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Charged That Classic Movie Channel Isn't Anymore

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NEW YORK ( -- A judge yesterday ruled in favor of Time Warner Cable in its lawsuit with Rainbow Media’s AMC that charged the cable network had breached its carriage contract with the cable operator by contemporizing its movie programming from classic films to newer releases.
The court ruling allows Time Warner to drop AMC from its 11 million homes immediately.

'Evaluating relationship'
The ruling allows Time Warner Cable to drop AMC from its 11 million homes immediately; Time Warner had said it is “presently evaluating our relationship with the network going forward.”

A spokesman for Rainbow Media today said, "We disagree with the judge's ruling and plan to appeal immediately. We are optimistic that this ruling will be overturned."

The year-and-a-half-old lawsuit has cast a shadow over AMC’s recent ratings explosion, which is largely attributed to more contemporary movie fare and significant investment in original programming. During the 2004-05 broadcast season, spanning September through May, the network grew 13% in the advertiser-coveted 18- to 49-year-old age group.

$80 million deal with corporate sibling
AMC’s recent $80 million deal with Warner Bros., a corporate sibling of Time Warner Cable, includes TV rights to 22 films -- including Million Dollar Baby, The Last Samurai, Ocean’s Twelve, Mystic River and this summer’s Batman Begins -- and is indicative of AMC’s mission to broaden its audience. Those films place AMC into competition with other top 10 cable networks with strong movie programming, including NBC Universal’s USA Network, Hearst- and Disney-owned Lifetime Television and Time Warner’s Turner Broadcasting networks TBS and TNT.

And that is at the core of Time Warner Cable’s beef -— the “new” AMC diminishes variety in the carrier's lineup. When it most recently renewed its contract with AMC in 2000, Time Warner Cable assumed it was getting another classic movie channel. (Time Warner Cable also carries Turner Broadcasting’s Turner Classic Movies.) But AMC claimed the contemporizing changes were already beginning when that 2000 contract, which runs through 2008, was signed.

Ad sales benefit
Of course, Time Warner Cable benefits from AMC’s ratings increases as Time Warner’s local ad sales team can sell, on average, two spots per hour on the ad-supported cable networks it carries. But that revenue stream may be too small to keep the cable operator from pursuing changes. While Time Warner Cable could drop AMC all together, it may also chose to shift the network to its digital tier, which has 4.9 million subscribers. One very likely result: It will use the ruling as leverage to negotiate a lower carriage fee.

To be sure, AMC still offers classic movies -- it recently acquired 32 John Wayne films -- though not as many as both Time Warner Cable and some of AMC’s core classic movie buffs would like. The network, considered Rainbow Media Holdings’ most valuable, has been fully ad-supported since 2002.

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