Deal reached between Time Warner, MTV Networks

UPDATE 11:48 PM CT: Time Warner has confirmed to me, "We have a deal." MTV, VH1, Comedy, Nick, they're all staying put.

---

UPDATE 10:45 PM CT: It's 15 minutes until lights out on the East Coast and "both sides are still talking," a source informs TVB.

---

UPDATE 9 PM CT: VIACOM PANIC EVERYWHERE, NOT JUST TIME WARNER HOMES! I have just heard from the American Cable Association that its members -- small, mostly mom-and-pop outfits that had nothing to do with today's game of Media Mogul Chicken -- were bombarded with phone calls from concerned customers who thought they were about to lose their cable! "Members from around the country have reported to us that the crawl was displayed on their cable systems, resulting in many concerned calls from customers taking up our members' time, people and money to answer a problem that was not theirs to begin with," said Matthew Polka, president of the association, which reps 1,100 different companies covering just 7 million homes. More about collateral damage below ...

---

UPDATE - 5 PM CT: Time Warner Cable spokesman Alex Dudley confirming that "the two sides are talking again." This ain't over ...

---

From the Famous Last Words department ... Remember when I posted that legal notice from Time Warner Cable a couple of weeks ago that showed them dropping all those channels on Jan. 1 and then I wrote, "I doubt Time Warner is going to yank Comedy Central ..."

Well, guess what: TIME WARNER IS GOING TO YANK COMEDY CENTRAL. And VH1, and Spike, and Nick, and MTV, and all those crappy MTV-VH1 digital channels, and Noggin, and TV Land....

The video above was captured this morning at 11 a.m. from Comedy Central on TWC Kansas City. When i tried dialing the supplied phone number, i was repeatedly treated to "(whistle) All circuits are busy!"

Oy vey! What a time for another game of Media Mogul Chicken!

If this thing doesn't resolve by noon, something tells me I'm going to be ringing in 2009 with a front page story....

Because Nikki Finke isn't updating her blog, I'm going to post my story below which those of you who are already up on the whole mess can read -- by the way, note that it's more like 15.7 million homes affected by the blackout -- and then after that, I've got some more about this late-breaking news regarding the amazing collateral damage Viacom has caused today:

More than 15 million customers in systems owned by Time Warner -- including 275,000 in the Kansas City area -- were expected to be without 19 cable channels this morning, including Nickelodeon, MTV, Spike, TV Land, VH1, BET, Comedy Central and others. Viacom, the owner of these networks, is demanding more money from Time Warner, the area's dominant cable provider and a major operator in both New York and Los Angeles. (Part of that total includes the Bright House Networks, part-owned by Time Warner but managed by Advance/Newhouse.)

Programmers and operators often undergo tough negotiations over the price of cable networks, but the brinksmanship on display Wednesday was notable for its ferocity. Viacom greeted the day with an all-out media blitz in print, on TV and the Internet, telling viewers that it would shut off the channels at 12:01 a.m. Thursday and urging them to bombard Time Warner with phone calls. The toll-free technical support number given out by Viacom was frequently so busy on Wednesday that callers heard the "all circuits are busy" message.

Time Warner struck back with angry press releases, including an announcement that Viacom had rejected its request on Wednesday to extend the deadline for striking a new deal.

Previous disputes between programmers and operators have rarely resulted in blackouts such as this one, and those have been typically short-lived.

The message crawl Viacom ran on its channels, which are known collectively as MTV Networks, warned that "starting tonight, you will lose this channel and 18 other channels from your TV ... Don't miss out on your favorite shows. You can stop this!" The crawl then gave out a toll-free technical support number at Time Warner Cable, which was deluged with calls all day Wednesday.

Viacom also took out ads in big-city newspapers warning of a blackout (one ad reportedly featured a crying Dora the Explorer). It installed pop-up ads on its Web sites and created a 30-second commercial featuring sound bites of Colbert, "South Park's" Cartman and other familiar TV characters screaming "Noooooo!!" as an announcer warned that they may be taken off Time Warner.

Viacom's salvo appeared initially to work, as comments on Internet message boards overwhelmingly blamed Time Warner for the fiasco.

"Oh, just give me a reason to drop you, Time Warner!" read a typical comment at Nikki Finke's Deadline Hollywood blog, which reported that that the two sides hadn't been in contact for days until word of Viacom's PR assault leaked late Tuesday.

If recent history is any guide, however, fans' mood may shift once they begin to hear the other side of the story.

At issue has been a rate increase that Viacom is asking for MTV Networks. Unlike broadcast networks, cable networks collect money from operators who carry them in addition to advertising revenues. Not surprisingly, media companies are looking to operators to make up the double-digit drop in advertising sales in 2008, as sponsors continue to reel from the economic crisis and pull back their marketing budgets.

Time Warner characterized Viacom's demand as a $39 million annual gouging, while Viacom presented it as a 25 cent per month increase per subscriber, an amount it called "modest" and "reasonable." Time Warner Cable CEO Glenn Britt countered that giving in to Viacom's demands would only encourage other powerful interests to step up their demands for compensation. Fox, NBC and Walt Disney all own fistfuls of highly-rated cable channels and have been hit hard by the depressed advertising market.

The ultimate price, Britt warned, will be paid by customers, to whom the rate hikes will have to be passed along.

"Viacom doesn't appear to be interested in what's fair and reasonable for American consumers - they're only interested in propping up their sagging bottom line ..." Britt said Wednesday in a statement.

Viacom countered that its channels eat up 20 percent of Time Warner customers' viewing time but represent less than 3 percent of their cable bill.

"If Nickelodeon, Comedy Central, MTV and the rest of our programming is discontinued - over less than a penny per day - we believe viewers will see this behavior by their cable company as outrageous," read a company statement issued Wednesday.

For now, those channels are absent from the Time Warner lineup. But Viacom may discover why this gambit is used so infrequently -- the only thing predictable is the outcry from upset viewers.

For two years the National Football League has used various media tactics to rally support for its NFL Network, which has also been rebuffed by Time Warner Cable. Fan opinion initially favored the NFL, but as details of the NFL's demands began circulating, fans were more inclined to blame both sides.

Still, Viacom may decide the health of its company depends on extracting larger concessions from the systems that carry its channels. By November Viacom's stock price had tumbled two-thirds from its 52-week high, though Wall Street seemed to think it had the upper hand in its game of chicken with Time Warner, sending its stock climbing on Wednesday.

OK, now more about the fact that Viacom's urgent ALERT ALERT ALERT is running on 98 million cable and satellite households nationwide. Here's something I didn't realize. Lots of cable companies are currently negotiating retransmission agreements, and many of those were going down to the 11th hour, as they usuall do. Retran, as it's called, means getting permission from all the local broadcasters to carry their signals. Usually it involves the cable company giving considerations -- for instance, agreeing to give NBC's cable channels better placement on its systems in exchange for the continued privilege of carrying the local NBC affiliate.

Well, into that process comes this huge poopstorm out of the East. Phones begin ringing off the hook, bewildered customers saying, "You're cutting off Nickelodeon???", bewildered receptionists saying, "What???" and soon everyone in the office is roped into it, because after all, most cable companies in America ain't Time Warner. There's no corporate to bump this up to, no voice-mail hell to consign callers to ...

"Viacom has shown reprehensible judgment today while engaging in what amounts to a national misinformation campaign against thousands of cable operators and millions of subscribers," American Cable Association Chairman and Chief Operating Officer of Wave Broadband, Steve Friedman said. "They seem to have no trouble targeting a specific operator when they refuse to pay higher programming fees and it comes time to turn off their service, so how is it they can't target an operator with a dangerously misleading message like this?"

Comments

[Bud Buttlicks]

Yeah, I've been seeing this message on Nickeoleon for several hours. Luckily I have Comcast so it won't affect me I guess.

[rpmason]

Time Warner is right to stand up to Viacomm. Some of the channels are good (CMT, Nick) but most are junk (MTV, Spike).

[kmb]

Of course Time Warner's selection of channels AND its customer service suxx - duh - they told me years ago that they couldn't do anything about the snowy reception on a half-dozen channels at my house, nor the "ghosts" that appear on certain other channels. I pay them for (a) better reception on local channels than I would otherwise get, (b) Cartoon Network (young son), (c) Comedy Central and (d) Nick at Nite and TV Land (insomnia). Am now looking into Everest and the like. I've also heard that Time Warner is BLOCKING the shows on the channels it's dropping from anyone hooked up to the internet through them. True?

Suggestions for new cable and internet service, anyone?

[rudy]

it's time for change then like dvd's i hope tw looses big time!!!! oh and internet!

[Big kahuna]

I guess this gives me the incentive to yank Time Warner. I have been waiting for a excuse to get rid of them.

[Istok]

It would be a shame because of John Stewart but the rest of the crap shows that Viacom puts out: The Hills???!!!! WTF is that all about?

[rudy]

its all about greed. i really hope tw feels a big pinch from this reccession. why not charge less and make more?

[rudy]

i guess its time to switch cable to sattlelite

[NautyOne]

Yeah, right....Time Warner Cable is yanking every brainless channel I watch. If I don't get my fix of Vh-1 , Comedy central or Mtv.....I may have to be committed .....If I don't see the premier of Rock of love on Sunday the chit will hit the fan.

I think its a disgusting display from Time Warner and I am looking into another service.

Oh, and the bill says.."we are yanking 17 channels and raising your bill 3 dollars.. burn Time Warner ~~~~~~~!!!!!

[Calvina D]

What I've heard from the news, other than Comedy Central and VH1, along with the 17 others, a popular channel that my cousins all watch is Nickelodeon. All of these great exciting channgels are going to be gone. This is why time warner cable might soon be out of business. Our favorite television shows are going to be gone. This is really freaking terrible! A lot of people are disappointed. It's probably recession but still, I think Time warner cable might go on its down fall. Now, I just think they suck.

[realist]

cmon, really? This is all about $$$. Everything comes with a price. I'm sure TWC would have no problem showing even more channels and not worry about all of this nonsence if they weren't concerned about customers monthly rates. This was a bold, and necessary move by TWC to protect its customers.

[James Lamb]

This always turn out to be much ado about nothing and we keep getting sucked in anyhow. Come on, let's see something really exciting, let's see a "strike." Let's see one of these retrans break-down. This is just the union mentality all over again. Push it to the last second and then settle.

If Viacom really represents 20% of Time Warner's watched hours and 3% of the bill, then here's an idea... change people's perceptions. Add a 25 cent Viacom surcharge to the bill. Or list out by major media company how much of the bill is going out to them. Disney makes incredible bank off channels like the ESPNs that I never watch. Ditto the MTVs and VHs from Viacom.

Let me pick and choose my channels.

[E]

I reallly hope TWC goes down in flames. Their service is mediocre at best. (that's saying a lot) The only reason I have TWC is because i need internet, and for some reason verizon or at&t haven't been able to offer dsl in my area.. this is ludicrous, bye bye Time Warner Cable...