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Time Warner Claims LIN Pulled Signals After Refusing To Grant Retrans Extension

Time Warner Cable charged Friday that LIN TV, demanding millions of dollars in cash, pulled its signals from the operator at midnight in 13 cities after refusing to grant a retransmission-consent deal extension.

“We offered to work through the night to reach an agreement, and they refused,” Melinda Witmer, Time Warner’s chief programming officer, said in a statement. “They showed little regard for their viewers and advertisers, and our customers, in their preference to remove the channel rather than work toward resolution.”

In a press release, Time Warner added that “without express permission,” it “cannot legally provide Lin’s television stations to its cable customers.”

While Pali Research analyst Rich Greenfield claimed that 2.7 million Time Warner subscribers are affected by the blackout, the cable operator said that only 1.5 million customers are impacted.

Greenfield Friday predicted that the operator will lose customers over the flap, particularly in Green Bay, Wis., where the National Football League Packers' game is set to air on the Fox affiliate, which LIN TV owns, this Sunday.

“Not only will TWC begin to lose subscribers, but we do not believe they are going to get a better deal from LIN by waiting,” Greenfield wrote. “In addition, we believe this sets a worrisome tone for how TWC will deal with retransmission-consent negotiations with other broadcasters over the coming months, with Univision set to be the most contentious retrans battle (given the price Univision wants per subscriber per month).”

The LIN TV-Time Warner standoff involves 15 stations, not only in Green Bay but in Austin, Texas; Buffalo, N.Y.; Columbus, Ohio; Dayton, Ohio; Fort Wayne, Ind.; Indianapolis; Mobile, Ala.; Springfield, Mass.; Terre Haute, Ind. and Toledo, Ohio.

The dispute drew a quick comment from the American Cable Association, which has been asking Washington for reform in retransmission-consent laws.

“Federal laws and regulations that allow abusive negotiating tactics by broadcasters have become business as usual for station owners as they force cable operators to pay higher fees that have no basis in a free market,” ACA president Matt Polka said in a statement. 

“And, it is cable customers and small cable operators that pay the highest price for the scorched earth strategy of pulling channels to leverage higher retransmission rates,” Polka said. “The American Cable Association and its members have called on the FCC to put a stop to this practice and return competition and sanity to a broken retransmission consent market place that disproportionately harms small cable operators and their customers, and we will continue to work with the Commission to bring about that much needed reform.”

Time Warner, the nation’s second-largest cable company noted that LIN TV is demanding a monthly license fee for carriage of its TV stations.

“Time Warner Cable has never charged for broadcast programming, which is available for free with an antenna or on the Internet,” the operator said in its release. “Rather, Time Warner Cable believes that LIN TV is fairly and adequately compensated for its channels with the clear reception and extended advertising audience that the station enjoys by being on Time Warner Cable’s channel lineup.”

LIN TV makes “millions of dollars in additional advertising revenue as a direct result “of being on Time Warner Cable, and “demanding more is just plain greedy and our customers deserve better,” according to Witmer.

“Despite acknowledging progress in the negotiations, Lin took the extreme step of removing its signal, depriving Time Warner Cable customers of network programming they enjoy,” Witmer said. “We asked for a very short extension to complete negotiations, but it was Lin’s preference to pull their signal off the air.”

Time Warner said it is still negotiating with LIN TV to resolve the dispute quickly.

“In the meantime, customers can use an antenna or connect their TVs to their computers and watch their favorite network programming via the Internet,” Witmer said.

LIN TV put the onus on Time Warner for the station blackout.

“Time Warner has known since August that the contract expired on Oct. 2,” the broadcaster said in a statement Friday. “We previously offered Time Warner an extension and they didn’t accept it, nor even respond.  They finally sent their first serious proposal late yesterday afternoon, and we worked diligently beyond midnight to close the gap, but were unsuccessful. There is no reason for any Time Warner subscriber to lose access to LIN television programming. Essentially all Time Warner subscribers can receive LIN signals over the air or through another multichannel distributor and the great majority of Time Warner subscribers can receive LIN television programming three or more ways now and in the future. We hope we will be able to reach an agreement.”

In his report Friday, Greenfield said that Time Warner will lose subscribers as a result of the station blackouts.

“We expect Time Warner Cable subscribers to begin seeking alternative video providers over the coming days, particularly in markets where NFL programming is a major issue, such as in Green Bay, Wisconsin, where the Packers game is set to air on Fox this Sunday (LIN owns the Fox affiliate in Green Bay),” Greenfield wrote.

In contrast to Greenfield, Collins Stewart analyst Tom Eagan in his report Friday said he didn’t expect the station blackout to hurt Time Warner. 

“We do not believe that this interruption of carriage will have a short-term or long-term impact on TWC’s subscribers or financials,” Eagan wrote. “Despite Dish offering TWC subscribers $50 to convert (to the Dish platform), we do not expect material number subscribers will churn, especially with the high level penetration of high speed data (60% of basic subs) and voice customers (30% of basic subs). Of the 15 relevant stations, 10 are major broadcast affiliates.”