Men Behaving Badly
After all was said and done, what did The Walt Disney Co. and Time Warner Cable accomplish with their respective pigheaded stances in the retransmission-rights battle for carriage of the ABC television network on cable?
Time Warner's calculated risk of taking ABC off the air in seven major markets-including New York and Los Angeles-during the all-critical May sweep period did nothing to smooth the way for future negotiations.
The sparks, after all, are still flying, with each party still throwing gasoline on what should be cooling embers by now.
Unfortunately, that action escalated into a very ugly standoff, all aired in public. The media had a field day, portraying Disney and Time Warner Inc. as greedy titans. Even the great unwashed on America Online Inc.'s bulletin board posted some 700 messages, which, for the most part, equally blasted both companies as being greedy, uncaring monopolists.
At best, you can say both parties looked like overgrown schoolyard bullies who may no longer be duking it out, but who are still glowering at each other.
The egos are huge here, and both parties lost their heads, forgetting about customer satisfaction-in other words, forgetting about the people who pay their cable bills and, in part, who keep both of these media titans in business.
Folks who are close to the players will tell you that cable operators are furious with Disney. They say Disney chairman Michael Eisner broke a tacit rule: "You don't mess with other guys' mergers in Washington. You don't muck up the water by bringing in the politicians"-a charge alleging that Eisner is trying to thwart Time's Warner's deal with AOL.
Time Warner, feeling the heat, probably felt that it had to display some testosterone of its own. Sources say Time Warner wanted to show that it was not afraid to take ABC off, and that the company thought it had an interesting bargaining position during the sweep period.
In other words, it's all about leverage. And for programming services that are not owned by media giants with broadcast concerns and their all-purpose accompanying retransmission chips, it was a "chilling week," according to one president of a network that doesn't have the leverage of an ABC.
So what have been very strained relationships between cable operators and programmers are even more taut and ready to snap.
Some say it's a shame Disney had to open up a Pandora's box by dropping its problems at the doorstep of the Federal Communications Commission and filing an emergency petition.
Initially, that regulatory agency had advised both parties to solve their problems on their own. In the end, the commission ruled in favor of Disney, upholding some arcane clause in the 1992 Cable Act that said a cable operator could not drop a broadcast network during a sweep period.
The FCC's ruling surprised some bystanders, who thought the agency should have called for a hearing before its ruling. That didn't happen, and now, a precedent has been set.
Now both parties have until July 15-another sweep period-to come to an accord. And you have to wonder how that can possibly happen, given the bruised egos and high stakes.
There used to be a time, just after the passage of the 1992 Cable Act, when brawling cable operators and programmers would seek the advice of the National Cable Television Association.
Back then, the act had wreaked financial havoc, leaving programmers and operators concerned about cable's image and worried about more regulation. All of the fighting and bickering occurred, but the dirty laundry was not out their flapping in the wind for all to see.
Unfortunately, the NCTA no longer serves as a mechanism to help mediate those gripes in private, thanks in large part to industry consolidation, convergence and the presence of newcomers who barely know what the initials NCTA stand for.
It's probably unrealistic to think that the NCTA can help to mediate the problems of Time Warner and Disney at this stage of the game. That should have happened well before Time Warner pulled the trigger, but it didn't.
But now that both parties have time to cool off, it's worth a shot. The last thing cable needs at this stage of its fantastic growth is more government regulation.
What was very enlightening about the messages posted on the AOL board about the Disney/Time Warner squabble was the common thread that the government should turn its attention to these two media monopolists.
Indeed, those AOL users were more sympathetic to the government splitting up Microsoft than they were to the two companies that had cost them a day's worth of viewing of ABC programming.
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