Alright this could really suck.

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Viacom Threatens to Pull MTV From Time Warner if Deal Not Met

Tuesday, December 30, 2008

LOS ANGELES — Media giant Viacom Inc. is threatening to pull MTV, Comedy Central and Nickelodeon and 16 other channels from Time Warner Cable Inc. if a new carriage fee deal is not agreed upon by midnight Wednesday.

If realized, the move could shut off popular shows like "The Colbert Report" and "SpongeBob SquarePants" to 13 million subscribers, said spokesman Alex Dudley, a vice president at Time Warner Cable, the nation's second-largest cable operator.

"The issue is that they have asked for an exorbitant increase in their carriage fees and their network ratings are sagging," he said. "Basically we're trying to hold the line for our customer."

Viacom has asked for fee increases of between 22 and 36 percent per channel, adding up to tens of millions of dollars per year, an amount that could increase customers' cable bills, Dudley said.

Viacom replied in a statement that the increases would cost less than 25 cents a month per subscriber. It said that Americans spend a fifth of their TV time watching Viacom shows but its fees make up less than 2.5 percent of the Time Warner cable bill.

"We make this request because Time Warner Cable has so greatly undervalued our channels for so long," it said.

"Ultimately, however, if Nickelodeon, Comedy Central, MTV and the rest of our programming is discontinued — over less than a penny per day — we believe viewers will see this behavior by their cable company as outrageous," it said.

Tense negotiations are continuing at the highest level, Dudley said.

Part of the disagreement is that most of the popular shows are rerun on Web sites where Viacom collects advertising revenue that it does not share with Time Warner, Dudley said.

"We don't think that's fair," he said. "They're trying to have their cake and eat it too online, where anybody can get it for free."

Viacom has staked much of its revenue-growth prospects on its ability to squeeze higher carriage rates out of its cable and satellite affiliates despite an ad slowdown and weak ratings.

In the third quarter, media network revenue, which accounts for about two-thirds of the total, grew 6 percent to $2.1 billion, despite global ad revenue falling 2 percent, largely because of double-digit percentage growth in affiliate fees and the success of its "Rock Band" video game.

Viacom shares rose 69 cents, or 3.7 percent, to close at $19.26 on Tuesday, while Time Warner Cable shares added $1.56, or 7.7 percent, to $21.76.