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Cablevision Calls ABC's Carriage Fee A "TV Tax"

Remember earlier this year, when Cablevision customers were forced to miss programming from Food Network and HGTV during a contract negotiation with their parent company, Scripps?

Now, they're slinging mud with ABC. At least in New York where WABC could be forced off Cablevision's systems, until negotiations are complete. (At least, I hope it's just WABC. If ESPN ends up being a pawn in this dispute, then I'll be angry.)

Anyway, below is the transcript of a message that is currently running on a loop on Channel 1999. I thought I'd write it up and disclose it for all to read. Talk about negotiation tactics... just tell viewers Disney's theme parks are bleeding money, and their top executive is making close to $1 billion, while hundreds of ABC employees are let go. That'll fire 'em up!

Here's more information on the dispute that could mean WABC could be gone from Cablevision as soon as Monday:
http://money.cnn.com/2010/03/02/news/companies/cablevision_disney/

------------------------------------------------------------------------------------

Right now, Cablevision is trying to negotiate a new contract with ABC. In response, ABC is threatening to pull Channel 7 (WABC) off your Cablevision system on March 7th. This is ABC's decision. Not Cablevision's. We would never choose to take ABC off the air. At Cablevision, we want you to know the truth about this situation.

Here are the facts: ABC is saying it will pull Channel 7 from our lineup unless we pay them $40 millionmore per year. That's right. $40 million. It's a 20% increase over the $200 million Cablevision currently pays ABC's parent company (Disney) for their group of networks, which includes ESPN, ESPN2, Disney Channel and ABC Family Channel. but ABC has offered us and our customers nothing new in return. No new programming. They just think they deserve a $40 million raise. We think in these economic times, ABC's demands are just not fair, especially since ABC has a license from the government, which they paid nothing for, to broadcast for free, over the air. Plus, they make most of their shows available for free on the Internet.

Still, we want to keep ABC on the air. Recently, we offered to pay as much or more than what we pay other broadcast networks. They have rejected this offer, and every generous offer we've made so far. ABC's parent company already owns the most expensive cable network in America, ESPN. now, ABC thinks it should be the most expensive broadcast network. The fact is, ABC is pursuing a strategy of unreasonable demands and fee increases that can cost Americans more than $1 billion a year, just to watch their one network.

So, why is ABC making this outrageous demand? They will tell you they deserve it, because of all the great programming they have. Well, we think there are other reasons ABC is suddenly demanding this money. First, like all businesses during these hard economic times, ABC's advertising revenues are down. And to make matters worse, ABC has not invested in state-of-the-art interactive advertising technologies, instead relying on 1960's-era technology. Second, their various theme parks around the world are struggling, and ABC needs to find money to prop them up. Third, ABC's sister company, ESPN, is stuck making huge payments for out-of-control sports broadcasting rights. Finally, perhaps ABC needs an extra $40 million a year to support salary and bonuses for their executives. CEO Robert Iger alone has been paid $72 million in salary and bonuses over the past two years, even though his company is suffering. In fact, ABC just announced layoffs to over 300 staffers at ABC News.

Now, we have repeatedly asked ABC to keep Channel 7 on the air, while we continue to negotiate a fair deal. But ABC wants its millions. They claim they will pull the network off the air, unless we pay what is essentially what is essentially a $40 million "TV tax" on Cablevision customers.

So, don't be misled by a slick ABC advertising campaign that features ABC programming, but never mentions how much money they want, or the fact that they seem willing to pull their channel to get the millions they are seeking. We apologize for their actions, and ask for your help.

You can make a difference in this dispute. Call 1-877-NO-TV-TAX, and tell ABC what you think of their ransom demand. Or visit http;//www.cablevision.com/abc, and send their executives an e-mail expressing how you feel.

Thank you for listening to this message, and thank you for your patience. The last time we had one of these disputes (with Scripps, forcing Food Network and HGTV off their systems for several days), your involvement helped bring that conflict to a positive conclusion.

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ABC's website:
http://www.saveabc7.com/
 
What areas does Cablevision cover besides parts of NY, NJ and CT? Would those Connecticut customers which get both WABC and WTNH-TV (ABC) channel 8 of New Haven, lose WTNH, too?
 
KML-224 said:
What areas does Cablevision cover besides parts of NY, NJ and CT? Would those Connecticut customers which get both WABC and WTNH-TV (ABC) channel 8 of New Haven, lose WTNH, too?

WTNH is not owned by ABC, so they would not be affected. I believe Cablevision's only service area is the tri-state NYC metro region.
 
ESPN already charges well over $3.00 per subscriber. ESPN also reserves the rights to increase the fees without notice whatsoever in many MSO agreements.

ESPN already gets into the skin of cable providers. They bully for lower channel positions and higher fees. Having a popular sister station wanting more of the pie is going to make cable providers madder. So is asking to pay for something that the end user can get for absolutely free.
 
jal41 said:
So is asking to pay for something that the end user can get for absolutely free.

Well, Cablevision could try pointing that out to their viewers. Somehow, I don't think that they're likely to do so, because the fact is that Cablevision does profit by reselling the programming of major broadcast stations to their subscribers...and they don't want to remind those subscribers that some of the most popular programming that they carry is available for free with an antenna.

The bottom line is that since Cablevision does profit by retransmitting WABC, it is perfectly reasonable for ABC to want a cut of those profits in the form of retransmission consent fees. Considering the relative ratings of the channels, I'd say that $1/month for WABC is actually more reasonable than the fees charged by ESPN (which are up around $4).
 
There's one Cablevision (Hamilton, NJ) system in Mercer County that gets both WPVI and WABC, so both could be affected. The system doesn't represent many homes for WPVI though.
 
When ABC keeps alleging Cablevision charges its customers "$18 per month" to get WABC/7... if I'm not mistaken, isn't that the cost of Cablevision's "broadcast basic" package, i.e. the lowest of the tiers of service (only the broadcast channels and a few shopping channels)? If that's the case, I'd love to see Cablevision break down the $18 cost - let's see, cable box, service, remote...
 
DToTheJ said:
When ABC keeps alleging Cablevision charges its customers "$18 per month" to get WABC/7... if I'm not mistaken, isn't that the cost of Cablevision's "broadcast basic" package, i.e. the lowest of the tiers of service (only the broadcast channels and a few shopping channels)? If that's the case, I'd love to see Cablevision break down the $18 cost - let's see, cable box, service, remote...

Seems to me it isn't ABC that's charging the "TV tax"!

_________________________________________________

(Seriously, I object to private firms applying the tag "tax" to a charge levied by another private company. Real, actual taxes -- those paid to government -- are a difficult political issue as it is. We don't need people muddying the waters by trying to make the public believe a private charge is a "tax".)
 
Do the TV statons pay the FCC anything in yearly fees or such for being allowed to have a channel on the spectrum? Seems that the FCC should charge a "rental" fee to each OTA broadcaster for spectrum usage.

Congress needs to allow the FCC to actually have some "teeth" like they did in the old days and make broadcasters EARN the spectrum they are given or have to give it up to someone that will.
 
Mark said:
Do the TV statons pay the FCC anything in yearly fees or such for being allowed to have a channel on the spectrum? Seems that the FCC should charge a "rental" fee to each OTA broadcaster for spectrum usage.

Congress needs to allow the FCC to actually have some "teeth" like they did in the old days and make broadcasters EARN the spectrum they are given or have to give it up to someone that will.

Mainly fees it seems. Including license renewal fees, which would be the closest there is to a recurring fee. Mainly the fees cover the costs of FCC regulation.

http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-209A1.pdf (see p. 26)
And non commercial stations maybe exempt.
 
Damn... I am sure glad that I dumped cable a year ago. I'm perfectly happy with my 30 Digital channels I get with my antenna for Free. Yeah.. even ABC. I get Two of them! It's all about money and I've never been happier since I took myself out of that race. Nobody can take my channels away.
 
Skynet74 said:
Damn... I am sure glad that I dumped cable a year ago. I'm perfectly happy with my 30 Digital channels I get with my antenna for Free. Yeah.. even ABC. I get Two of them! It's all about money and I've never been happier since I took myself out of that race. Nobody can take my channels away.

I did the same thing. $75 a month just isn't worth it, considering all I watch other than locals is CNN (some content is online), ESPN/ESPN2 (only worth it for games), Fox Sports Net Arizona (local team coverage is better on radio anyway), and occasionally NFL Network and Big Ten Network. And I only watch the locals for news, Suns games, and maybe Jeopardy and a few movies & reruns on AZTV/RTV (KAZT) or This-TV (KTVK).

Between my local stations and online, there's plenty to watch without that extra cost, if I want to. But the only problem will be if the locals decide that they can do without the 15% or so of their audience that doesn't have cable/satellite and turn their expensive transmitters off. That could happen unless lots of folks do what we did (unlikely but not impossible).

Some of these stations may go dark in the next 10 years anyway if, or more likely, when the dinosaur networks go bye-bye due to the parent company getting sick of losing megabucks on them. There's no need for more than 2 or 3 independent stations in any market if the networks are gone.

Unfortunately, broadcast-network TV in 2010 is what broadcast-network radio was in 1950 - a business model who's day is just about done. Unless there's a backlash against cable, plus better programming, the networks' days are numbered.
 
Here is the transcript of the latest message from Cablevision running on a loop on Channel 1999:

Right now, we know you are tired of these conflicts with big programming companies, like ABC, who want to drive up our cost, and your cable TV bill. We are, too, even though ABC has said some outrageous things about us this week. The facts still remain the same: We pay ABC's parent company (Disney) over $200 million a year for their programming. yet they are demanding an additional $40 million more per year. They're not offering us any new programming. They just want a $40 million raise.

Having said that, the last thing we want is to pull WABC/7 from our network. Pulling WABC/7 off the air would be wrong and unfair to you, our customers, and their viewers. We aren't alone in this point of view. Sen. John Kerry of Massachusetts, in a letter to the chairman of the FCC, said, "I simply do not believe consumers should lose access to a signal over their cable service, as long as both parties are negotiating in good faith." Well, we are still actively negotiating with ABC, yet ABC is still threatening to remove their channel. In addition, there are over 70 elected officials at the local, state, and federal level, who have urged ABC to leave their channel on Cablevision and negotiate a fair agreement.

We've been working around the clock to find a way to keep WABC/7 on the air. We've spent countless hours in meetings with the owners of WABC/7, and made numerous offers. Just yesterday (Friday), we made another offer which guarantees ABC will be compensated as much as, or more than, what we pay any other broadcaster in the area, including the highest rated broadcast network (CBS?). We've been able to work out agreements with every other broadcaster, including CBS, NBC, FOX, and Univision, to name a few. We remain hopeful that the owners of WABC/7 will agree to our latest fofer, which we believe is more than fair.

Still, we urge you to make your voice heard. Call 1-877-NO-TV-TAX now, and tell ABC to keep WABC/7 on the air. Or visit http://www.cablevision.com/ABC, and send their executives an email expressing how you feel.

It is important to remember that if ABC were to pull their network, you can still watch WABC/7 free over-the-air by obtaining a digital TV antenna from your local consumer electronics store. Or, you can watch almost all of ABC's primetime programming free, on the Internet, at hulu.com, or at abc.com.

Thank you for listening to this message, and thank you for your patience. Despite ABC's threats, we still believe we can come to a fair agreement, and keep WABC/7 on the air.
 
I guess the greed factor hit Mickey now,thats to bad.now we have more then 3 million ch7 viewers pssst off now,and cannot watch tonights telecast of the Oscars.Boycott Disney products,that may wake them up.
 
Mark said:
Do the TV statons pay the FCC anything in yearly fees or such for being allowed to have a channel on the spectrum? Seems that the FCC should charge a "rental" fee to each OTA broadcaster for spectrum usage.

Congress needs to allow the FCC to actually have some "teeth" like they did in the old days and make broadcasters EARN the spectrum they are given or have to give it up to someone that will.

Stations do pay an annual "regulatory fee". The amount depends on the market size. The 2009 fee for the station I work for (a VHF station in market #30) was $37,575. WABC's fee would have been roughly $78,000.

Broadcasters are required to compete with unregulated cable channels, with one hand tied behind their back. They're required to carry children's educational programming; they can't use contemporary language/visuals for fear of an indecency action. And they're spending millions of $$ maintaining a transmitter and tower to reach maybe 15% of the audience -- the 15% that spends the least time with TV and is more likely to not have the money to buy the products/services advertised.

I think they're well earning their spectrum.

_________________________________________________
Sen. John Kerry of Massachusetts, in a letter to the chairman of the FCC, said, "I simply do not believe consumers should lose access to a signal over their cable service, as long as both parties are negotiating in good faith." Well, we are still actively negotiating with ABC, yet ABC is still threatening to remove their channel.

It's kinda like a union surrendering the right to strike. If ABC agrees to keep channel 7 on the system regardless of how long negotiations continue, they lose their leverage.

Cablevision can stall as long as they want. They lose nothing -- their subscribers continue to receive WABC, they keep paying the old compensation. And ABC is stuck with a package they obviously consider inadequate.

Cablevision obviously believes their subscribers value ABC. If they thought nobody was watching, they wouldn't raise this big public stink. They'd just quietly drive a hard bargain, and let ABC choose between taking their offer or ending up off the system.

Cablevision realizes that without ABC, they will find it more difficult to compete with Dish/Direct/FIOS. (/OTA) The ABC signal will be something their competitors have that cable doesn't.

This "NOTVTAX" thing is a negotiating tactic, an attempt to use political pressure to get ABC to accept a worse deal than supply/demand economics would provide.

You could say it's an attempt to make an end run around the free market.
 
Now we see tonights Oscars are pulled from the No#1 tv city,plus Philly too.Will the lost of 3 million plus viewers will affect the Oscar overnight ratings? Was this little stunt worth the lost of these viewers and lost of revenue for WABC and WPVI.Probably more then $40 million dollars they are fussing about.btw Oscar.com might be running a video stream like the Grammys did on their last show.That will be great for the Cablevision subs that lost these ABC channels.Oscar Vid clips probably will be plastered all over Youtube,Google video,Voeh and other video sites tomorrow.Watch Before they will get yanked by the Oscar people.
 
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