co., and even though ESPN and Disney are by far two of our highest-cost networks [their rates have jumped by 40 percent over the past three years], we are expecting another double-digit rate increase for 2001."

Cable One said it offered to once again provide Disney Channel as a premium service to subscribers who wanted to pay extra for it, but that Disney wouldn't let it do that. The letter also pointed out that when Disney Channel was a premium service, only 6 percent of Cable's One customers subscribed.

The dispute between Cable One and Disney became a full-blown public war in Akron, where Disney ran full-page ads urging subscribers to call the cable system to stop it from dropping Disney Channel.

A second newspaper ad urged residents to sign up for EchoStar Communications Corp.'s Dish Network so they wouldn't lose Disney Channel.

In addition, Disney Channel Worldwide president Anne Sweeney also wrote a letter intended for local newspapers that pointed out that 9 percent of Disney Channel's 67 million subscribers now get the network as a basic channel and not a premium.

Just two days before their Dec. 31 extension was set to expire, Disney was able to resolve its issues with Comcast, which involved the linkage of retransmission consent with a Disney Channel move to basic and carriage of SoapNet. Disney has given the No. 3 MSO a number of retransmission-consent extensions for its ABC stations. The final one was granted during the Western Show.

On Dec. 12, Burke told the Washington Metro Cable Club that he was confident talks with Disney would be wrapped up within two to three weeks.

Comcast had said that unlike Time Warner Cable last year, it would not yank ABC's stations from its lineup.