Disney Keeps Channels on Time Warner Cable as Talks Extend Past Deadline

Walt Disney Co. kept its ESPN, ABC and other networks on Time Warner Cable Inc. systems while negotiations to resolve a fee dispute extended through a midnight deadline.

The sides are still talking and programming is still on the air, Maureen Huff, a spokeswoman for New York-based Time Warner Cable, said in an e-mail at 6 a.m. local time.

About 13 million Time Warner Cable subscribers would have lost ESPN and Disney Channel in a blackout. Customers in New York, Los Angeles, and Raleigh, North Carolina, would lose ABC as well. A standoff would threaten Disney’s advertising revenue, and potentially trigger defections at Time Warner Cable.

Sticking points in the negotiations have included whether Time Warner Cable should pay Disney for its ESPN3.com website and if it should carry Disney Jr., the preschool service Disney is converting from SoapNet next year, a person familiar with the negotiations said last week.

Burbank, California-based Disney is probably seeking at least 50 cents per subscriber per month for ABC, and as much as a 10 percent increase on its cable fees, said Andrew Kim, an analyst at Macquarie Capital in New York.

ESPN Programming

In addition, Disney requested 10 cents a month per Web customer for ESPN3.com, said the person with knowledge of the negotiations, who declined to be identified because the talks are private. ESPN, the most expensive channel on the dial, received $4.08 per customer monthly on average from pay-TV operators last year, while the Disney Channel brought in 88 cents a month per subscriber, according to researcher SNL Kagan.

Time Warner Cable fell 49 cents to $54.47 at 9:41 a.m. in New York Stock Exchange composite trading. The shares gained 30 percent this year before today. Disney advanced 29 cents to $33.80 today and had risen 3.9 percent in 2010.

In January, Time Warner Cable almost lost Fox-owned TV station programming after a fee battle with parent News Corp. The dispute was later resolved in overnight talks. In March, Disney struck a deal with Cablevision Systems Corp. for its ABC stations after a dispute blacked out the opening minutes of the Academy Awards for Cablevision’s 3.1 million New York-area customers.

For about two decades, the owners of networks gave away broadcast rights for their stations, relying on higher programming fees for their cable networks or better channel positioning to help drive sales. Disney, like other broadcast network owners, has been seeking fees for its ABC network, in addition to asking for higher prices for its cable networks and introducing new Web fees.

Time Warner Cable has tried to stem costs by resisting increased fee demands. In national campaigns, Chief Executive Officer Glenn Britt has asked subscribers to pressure programmers to keep costs low. Britt said that higher fees ultimately are billed to the customer and that network programming is free on the Internet and over the air.

To contact the reporter on this story: Kelly Riddell in Washington at kriddell1@bloomberg.net.

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