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Disney vs. Comcast: Retrans Redux

10/29/2000 7:00 PM Eastern

As Yogi Berra once said, it's deja vu all over again. Another retransmission-consent battle involving The Walt Disney Co. is brewing, this time pitting the programming giant against Comcast Corp.

The issues in this squabble are the same as in this past May's nasty public brouhaha between Time Warner Cable and Disney, in which ABC-owned TV stations in markets reaching 3.5 million homes were dropped from cable for nearly two days.

Comcast, whose retransmission-consent agreement deal with Disney expired Dec. 31, has received several extensions. As of press time Friday, the latest deal was to set to expire this past weekend, at 12:01 a.m. on Oct. 30, early Monday morning.

In a worst-case scenario for Comcast and Disney, roughly 3 million subscribers-in the MSO's home-base cluster of Philadelphia, as well as northern New Jersey; Los Angeles; Chicago; Toledo, Ohio; and Flint, Mich.-would be without their ABC-owned TV stations if this isn't amicably settled.

But late last week top Comcast top management-including CEO Brian Roberts in a interview in
The Wall Street Journal

-said the MSO is still negotiating with Disney and would not take the drastic step of dropping ABC's TV stations.

"We will not pull the signal," Dave Watson, Comcast Cable Communications Inc. executive vice president, said last Friday. "However, Disney clearly has the power to withdraw consent. But Comcast will not be the one to remove the ABC signal unless Disney forces us to do so."

In the latest chapter of the dispute, Comcast is asking Disney to open its books, or have an independent third-party look at them, to be sure that the deal it's been offered is the same reached with other MSOs. Disney so far has rejected that request.

"This is a contractual dispute between two companies," Watson said. "They are trying to leverage that. We believe we have a contractual right to the same deal as other operators our size."

The agreement Disney has offered so far represents a 2,000 percent increase in programming costs compared with the expired 1993 retransmission-consent contract, according to Watson.

"It's not a fair deal," he said. "What we're talking about is an extraordinary increase in cost."

The sticking points in the Comcast-Disney situation echo those in the Time Warner-Disney dispute. Both MSOs charged that Disney is using retransmission-consent to get Disney Channel moved from basic to premium and to force it to carry new networks, such as Toon Disney and SoapNet. Disney contends it is simply seeking fair compensation for the valuable programming that its ABC stations provide cable subscribers.

"We're looking for the deal we have made with other cable operators," an ABC spokeswoman said. "We're not plowing new ground here."

Nonetheless, in the past two weeks both sides have shifted from being very private about their retransmission-consent standoff to a very public, and pugnacious, stance.

Comcast Cable president Steve Burke gave interviews to the Associated Press and
The Philadelphia Inquirer

about the issues in the retransmission-consent dispute.

It's particularly ironic that Burke finds himself in a battle with Disney and its ABC Inc. unit, since he left the presidency of ABC Broadcasting to join Comcast back in 1998. Burke is also the son of Dan Burke, the former chairman of Capital Cities/ABC Inc.

Comcast CEO Brian Roberts has also waged a public campaign against retransmission-consent rules, saying they give programmers too much power at a time when programming costs are soaring. Comcast also was one of the last holdouts when General Electric Co.'s NBC Cable shopped renewal deals for MSNBC and CNBC and retransmission-consent for NBC tied in with 2000 Olympics coverage.

Disney's big-gun lobbyist, Preston Padden, has paid a visit to Philadelphia's City Council in recent weeks to talk up the programmer's position. In addition, Disney and the two main direct-broadcast satellite providers-DirecTV Inc. and EchoStar Communications Corp.-have talked about putting together a free dish offer similar to the ones offered in Time Warner markets where ABC stations were dropped earlier this year.

Watson countered that Comcast is used to competition, but he said he was "disappointed" Disney is already trying to arrange a deal with the DBS providers.

In Philadelphia, where Comcast has roughly 1.5 million homes,
the general manager of the ABC station, WPVI, has gotten permission to testify this Tuesday before a City Council hearing on whether RCN Corp. should get a franchise to compete against Comcast in parts of that DMA.

"Comcast has a stranglehold with this market and this super cluster they have," WPVI general manager Dave Davis said. "They feel they can afford to play it tough."

He's betting Comcast won't take any action to drop ABC's signal.

"I think they learned from the Time Warner disaster," Davis said. "The only way our signal will come off is if they continue to refuse to give us that which we have gotten from every other cable company. They're trying to force our hand."

A local-news network, Philly TV News, has made WPVI should its signal be dropped from Comcast's lineup. Philly TV News, which buys time on the must-carry UHF station WTVE to air its coverage from 5 a.m. to 10 p.m., said it would be willing to air between five to six hours of WPVI's news programming in case of a blackout.

But Philly TV News acting general manager Jim Sweeney said he would not take sides in the dispute.

September