Updated: Will Time Warner Cable really stop airing Viacom channels come New Years? No.

Categories: TV Business

Written By

December 31st, 2008

Update 2: As predicted, just a game of chicken and TWC and Viacom have settled their dispute.

Update 1: commenter "Mikey" provided us with some data in the comments and I've cleaned up the formatting and posted here. It is an analysis of the subscriber monthly cost per cable channel per tenth of a ratings point. Based on this data, Mikey gives the moral high ground in the dispute to Viacom (though he isn't advocating all the spin Viacom has surrounded its PR campaign with). There were some fairly big "wow" moments for me when I saw the cost of high performing networks ratings-wise like Nick and USA vs. say, TNT).

[original post from 12/30/08 below]


I'd probably ignore this and it would have merely been a reply to a comment left about Nikki Finke's post on the TWC vs. Viacom battle. But the comment was posted in the broadcast weekly top twenty, and replying there seemed awkward since it doesn't have a freaking thing to do with cable channels.

Viacom is asking Time Warner to pony up an additional $.25 per month, per subscriber. Time Warner's response so far is this: we'll pass on you and your cable channels. So Viacom is working the press, spinning tales about how 20% of TV viewing time is spent watching their channels so the increase is very reasonable.

While I understand Ms. Finke's dismay at potentially losing SpongeBob, my gut tells me that Viacom and TWC are different sides of exactly the same greedy coin. There's so much spin in the blurb she posted from TWC, that sorting through how misleading it is isn't worth the effort since conflict will likely be avoided.

Viacom is hurting in general, and this isn't a deal where it's looking to get paid, it's looking to get paid $.25/mo./subscriber more than it's already receiving from TWC. I do not in any way immediately jump to the conclusion that Viacom deserves a $.25/month increase across all subscribers, and Time Warner is armed with data about how much time its customers spend watching Viacom channels.

I seriously doubt Viacom will give up all the revenues it receives from TWC in the name of earning an additional few million or so a month, but I also seriously doubt that TWC can handle the customer service hit. You can't go dark on Nickelodeon, Comedy Central and MTV, etc. without running into a customer service nightmare.

Right now it seems like just an interesting game of chicken heading into the New Year, and the stuff Nikki Finke posted is pure Viacom propoganda in hopes of gaining some negotiating leverage. My bet is one of them, probably Viacom, blinks before the networks go dark on TWC. Can Viacom afford to lose the TWC subscriber base? Hell no. It would be looking at all kinds of make goods if that happened.

Can TWC really take on the customer service nightmare and lost local ad revenues for those channels? Not paying any fees at all would more than make up for the local ad revenue, but at the expense of screaming customers, and increased defection to satellite, and where available, FiOS. Though TWC seems in a better position than Viacom, TWC is clearly not going to be able to reprise Michael Corleone in The Godfather, part II and take a position like:

Viacom, you can have our answer now if you like. Our final offer is this: nothing. Not even the monthly fees we we're already paying you...

...but it's fun to think about.

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