And the Oscar Loser Is…

Sunday night, millions of TV viewers across the nation and around the world will be watching the Academy Awards ceremonies, with the possible exception of Cablevision subscribers in the New York City area, including the Bronx, Brooklyn, Long Island, and Westchester County. The problem is that the ABC network (and its parent company Disney) want Cablevision to pay for the right to rebroadcast the programming from WABC7, the New York City local station that many of the cable’s subscribers could get for free over the air. If they don’t, the ABC will shut down the rebroadcast of Channel 7 at midnight tomorrow, Saturday March 6.

According to Cablevision, the company already pays Disney $200 million a year for other Disney channels, and claims that they are being held up for another $40 million for Channel 7. That amounts to a 20% increase in fees with no change at all in the programming offered. For its part, ABC claims that Cablevision is already paying much more than $40 million to other providers for content that is attracts far fewer viewers than WABC does.

I don’t have a winner picked in this dispute. I predict that both will lose; at the 11th hour, someone will blink and they will reach a settlment. We’ve seen this brinksmanship before with other network/cable disputes around the SuperBowl last year and college bowl games this year. And both sides are right. Cable companies are already under fire for constantly raising subscription rates with little or no increase in programming. And the networks are watching revenues dry up as advertiser budgets repeatedly get cut and spread thinner, and viewers skip more and more commercials.

Someone has to pay for the production and distribution of this content, but if the networks and cable companies think the solution is to try to beat each other up over it, then everyone will lose. We need new revenue models in order to make this entertainment content widely available.

UPDATE 3/8/10: As predicted, the signal came back on at 8:43 PM Eastern Sunday night, just in time for the start of the Academy Awards broadcast. According to reports, Disney was asking for $1 per subscriber while Cablevision offered $.25 per subscriber, and the tentative deal apparently came in around $.60 per subscriber. (Sounds like about the midpoint to me.) We have not heard the last of this type of dispute, as broadcasters will start to charge other cable companies for the right to carry their content. And this is a little ironic when you consider the history of cable companies; they originally started as CATV — community antenna television — where they would receive distant broadcast signals for free using a tall antenna, and then distribute the signal to the community.