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Disney-Time Warner tiff heralds broadband age

May 1, 2000
Web posted at: 3:59 PM EDT (1959 GMT)

By Jessica Reaves

(TIME.com) -- Is this a sign of things to come in the Internet age? Two multimedia monoliths, Time Warner and Disney, are playing a high-stakes tug of war, not only putting the immediate fate of TV one network's programming at risk, but also raising questions about the future of a totally Web-based news and information future. After time ran out on their most recent usage agreement, Time Warner Cable and Disney arrived at an impasse Monday; Time Warner then called Disney's bluff, pulling the Mouse's ABC network from its programming roster. Time Warner Cable customers hoping to tune into "Good Morning America" were met with a blue screen and a scrolling message from Time Warner: "Disney has taken ABC away from you."

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It's not that simple, of course. Time Warner Cable, which has wide control over cable outlets in several major markets across the country, including the viewer-rich New York City area, and Disney, which owns ABC and several other networks, such as ESPN, have been involved in a spitting contest for the last four months, ever since their latest long-term contract expired. According to reports, Disney, whose confidence has been boosted by the spectacular success of shows like "Who Wants to Be a Millionaire," wants Time Warner to agree to carry several Disney networks, including the heretofore premium Disney Channel, on their basic cable transmissions. For their part, Time Warner, the parent company of TIME.com, contends that Disney has effectively barred them from carrying Disney programming by raising their rates and making unreasonable demands.

As if all that weren't enough to keep negotiators busy, Disney is also reported to be concerned that Time Warner's pending merger with AOL will create an impenetrable barrier to non-AOL Time Warner companies interested in participating in looming interactive TV technology. If AOL Time Warner's success in cable television extends to Internet provision capabilities, their critics fear that interactive technology, which would enable viewers to participate in game shows and purchase items seen on various shows, could be withheld from people who choose to watch, say, NBC instead of Time Warner networks like CNN and WB. So Disney, with an eye on the future, is said to want assurances from Time Warner that no such favoritism is on the horizon. Time Warner, according to the New York Times, deems such a demand unacceptable, especially because it is unclear what direction the still-emerging interactive television technology will take.

The tiff appears to mark the beginning of another seismic shift in the cable industry. In the nascent days of cable, when providers were bringing channels to new pools of rural viewers, networks were thrilled to be part of a cable empire, and paid the providers accordingly. Then power shifted; cable companies now pay networks for the privilege of carrying their programs. And it's anyone's guess where the favor will fall once interactive television becomes a reality -- and cable access becomes an integral part of viewing network programs.

In the meantime, says TIME television writer James Poniewozik, don't expect frustrated Time Warner Cable customers to cry any tears of sympathy for either side. "It's hard to see any good guys in a dispute like this," says Poniewozik. "In one sense, it's not like anyone has a constitutional right to Disney programs like 'Celebrity Who Wants to Be a Millionaire,' but on the other hand, it's always disturbing to see a company like Time Warner Cable, whose holdings pretty much constitute a monopoly in many areas, exercising their power by taking an entire channel off the air."

For the moment, anyway. Though the company's 1.7 million New York subscribers don't have much of a choice of cable providers -- many city apartment buildings are not wired to receive satellite broadcasts -- in markets like Milwaukee and Raleigh-Durham, viewers can relatively easily dismiss Time Warner in favor of satellite providers like Direct TV. And the cable giant may want to make amends quickly: After all, does Time Warner really have the stomach required to take keep America away from its daily dose of Regis Philbin?

Copyright © 2000 Time Inc.