There was a major battle between Cablevision Systems Corporation and ABC-Disney involving retransmission payments. The signal for ABCs New York station, WABC, has been retransmitted, essentially free, by Cablevision for decades. But Cablevision said last week that ABC wanted $40 million a year, or about $1 per month for each subscriber, to continue providing programming.
The retransmission payments are growing more common as television stations seek to supplement advertising with a new, predictable revenue stream. Cable providers already receive monthly payments, and ABC demanded a portion. It was reported that Cablevision made a counter offer to ABC of roughly .25 cents per subscriber. But ABC rejected it.
Unable to reach an agreement, Disney warned that it would cut off Cablevision’s ability to show WABC at midnight on Saturday night if a payment deal was not reached, leaving millions without the channel. The decision to pull ABC on Saturday night was probably a tactical one intended to force Cablevision to comply with ABC’s demand since the Academy Awards was scheduled to be broadcasted on ABC the following night (Sunday night). In commercials on the station’s website, WABC urged viewers to send email messages to the cable distributer saying, “Lose my shows, lose my business!”
Senator John Kerry, Chairman of the Commerce Committee’s Subcommittee on Communications, Technology and the Internet, urged the FCC to intervene so that consumers would not lose access to ABC. However, ABC pulled its programming off Cablevision at 12:01 on Sunday, removing the channel from more than 3 million New York area homes after failing to reach an agreement with the cable provider.
“It is now painfully clear to millions of New York area households that Disney CEO, Bob Iger will hold his own ABC viewers hostage in order to extract $40 million in new fees from Cablevision” said Cablevision’s executive vice president Charles Schueler, in a statement 5 minutes after midnight.
WABC’s president and general manager, Rebecca Campbell, countered with this statement: “Cablevision pocketed almost $8 billion last year, and now customers aren’t getting what they pay for. It’s time for Jim Dolan and the Dolan family dynasty to finally step up, be fair, and do what’s right for our viewers.”
Disney is said to be under pressure to stand its ground because if it doesn’t win concessions from Cablevision, it will be virtually impossible to push for so-called retransmission payments when ABC’s contracts come due with providers like Time Warner Cable.
On Sunday, Senator John Kerry urged ABC-Disney to restore ABC to Cablevision customers and suggested binding arbitration to resolve the dispute.
This prompted Schueler of Cablevision to issue the following statement yesterday:
“Given the extraordinary public interest in this matter Senator Kerry and other public officials have suggested that arbitration is appropriate in this highly unusual situation. Thus Cablevision will agree to binding arbitration and calls upon Disney CEO Bob Iger to immediately return ABC to New York are viewers and join us in binding arbitration to resolve this matter fairly.”
It appears that the dispute has been settled. According to people close to the matter, Disney and Cablevision traded counter-offers on Sunday, and real movement began after 5 p.m. Eastern time. They reached a verbal agreement at some point after 8 p.m. Terms of the tentative deal were not disclosed and there were differences of opinion of the value of the contract. One person familiar with the pact said it came out to about 55 cents to 65 cents per subscriber; another said the figure was closer to 27 cents to 37 cents.
It’s not surprising that Senator Kerry recommended arbitration to settle this dispute. Arbitration is the fast, inexpensive and convenient because it can take place at any time – even shortly after midnight. Binding arbitration can be enforced in the same manner as an Order or Judgment by a Judge in civil court. An added benefit of arbitration is that it is private and confidential. No one is allowed in the arbitration hearing unless all parties agree. Also, the record of the arbitration hearing will not be filed in court where the press may be able to gain access.
If you are interested in using arbitration to settle your dispute, or if you would like to include an arbitration clause in a contract you are negotiating, contact me for more information at: www.w-phillips.com
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