Viacom and Time Warner Cable reached an agreement in principle on Thursday that avoided a blackout for 13 million cable subscribers. The two companies said in a statement they expected to finalize details of the agreement over the next week. Affiliate fees have become more important lately as ad revenues are declining. So Viacom wanted Time Warner Cable to pay an extra $35 million to $40 million a year for carrying 19 of its cable channels, including MTV, Comedy Central and Nickelodeon. Time Warner had refused, citing the economic climate makes it impossible to pass along the costs to its customers. Viacom also denied Time Warner’s request for an extension of the current terms and threatened to pull its networks from Time Warner at midnight 1/1 when the current contract is up, unless a deal was reached.
In the midst of it all, Viacom launched an ad campaign in the NY Times entitled, "Why is Dora crying? Time Warner is taking Dora off the air tonight! Along with 19 of your favorite channels." However, after the deal was struck, Viacom was unable to pull previously placed ads, including print, in New York, Cleveland, Orlando, Dallas and Raleigh.
Viacom said it deserves a larger revenue share because viewers spend more than 20% of their time with its networks, but its fees amount to less than 2.5% of Time Warner’s revenues from viewers. It believes the additional rate would cost subscribers around 25 cents more per month.
Said Time Warner Cable CEO Glenn Britt: We are pleased that our customers will continue to be able to watch the programming they enjoy on MTV Networks. We are sorry they had to endure a day of public disagreement as we worked through this negotiation."
Said Viacom CEO Philippe Dauman: "It’s gratifying that we could reach an agreement that benefits not only our audiences but that is also in the best interest of both of our companies."