Search

Time Warner Cable, Disney Reach Fee Agreement for ESPN, ABC

By Kelly Riddell
September 02, 2010 7:25 PM EDT

Walt Disney Co. reached a long-term agreement with Time Warner Cable Inc. that keeps ESPN’s football games and ABC’s comedy “Modern Family” on the air for the cable operator’s almost 13 million video customers.

Time Warner Cable agreed to add Disney Junior, ESPN 3D, ESPN3.com and ESPN Goal Line to a lineup that includes ESPN sports, Disney family fare and ABC shows, the companies said today in a statement. Time Warner Cable subscribers will also get expanded video-on-demand services for ABC and other Disney offerings. Financial terms weren’t disclosed.

Disney and Time Warner Cable executives negotiated through the night to avoid programming blackouts after their contract expired Sept. 1. Sticking points included terms for the ESPN3.com website and Disney Junior, the preschool service Disney is converting from SoapNet, a person familiar with the negotiations said last week.

Time Warner Cable, based in New York, isn’t paying a specific monthly fee per subscriber for its video customers to access ESPN3.com, Alex Dudley, a spokesman, said in an interview. Last week, Disney was said to have requested 10 cents a month per Web customer for ESPN3.com.

ESPN3.com will be free to Time Warner Cable customers who get ESPN, Dudley said. Time Warner Cable agreed to provide ESPN3.com to subscribers as part of a package of online rights it acquired for ESPN, ESPN2 and ESPNU, Dudley said.

The ESPN Web service was negotiated as part of the company’s “TV Everywhere” initiative, which makes cable channels available on the Internet to current video subscribers.

College, Pro Sports

Burbank, California-based Disney was probably seeking at least 50 cents per subscriber a month for ABC, and as much as a 10 percent increase in its cable fees, said Andrew Kim, an analyst at Macquarie Capital in New York. ESPN, the most expensive channel on the dial, received $4.08 per customer on average a month from pay-TV operators last year, while the Disney Channel brought in 88 cents a month per subscriber, according to researcher SNL Kagan.

ESPN Goal Line, an exclusive once-a-week network developed for Time Warner Cable’s premium sports subscribers, will highlight match-ups and scoring drives each Saturday during the NCAA college football season. A similar service called ESPN Buzzer Beater will be available for college basketball.

Buzzer Beater

“Goal Line and Buzzer Beater are two examples of the creativity that went into reaching this deal,” said Chris LaPlaca, a spokesman for ESPN in Bristol, Connecticut. “They are part of the reason why this is the most expansive content agreement Disney has ever signed.”

The accord allows the second-largest U.S. cable operator to keep carrying college and National Football League games on ESPN, as well as ABC programs such as “Desperate Housewives” and the ABC Family and Disney channels.

Time Warner Cable gained 72 cents to $54.70 today in New York Stock Exchange composite trading. Disney added 40 cents to $33.91.

For about two decades, the owners of broadcast networks traded rights to their signals to gain pickup for their cable networks or better channel positioning. Disney, like other broadcast network owners, has been seeking fees for its ABC network, in addition to asking for higher prices for its cable networks and introducing new Web fees.

Time Warner Cable has tried to control costs by resisting increased fee demands. In national campaigns, Chief Executive Officer Glenn Britt has asked subscribers to pressure programmers to keep costs low. Britt argued that higher fees ultimately are billed to the customer and that network programming is free on the Internet and over the air.

The cable operator negotiated the Disney deal on behalf of Bright House Networks’ 2.4 million customers in Florida, California, Indiana, Michigan and Alabama.

To contact the reporter on this story: Kelly Riddell in Washington at kriddell1@bloomberg.net

Comments
More related content »