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Time Warner's "Get Tough" Campaign Caved In to Disney/ABC's Demands
So much for “getting tough.”
Time Warner Cable averted a blackout of several Disney-owned cable and broadcast outlets Thursday when it cut a deal with Disney to keep programming on Time Warner Cable. As part of the agreement, the nation’s second largest cable operator agreed to add several Disney-owned networks subscribers will ultimate pay higher cable bills to receive in 2011.
The cable trade and business press are applauding the agreement. The Wall Street Journal said the two sides surprised the TV industry by avoiding the level of public acrimony common with similar disputes in the past, avoided nasty publicity campaigns, and reached an agreement that avoided a standoff.
“We are pleased to have reached an agreement without any interruption in service,” said Time Warner Cable Chief Executive Glenn Britt.
Subscribers may also appreciate they aren’t facing the loss of programming they would still pay for as part of their monthly cable bill.
Disney wins new fees for carriage of ABC shows approaching 50 cents a month per subscriber, according to sources close to the negotiations. The programmer also will receive substantial increases in payments from the cable company for ABC Family and The Disney Channel, along with the right to repurpose that programming online through services like Hulu and ABC.com.
Time Warner Cable has argued that programming costs make up the bulk of rate increases, yet its newest agreement with Disney compels the cable company to add additional networks and services cable subscribers may have no interest in receiving, much less paying to receive.
Among them are:
- Disney, Jr., a new 24-hour cable network targeting preschoolers which will replace ABC SoapNet in early 2012;
- ESPN Goal Line, a new network showing reruns of college football games;
- ESPN Buzzer Beater, still another new network rerunning college basketball games is also under development and will be added to Time Warner Cable’s lineup when launched.
- ESPN 3D, which will show-off sporting events on newly available 3D televisions.
- The addition of ESPN Deportes HD to Time Warner Cable’s larger footprint.
- Availability of ESPN Radio feeds in New York, Los Angeles and Dallas to Time Warner Cable’s video platform.
- A Time Warner Cable/ESPN Deportes co-branded, Spanish language sports website in Los Angeles.
One of the most contentious issues in the debate had been online video programming. Time Warner Cable agreed to add ESPN3, an online network, for “authenticated” cable subscribers who have a package that includes ESPN. That’s a departure from Disney’s usual demand that operators pay a fee for every broadband customer they have in return for access. That means Time Warner Cable customers who subscribe to a TV package will soon be able to access ESPN, ESPN2, ESPN3, and ESPNU even if they don’t subscribe to Road Runner. But it also means Road Runner customers who don’t take cable-TV will not have access.
Finally, Time Warner Cable won the right to include on-demand access to popular ABC and Disney Channel shows.
Ultimately cable customers will pay a price for this agreement, facing even higher cable rate increases in 2011 to cover the costs for additional programming. Many critics contend Time Warner Cable’s “Roll Over or Get Tough” campaign is more public relations than substance. The company can claim they are fighting for subscribers when an intransigent programmer forces the cable company to take networks off the air, but in reality most of the time agreements are reached that look to many more like “rolling over” than “getting tough,” especially when the company simply passes along the added costs to cable customers.
http://www.phillipdampier.com/video/CNBC Disney Time Warner Agreement 9-2-10.flvCNBC covered the announced agreement between Time Warner Cable and Disney, reporting it was Disney’s largest carriage deal ever. (2 minutes)
Other stories of interest:
- More Carriage Disputes: Time Warner vs. Disney, AT&T vs. Hallmark – Online Video Dispute New to Fight
- Fox, Bright House Networks and Time Warner Cable Reach Agreement in Principle That You Will Pay For
- Time Warner Cable Tries to Control Online Video Onslaught With iPad App to Manage Your Cable TV
- One Day Left for Fox-Time Warner Cable Negotiations
- Time Warner Cable Needs Internet Overcharging Because Their Employees Need a Raise
These Networks are biting off more than they can chew. More and more people are going to drop cable if this keeps happening, which it will. Once that happens, I think a wonderful thing will happen. Instead of total domination by certain networks, we would see independent Internet only TV stations popping up producing their own content. Competition is great and I thank the Internet for giving the consumer more choice.
Phillip writes regarding ESPN3 that: ” [...] it also means Road Runner customers who don’t take cable-TV will not have access.” This is the way I also understood it when I read in the news about the new TWC-Disney agreement. However, I am trying to save money in these tough times and I cancelled my TWC Cable-TV (I rarely watch TV anyway), and I only have Road Runner now. I was curious about this and I have just called the Road Runner national hotline and customer service rep. told me that I would be able to access ESPN3 even if I don’t have Cable-TV. I would be greatly appreciative if Phillip double-checks this issue and offers all of us the final word on ESPN3 (I would have been able to watch my SU Orange beat Akron had I had access to ESPN3 last night!).
The Road Runner national help desk is run by a third party company, although I’m not sure that’s who you ended up talking with. The agreement says fees for ESPN3 will be paid for each cable TV subscriber, not each broadband customer. Various reports indicated the authentication method would be tied into who is subscribing to cable TV.
HOWEVER, after visiting ESPN3′s website, I noticed they haven’t gotten TWC in their system yet, and the traditional way of verification has tied to where your Internet connection originates from. Therefore, I would actually not be surprised if unofficially any Road Runner (or even potentially Earthlink) customer can get through the pay wall.
The problem is going to come from cable subscribers who use someone else for Internet. I don’t know how they’ll handle that, unless the other provider also offers ESPN3.
Honestly, the best way to test this out will be when TWC is listed and then we can test it ourselves. I have cable and broadband from TWC, my cousin has Earthlink and no cable TV package, and you have Road Runner but no cable TV, so between all of us, we should be able to figure out what is really going on.
BTW, a lot of folks were looking for that Akron/SU game in upstate NY, but YNN News made a point to say the system wouldn’t be ready to recognize TWC subscribers in time.
Thanks Phillip. If it’s not the case that I can’t watch ESPN3 because I don’t subscribe to Cable TV, I have the option here in the Syracuse area to switch to Verizon Fios internet. The CR from TWC national helpline told me that ESPN3 will be available by next month to me even if I only have RR internet. I will wait until then to see. As to TV, I get about 14 local channels in HD (whenever broadcast) and the quality is very high with my antenna. I don’t mess having to pay for cable and the channels that I never like to watch.
The only concern I have with Verizon Fios is that they require customers who only subscribe to internet to provide a credit card (Time Warner Cable does not do so, and I have to say that I have found TWC customer service at its Syracuse-area offices to be outstanding). I don’t believe that I should give mu credit card access to Verizon just because I have internet without their other products (which they like all of us to “bundle”).
Funny how the “bandwidth hog” logic of the Cable Co’s going metered for internet saying nobody should have to pay for a small amount of users that use up the most bandwidth doesn’t apply to cable TV subscribers having to pay for all the premium ESPN, Disney, and other programming channels that get bundled into the required tier of channels.
Surely if they were so inclined to be looking out for their customers they’d offer ala carte programming so you don’t have to subsidize someone elses channels that you don’t watch/use.
After rolling over, it seems that TWC is getting tough on your pocket book pretty quickly. Today I received my September bill to see that in October the cost of DVR service is going from $10.95 to $12.95 (18% for that service).
Time to trim another item off of my TWC bill. I already quit HBO, I guess the DVR is next.
I have just found found the following link from TWC, which explains the ESPN3 issue:
http://www.twcableuntangled.com/2010/09/espn3-we-have-a-deal-but-its-going-to-take-time-to-implement/
I will be canceling my TWC Roadrunner as soon as possible and switching to Verizon. No, I don’t like Time Warner Cable’s “business model.”