How WABI and Time Warner made a deal Cable giant and local TV station reach accord on 3-year contract

loading...

BANGOR – Adelphia cable subscribers who next week will become Time Warner Cable customers no longer have to worry about hunting around for their old rabbit-ear antennas so they can continue to watch programs on local CBS affiliate WABI.

After weeks of wrangling, Time Warner and WABI agreed to a three-year contract Friday evening that will allow Time Warner to include the television station’s analog broadcasts in its basic cable package. Mike Young, general manager of WABI, said the deal is good through the end of 2009.

“We’re extremely pleased we were able to come to terms with Time Warner television,” Young said Friday.

Young did not disclose the financial terms of the agreement.

The general manager’s diplomatic tone after the deal contrasted with the sharper tenor the two sides had struck just hours before as they commented on the contentious negotiations.

Earlier Friday, Young had suggested the cable company was not being forthright with WABI about its policies. On Thursday, the local station issued a press release claiming that Time Warner was reneging on its verbal assurances and that it “was not negotiating in good faith.”

Time Warner issued a brief statement Friday through its Portland office indicating WABI had turned down a short-term deal that would have kept it on the cable system after the Aug. 1 transfer of Adelphia’s operations in Maine to Time Warner. The cable company had been planning to place a full-page ad explaining its position in today’s edition of the Bangor Daily News but pulled the ad as the two sides reached an accord.

On its Thursday and Friday broadcasts and on its Web site, WABI had warned its viewers that it could disappear from the local cable system if the two sides were unable to come to an agreement within the next few days. It asked viewers concerned about this possibility to contact Time Warner officials.

Young acknowledged before Friday’s deal was reached that the station could be affected financially if it were not included in Time Warner’s local cable package. He indicated the station could lose 30 percent of its customer base, but said that its main concern was not about money.

“In the final analysis, it’s about serving the public and serving our customers,” he said.

The root of the contractual dispute, according to Young, appeared to be Time Warner’s resistance to carry the station’s CW signal, which is expected to be launched in September. The CW is a new network that essentially will be a combination of UPN and the WB, both of which will go off the air – and the cable system – when the CW signal becomes available.

As part of Friday’s deal both WABI’s signal, including its CBS programming, and the station’s separate CW broadcast will be included in the cable network’s basic plan, according to Young.

Young said Time Warner initially had indicated when the companies began negotiating that its policies would not allow it to carry the CW’s digital signal in its basic cable lineup. Young said that despite this claim, he knows Time Warner does allow digital signals in its basic packages in other parts of the country.

Still, when WABI offered to cover the cost of converting the digital CW signal into an analog format before sending it to Time Warner for retransmission, the issue seemed to be resolved, he said.

But when WABI received a proposed written contract from Time Warner, the details the companies had worked out over the phone were nowhere to be found in the printed copy, Young said.

Moreover, Time Warner’s written proposal included provisions that had not been discussed in its talks with WABI, according to Young. Time Warner wants the rights to apply certain technologies such as video-on-demand and a replay function to WABI’s signal, but WABI balked at immediately signing these rights over because it wanted to make sure they would not violate any of the station’s third-party agreements, he said.

“They’re very accustomed to getting their own way,” Young said of Time Warner.

He said that despite concessions WABI offered to make, Time Warner still seemed resistant to carrying the station’s CW signal when it becomes available.

“Their reasons for not carrying [CW] have changed as negotiations have proceeded,” Young said earlier Friday. “It was considered a deal breaker if we couldn’t get both [signals in the basic cable package].”

Attempts Friday to contact Time Warner officials in Maine were unsuccessful, but the company did release a statement through an unidentified employee who answered the phone at its Portland office.

“We are trying to reach an agreement with WABI,” the employee read from the statement.

Time Warner had proposed a short-term agreement to keep WABI in the company’s basic cable package while the two parties worked on a long-term agreement, the company indicated.

“WABI turned us down for this,” the employee said.

WABI may have been the only Bangor-area station that had difficulty coming to terms with Time Warner. An official with another local affiliate said Friday that the competing station had no issues with the cable company and didn’t expect any, but it is not the only entity to raise concerns about Time Warner’s expansion in Maine.

A top state official has voiced concerns that Time Warner would effectively become a monopoly in Maine after it acquires Adelphia’s assets in the state. Adelphia filed for bankruptcy in 2002, and investors lost billions of dollars after the company became embroiled in a corporate accounting scandal involving the Rigas family, which had founded the firm and held some of its top executive positions.

In a legal brief submitted to federal regulators, Maine Attorney General Steven Rowe wrote that Time Warner’s expansion in Maine would give it control of about 85 percent of the state’s cable market. The cable company has said it expects to have 280,000 customers in Maine as of Aug. 1.

Rowe opposed federal approval of Adelphia’s sale to Time Warner on the grounds that something should be done to reduce Time Warner’s dominance of the cable television market in Maine.

The sale, Rowe indicated in the brief, would “produce results detrimental to competition and the public interest.”