Disney-Cablevision Standoff May Hurt Oscars Viewership

If Retransmission Fee Battle Not Resolved by Sunday, 2.5% of Event's National Audience Could Be Shut Out

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NEW YORK (AdAge.com) -- It's the phrase no advertiser wants to hear: "And the Oscar goes to ... everyone but Cablevison's 3 million New York-area subscribers!"

Ad buyers say there is an emerging concern that the current showdown between Walt Disney and Cablevision Systems could affect the ultimate viewership of what is often the second-biggest event on broadcast TV, ABC's annual star-studded Oscars broadcast. Disney and Cablevision earlier this week made public a long-brimming impasse over retransmission rights, which could leave Cablevision subscribers without access to the network's New York station, WABC, as of 12:01 a.m. on Sunday, March 7.

That's the same day the Oscars ceremony, where a 30-second ad goes for $1.3 million to $1.5 million, is set to air.

"It will make a difference," said Larry Novenstern, exec VP-director of national and local broadcast at Publicis Groupe's Optimedia, who estimates as much as 2.5% of the national audience for the event could be lost. "Not a huge one, but it will definitely make a difference." The Oscars reached approximately 36.3 million viewers in 2009, according to Nielsen.

The threat to the Oscars is just one piece of potential fallout should Disney and Cablevision remain at odds past this weekend. Scuffles over retransmission fees -- money paid by cable operators to TV networks -- have taken on new importance as emerging mobile devices and other technologies allow TV viewers to graze on video in any number of places, not just the boob tube. Broadcast networks, accustomed for decades to thriving largely on ad revenue, have now begun to cast about for other money streams as advertisers start to spread their wealth over a broader array of venues. In recent months, Cablevision has squared off against Scripps Networks, and News Corp. with Time Warner Cable.

Satisfying advertisers
But ABC's battle with Cablevision threatens to cut off access to the network from a highly desirable segment of the viewing public: residents of the New York metropolitan area, which includes parts of Connecticut.

ABC is certainly cognizant of the potential the standoff has to reduce a small percentage of the Oscars' viewership, according to one person familiar with the situation. The network intends to make sure advertisers are satisfied, even as it hopes to avoid a scenario in which Cablevision subscribers aren't able to watch the Oscars through their cable service.

One ad buyer said he will likely wait until the broadcast is complete and the audience tallied to determine whether his clients need to be concerned.

"I don't think the possibility of not having Cablevision would harm [the Oscars broadcast] that much, but obviously, it is in some major markets and in the New York area, so it would be of some concern," said Andrew Donchin, director of investment at Aegis Group's Carat. "I would hope that the whole thing gets resolved."

In the meantime, both parties are hurling invective at each other. "For two years, WABC has been working in good faith to try and reach an agreement that acknowledges the station's value financially and as a key resource to the community. This is value Cablevision already charges their customers up to $18 each month for access to," Rebecca S. Campbell, president-general manager, WABC-TV, said in a prepared statement.

On Tuesday, Cablevision had similar remarks to make about Disney. "We pay more than $200 million a year to ABC Disney for their programming, and now they say they will pull the plug unless Cablevision pays $40 million more in new fees for the exact same channels. It is not fair to force Cablevision customers to pay a new TV tax for programming ABC Disney gives away free, both over-the-air and on the internet," said Charles Schueler, exec-VP, communications, at Cablevision. "In tough economic times, it is shameful that ABC Disney would hold viewers hostage by threatening to pull the plug, and we urge them to work with us to reach a fair agreement."

These fights draw lots of scrutiny because they involve colorful media companies hurling mud at each other through incendiary advertising. But in most cases, the two warring parties find ways to mend fences -- out of fear of upsetting or offending consumers and viewers who pay money to watch their favorite TV programs.

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