Dora Roped Into Viacom-Time Warner Fee Spat
MELISSA BLOCK, host:
From NPR News, this is All Things Considered. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel. There's an ad in the New York and LA papers today that shows how bitter a cable contract dispute has become. It's a drawing of Nickelodeon's "Dora the Explorer." A tear is falling down her cheek. There's a look of alarm in the eyes of her sidekick, Boots the monkey, whom she's hugging, and the ad asks, "Why is Dora crying?" And then it says, Time Warner Cable is taking Dora off the air tonight along with 19 of your favorite channels. If you took a magnifying lens to the ad, you could see at the bottom that it's paid for by Viacom. And here to explain the dispute between Viacom and Time Warner Cable is Meg James, she's a business reporter for the Los Angeles Times. Hi.
Ms. MEG JAMES (Business reporter, Los Angeles Times): Good afternoon.
SIEGEL: Let's start with what these two companies are. First, what is Time Warner Cable?
Ms. JAMES: Time Warner Cable is the second largest cable company in the United States. It has a tremendous amount of customers in both Los Angeles and New York and other areas of the country. They have about 12.3 million subscribers nationwide.
SIEGEL: And what is Viacom?
Ms. JAMES: Viacom is one of the largest cable channel programmers. They own such channels as MTV, VH1, Nickelodeon, BET, TV Land, Spike and Comedy Central.
SIEGEL: And those are the channels that, I gather, barring a last minute deal will disappear from Time Warner customer's cable service tonight.
Ms. JAMES: Right. As of midnight, Time Warner would no longer have the authority to run the Viacom channels.
SIEGEL: These would seem to be two companies that need each other and that have to reach some kind of agreement in order to reach audiences. What's the hang up?
Ms. JAMES: The hang up, of course, is money, as it always is. Time Warner says that Viacom is asking for an additional $39 million a year, and in this economic climate, when cable subscribers are so sensitive to their rising cable bills, they're unwilling to grant such an increase to Viacom.
SIEGEL: And what's Viacom's justification, apart from the fact that it wants to make more money, why do they say they should get any more money from Time Warner?
Ms. JAMES: Viacom says that they're actually not being compensated adequately for their very popular programming. They have very popular characters - Dora, iCarly, SpongeBob - and they feel Time Warner should be increasing their payments to Viacom to help them cover the rising costs of programming.
SIEGEL: Comedy Central, also, I guess, would be a big success story for them recently?
Ms. JAMES: Definitely. Comedy Central is very important, and that actually raises another point that Time Warner makes, is that Viacom has made so much of the Comedy Central programming available for free on the internet, so why are they asking Time Warner Cable subscribers to subsidize so much of this?
SIEGEL: Have we actually had, I'm trying to recall, have we had real blackouts before where people wake up on January 1st or whenever the contract expiration was and that favorite cable channel has just gone?
Ms. JAMES: There have been examples a few years ago. Lifetime was involved in a very messy contract dispute with EchoStar, the satellite provider. And Lifetime channels were removed for a couple of months, and the cable networks had a hard time recovering from that.
SIEGEL: Yeah, I assume it must be terrible for business, either to be the cable company and have blacked out channels or to be the programming company and to not have a loyal audience to talk to for weeks.
Ms. JAMES: Exactly. And also their ad revenues will fall because about one-tenth of the country that won't be receiving these programs. And also for Time Warner, their switchboards will likely be jammed for people saying, "What happened to Dora," and "What happened to SpongeBob"?
SIEGEL: Yeah, and each side, I gather, is saying the other one is taking it off the air, if it should actually disappear.
Ms. JAMES: Well, as you pointed at the top of the interview, that Viacom has already taken out these ads blaming Time Warner for the stalemate, and Dora has a big tear in her eye. And what one Time Warner spokesman told me this morning was, well, the reason why Dora is crying is she's going to have to be riding coach from now on.
(Soundbite of laughter)
SIEGEL: Well, Meg James, thanks a lot for talking with us about the Viacom Time Warner dispute and the cable channels and characters, including Dora the Explorer, who are caught in between.
Ms. JAMES: Thank you very much.