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3.1M customers face Oscar night without broadcast

Cablevision subscribers were scrambling Sunday to hook up antennas or find live TV on the Internet in order to watch the Academy Awards after ABC's parent company Walt Disney Co. switched off its signal in a dispute over fees.
/ Source: The Associated Press

Cablevision subscribers were scrambling Sunday to hook up antennas or find live TV on the Internet in order to watch the Academy Awards after ABC's parent company Walt Disney Co. switched off its signal in a dispute over fees.

The standoff affected 3.1 million subscribers to Cablevision Systems Corp. in parts of New York, New Jersey and Connecticut. It was the first time in a decade that a major broadcast station went dark in a dispute with a cable company.

As Cablevision customers and consumer groups fumed, lawmakers including U.S. Sen. John Kerry, U.S. Rep. Nita Lowey and Governor David Paterson said Disney and Cablevision should agree to binding arbitration if they cannot resolve the dispute on their own. "It is imperative that consumers be held harmless during this process by having the signal restored immediately," said Lowey, D-N.Y.

The companies traded blame for the stalemate ahead of one of the most-watched nights of television.

"Cablevision has once again betrayed its subscribers," said Disney spokeswoman Charissa Gilmore. "Cablevision pocketed almost $8 billion last year, and now customers aren't getting what they pay for ... again."

ABC said Sunday afternoon that it had sent Cablevision a new proposal and was awaiting a response. No details on the new proposal were provided.

Cablevision said Sunday it would agree to binding arbitration and blamed the stall in negotiations on Disney CEO Bob Iger. "We remain deeply disappointed that ABC Disney has put their own financial interests above their viewers and pulled the plug on ABC," said Charles Schueler, Cablevision's executive vice president of communications. "We have communicated our position to the highest levels of the FCC and urged the agency to appropriately involve itself in this process."

Federal Communications Commission spokesman William Lake said Sunday that the agency has been in touch with both companies and was monitoring the situation closely. Disney spokeswoman Karen Hobson did not say whether the company also would agree to arbitration, but stated that "it would be more constructive for Cablevision to deal with the offer that we have on the table...The ball's in their court."

ABC's signal can still be pulled from the air for free with an antenna and a new TV or digital converter box. But Cablevision customers were angered over being the losers in a fight between two corporations.

"It's not fair," said Ranee Gaynor, who said Cablevision is the only cable provider available in her Bronx neighborhood. "We don't have a choice."

Gaynor said she would try to watch Sunday night's Academy Awards show on the Internet. "Either that or go to someone's house in Manhattan," she said.

Juliana Mapson of Brooklyn said she might try to hook up an antenna before the show started.

"What can I do?" she asked. "I don't understand why they couldn't come to some conclusion."

The dispute is another example of how networks are struggling to find profits as advertising revenue dwindles and programming costs grow. Networks are transmitted freely over the airwaves, but expensive event programming has led the companies behind them to increasingly demand fees from cable TV and satellite operators for retransmitting those signals.

Cablevision has argued that Disney is seeking an additional $40 million a year in new fees, even though the company pays more than $200 million a year to Disney.

Disney counters that Cablevision charges customers $18 per month for basic broadcast signals but does not pass on any payment for ABC to Disney.

The dispute is similar to a standoff at the end of last year between News Corp. and Time Warner Cable over how much Fox television station signals were worth. That tussle, which threatened the college football bowl season and new episodes of "The Simpsons," was resolved without a signal interruption.

Cablevision also feuded with Scripps Networks Interactive Inc. in a January dispute that temporarily forced the Food Network and HGTV off the service. Neither side provided terms of an agreement that restored the channels after three weeks.

Disney is asking Cablevision to pay about $1 per subscriber per month, the same amount that News Corp. demanded from Time Warner in their dispute. Some analysts think News Corp. eventually accepted about 50 cents per subscriber.

Derek Baine, a senior analyst at SNL Kagan, said that if all four networks charged $1, that would total $4 a month in new fees. Most cable companies couldn't absorb that cost increase and would have a hard time passing them onto consumers, he said.

"That's a lot of money," Baine said. "They're just playing chicken here."

Disney's previous contract with Cablevision expired more than two years ago, but it was extended month by month as talks continued. Under previous arrangements, Disney was paid for cable channels such as ESPN and Disney Channel, but gave its ABC broadcast signal away for free, a situation that most broadcasters are now trying to change.

"We can no longer sit back and allow Cablevision to use our shows for free while they continue to charge their customers for them," WABC's Campbell said.

WABC-TV is the most-watched TV station in the country, said Disney, which is based in Burbank, Calif.


Associated Press writer Christopher S. Rugaber in Washington, D.C., contributed to this report.