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Network Drops Averted — For Now

At the eleventh hour, squabbling programmers and direct-broadcast satellite providers declared temporary ceasefires last week, with EchoStar Communications Corp. and DirecTV Inc. able to avert dropping any networks.

But in a spat between a distributor and programmer that wasn't resolved, CBS affiliate KMTV in Omaha, Neb., planned to pull its HDTV signal from Cox Communications Inc.'s system in that market. The station, owned by Emmis Broadcasting Corp., is seeking compensation from the cable operator for its high-definition signal.

Without that feed, Cox subscribers in that DMA won't be able to view the Super Bowl in the HDTV format.

But most simmering disputes didn't reach the boiling point at which a signal would be pulled or a network dropped.

In EchoStar's case, it reached a "multi-month extension" to continue carrying a variety of Turner Broadcasting System Inc. networks on Dish Network, EchoStar spokesman Steve Caulk said.

The DBS provider also agreed to another last-minute contract extension, this one to Jan. 7, with Viacom Inc.

These contract extensions were all meant to give opposing sides time to try to negotiate new carriage deals, since their most-current affiliation agreements expired the end of last Wednesday, Dec. 31.

The Turner networks whose deals with EchoStar were expiring included Cable News Network, CNNfn, Cartoon Network, Turner Classic Movies, Boomerang, Turner South and Headline News.


DirecTV reached a truce with Trio, which it had threatened to dump as of 2003's end, when a carriage deal expired. A DirecTV spokeswoman said contract talks would continue with the pop-culture network.

"We are still in negotiations with the Universal Television Group [Trio's owner], and we will not be turning off Trio on the 31st" or Jan. 1, the spokeswoman said.

Universal spokesman Steve Webster said: "We can confirm that we are in talks with DirecTV in regards to carriage of Trio. We fully expect to be part of DirecTV for a long time to come."

Had DirecTV made good on its threat to pull the plug, it would have been a big blow to Trio. More than half of the channel's 20 million subscribers come from the DBS provider.

In the Omaha dispute, KMTV and Cox — which has 192,000 basic subscribers there, with only 2,500 reportedly having HDTV digital set-tops — have been negotiating nearly a year over carriage of the station's HDTV transmission.

The broadcaster said it wants cash compensation for its HD investment, and Cox says it refuses to pay for the signal.

"We have not resolved it and we have every intention of withdrawing permission for them to carry our HD signal [effective Dec. 31]," KMTV general manager Jim McKernan said last week.

"The issue is compensation, and we're not going to compromise on that. Our feeling is that after a $3 million investment to build a digital broadcasting facility in Omaha, with more expense to come from the standpoint of being able to originate local programming in high-definition, we should be compensated for that."

Cox's argument is that it offers a tier of 10 HD networks for free to its digital customers, and therefore it should not have to compensate KMTV or anyone else for HD signals.

"Our position is that it's just ridiculous for us to be charged an extra fee when we help deliver their signal," Cox spokesman Bobby Amirshahi said, adding that Cox has long-term deals with all the other HD providers in Omaha and is not paying any of them.


KMTV doesn't buy Cox's argument. Cox has been running a promotional campaign that is "basically using ABC, CBS and NBC programming as the hook for them to upsell people to their digital tier," McKernan said.

"For them to say they're not profiting from that is ludicrous," he said. "For us to be used as a hook with no compensation is just a position that we cannot agree with."

Cox said it and broadcasters alike benefit from the cable operator's promotion of HDTV.

Earlier, other battling networks and distributors extended carriage deals set to expire on Dec. 31.

Time Warner Cable and Rainbow Media Holdings Inc., the programming arm of Cablevision Systems Corp., called a truce in their acrimonious battle over carriage of Madison Square Garden Network, Fox Sports New York and the MetroChannels in New York — a tussle that also tangentially involves Rainbow's AMC.

The MSO and Rainbow agreed to extend current carriage deals for the Cablevision-owned networks so they could continue to negotiate a longer-term agreement.

Rainbow and Time Warner issued a joint statement Dec. 26 on the extension, and declined further comment last week.

That spat had been an especially contentious and public one, with Time Warner taking out newspaper ads in the New York metro area on Dec. 18, headlined "Cablevision is threatening to take the Knicks and Rangers away from you in January."

Time Warner Cable claimed Cablevision was making "unreasonable financial demands" with respect to those regional sports networks.

Denying that charge, Cablevision said it has offered to give the operator the opportunity to allow subscribers to choose whether or not to get the regional sports services in question.


Cablevision also accused Time Warner Cable of waging a battle against its Rainbow networks, including AMC, which is the subject of litigation between the programmer and distributor.

Time Warner has said that it objects to the way AMC has changed its programming, moving away from classic movies, and threatened to terminate its contract with AMC.

In November, Rainbow sued Time Warner Cable, saying AMC's contract with the MSO was binding to 2008. Time Warner countersued, saying it was within its rights to void its deal with the network.

In correspondence, Time Warner has told Cablevision that starting this year it will carry AMC on a month-to-month basis, and pay a license fee lower than the current rate.

Because the dispute is in litigation, Rainbow and Time Warner Cable officials declined to comment last week.

But the programmer has charged that Time Warner has raised complaints about AMC's schedule to create "an irrelevant smokescreen" and try to gain leverage in terms of negotiations for the regional sports networks, like MSG Network and FSNY.