Viacom Inc. threatened to pull shows such as “Dora the Explorer” and “The Daily Show” from Time Warner Cable Inc. systems on Jan. 1 if the companies don’t reach a new programming agreement.
Viacom, controlled by Sumner Redstone, is seeking an increase in affiliate fees of less than 25 cents a month for each subscriber for all 19 of its MTV Networks cable channels, including Nickelodeon and Comedy Central, the New York-based company said yesterday in an e-mailed statement.
With advertising weak, the fees are a crucial source of revenue for cable programmers such as Viacom. The company, which also owns Paramount Pictures, reported a 12 percent increase in revenue from affiliates to $660 million in the third quarter, accounting for 19 percent of total sales.
“Talks have stalled,” Viacom spokeswoman Kelly McAndrew said in an interview. “We remain hopeful they will come back to the table and discuss a reasonable agreement.”
Alex Dudley, a Time Warner Cable spokesman, said the company is willing to pay a “modest increase.”
“They are clearly desperate to make up for sagging ratings and sagging ad revenue on the backs of Time Warner Cable customers,” Dudley said in an interview. The New York-based cable company is prepared to refund customers for the lost programming, though the amount hasn’t been determined, he said.
Time Warner Cable is the second-largest U.S. provider behind Comcast Corp., with 13.3 million basic video subscribers. It is 84 percent owned by Time Warner Inc., which is disposing of its take in the pay-television service.
Viacom rose 66 cents, or 3.8 percent, to $18.21 yesterday in New York Stock Exchange composite trading. The Class B shares have dropped 59 percent this year. Time Warner Cable gained $1.56, or 7.7 percent, to $21.76. The shares have fallen 21 percent.
Rising affiliate fees have helped counter falling cable advertising sales. Ad revenue at Viacom’s cable networks dropped 3 percent in the U.S. in the third quarter, the company said on Nov. 3. Cable channels contributed 97 percent of the company’s operating income last year.
“The renewal we are seeking is reasonable and modest relative to the profits TWC enjoys from our networks,” Viacom said in the statement.
Viacom announced plans to cut 850 jobs, or 7 percent of its workforce, on Dec. 4 and will write down the value of some assets in response to falling ad sales and viewership.
The company’s shows also include “The Colbert Report” and “SpongeBob SquarePants.”
The dispute with Time Warner Cable comes as Redstone is seeking to renegotiate bank loans at his family holding company, National Amusements Inc. A drop in the shares of Viacom and CBS Corp., another Redstone holding, led to a violation of covenants at the holding company.
Tags: WTF, Price Hike, Cable, Viacom, Time Warner.
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