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Time Warner and Viacom Talks at a Standstill

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Authored by Jon Mercer in Movies and Television
Published on 01-08-2009

If you’re a fan of “The Daily Show with Jon Stewart” or even “Dora the Explorer,” you and as many as thirteen million other viewers could be missing out on these shows very soon. The ongoing legal dispute between Viacom Inc and Time Warner Cable has reached a stalemate, and sources on both sides say that there has been no useful communication between the two companies.

The issue at hand is that Viacom wants Time Warner to pay an extra $35 to $40 million for carrying its cable channels. Some of the Viacom channels in question are MTV, Nickelodeon, and Comedy Central. Billboard Magazine reported on their web site January 1, 2009 that the two company’s legal dispute was at a virtual standstill because Time Warner refused the price increase, claiming that in this economic climate it would be impossible to pass the cost increase along to their customers.

Viacom has refused a request by Time Warner for an extension of the current agreement, and instead have threatened to pull their TV networks from Time Warner at midnight January 1st unless a deal is reached. Although disagreements are common between cable companies and TV programmers, this one is particularly notable because of the involvement of two major companies. The dispute has also prompted a high-profile advertising campaign.

Time Warner is a huge outlet for programmers with a presence in cities like New York, Los Angeles, Dallas, and Cleveland, and representing more than 13.3 million cable TV subscribers. Viacom is equally strong with control of no less than nineteen major cable TV networks that carry many popular shows.

Viacom has taken the dispute public with a new ad campaign. “Why is Dora crying” is the title of one ad that Viacom recently placed in the New York Times. The ad states that Time Warner is taking “Dora the Explorer” off the air unfairly, along with nineteen other popular channels.

Neither company has the stamina for a long standoff, with Time Warner Cable about to lose the support of their parent company, Time Warner Inc, because the companies are planning to split into separate entities later this year. Equally, Viacom’s controlling shareholder, Sumner Redstone, is facing his own debt problems, so a settlement is expected very soon, though neither side has shown signs of giving in so far.

Viacom wants more money because it says viewers spend more than 20 percent of their time watching their programs. Viacom’s fees, however, amount to less than 2.5 percent of Time Warner’s total revenues.

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