Wednesday, December 31, 2008
This negotiation has most likely been going on for a while, but as contracts expire and deadlines are reached, it has left the board room and reached the ears of the public. Time Warner and Viacom, owners of Nickelodeon, Comedy Central, and others, have reached an impasse where there are no winners. Each has solid points and each has big issues to overcome in a changing entertainment landscape.
For Time Warner, it means controlling costs, when customers are able to downgrade or leave for other programming providers like the telcos and satellite. As programming cannot be made exclusive to a particular provider, it provides little competitive benefit in the marketplace. At the same time, customers have shown more preference for hi speed web access and are able to get some of this disputed programming streamed to their PCs, whether they receive the linear channel or not. For Viacom, it is the need to grow revenue to offset the higher costs or original programming. A show tends to be cheaper in its first few years until it gets an audience; the power than switches to the show who is able to command higher costs for its talent and staff. And as linear advertising has flattened and in some cases declined, revenue needs to be made up in other ways. It won't all come from the internet so cable subscription remains an important opportunity. Why is Viacom publicly fighting this battle; take a look at their recent stock price and it is clear they need leverage on their side to get an agreement signed.
So what is the Time Warner consumer to do. In the long run, the choice is to switch to another provider if neither party comes to an agreement. These disagreements eventually always get resolved and programming is restored. In the short run, there are some options: for kid programs, start DVRing your favorite shows. For my kids, we have numerous Nick shows recorded for viewing. As most aren't expecting new episodes for a while, we are comfortable with repeat viewing of our shows. Or go to their websites for games, episodes, and other things to do. For Daily Show and Colbert Report fans, the internet will be the way to go. Hulu is always a popular option. Don't be surprised if some illegal peer to peer sites come up offering downloads of shows. Or you could invest in a Slingbox and put it in a family or friend's home where they are on a different cable company. Or even buy the DVDs of favorite series. As you can see, there are alternatives.
So enjoy your last hours of these networks, I expect a long battle.
Posted by Andy Hunn