Via THE ASSOCIATED PRESS:
SPONGEBOB SQUAREPANTS may be getting squeezed off of Time Warner Cable.
Media giant Viacom Inc. said its Nickelodeon, MTV, Comedy Central and 16 other channels will go dark for 13 million subscribers at 12:01 a.m. Thursday if a new carriage fee deal with Time Warner Cable is not agreed upon by then.
The impasse would mean SPONGEBOB and other popular shows like Jon Stewart's THE DAILY SHOW and Stephen Colbert's THE COLBERT REPORT will be cut off, said spokesman Alex Dudley, a vice president at Time Warner Cable. The nation's second-largest cable operator primarily serves customers in New York state, the Carolinas, Ohio, Southern California and Texas.
Viacom has asked for fee increases of between 22 percent and 36 percent per channel, an amount that could increase customers' cable bills, Dudley said. Viacom spokeswoman Kelly McAndrew said the requested increase was in the very low double-digit percentage range.
"The issue is that they have asked for an exorbitant increase in their carriage fees and their network ratings are sagging," Dudley said. "Basically we're trying to hold the line for our customer."
Viacom said the increases would cost an extra 23 cents a month per subscriber -- which works out to $35.9 million more in total. 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.
Negotiations are continuing at the highest level, Dudley said.
Viacom accused Time Warner Cable of not negotiating.
"It is our sincere hope that they will come to the table and negotiate a deal," said McAndrew. The network operator also intends to tell viewers about the dispute in TV ads in 11 major markets.
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 extract 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.
The channels that would be affected are: Comedy Central, CMT: Pure Country, Logo, Palladia, MTV, MTV 2, MTV Hits, MTV Jams, MTV Tr3s, Nickelodeon, Noggin, Nick 2, Nicktoons, Spike, The N, TV Land, VH1, VH1 Classic, and VH1 Soul.
Pop-up alerts on THE COLBERT REPORT and THE DAILY SHOW Web sites Wednesday morning informed fans that Time Warner Cable customers will lose Comedy Central shows soon and urged them to call the cable company and protest the change.