My Turn

Poking Sticks or Waving Carrots

12/17/2007 4:43 AM

There are lots of ways programmers attempt to get carriage on cable companies. Often they don’t succeed, a major frustration to a company with a business plan built on reaching millions of TV homes.

These days, a tactic more networks are trying is to go on the attack against potential affiliates for not carrying them.

These aggrieved networks range from the well-connected and powerful (the Fox-backed Big Ten Network and the National Football League-backed NFL Network) to independent services that haven’t even launched yet (The America Channel, or TAC).

Some cable companies are so big and own so many of the networks on their cable systems that non-affiliated programmers understandably see conflicts of interest when they don’t get carriage deals that similar-looking affiliated services get.

Some programmers see government intervention as their last recourse or at least a point of leverage.

TAC, denied a berth on Comcast and Time Warner, lobbied against their buying Adelphia’s 2 million subscribers. It ended up getting a Comcast carriage deal via a provision of the Federal Communications Commission’s Adelphia-sale approval. Basically, TAC became a regional sports network and rode an arbitration process into a carriage deal.

Programmers including Hallmark Channel hoped in vain the FCC last month would force cable operators into arbitration when carriage talks break down and the programmer can demonstrate the operator acted unfairly.

An independent programmer called WealthTV was one of them. It hired former FCC official Kathleen Wallman to make the case at the commission, citing WealthTV’s difficulties getting carriage on Time Warner Cable as an example of problems indie programmers face.

Last week, WealthTV went further. It lashed out at Time Warner after network CEO Robert Herring Sr. heard disparaging references to WealthTV during an audio podcast published Dec. 6 on the Web site Engadget.

Engadget is owned by America Online, which is owned by Time Warner, which also controls Time Warner Cable.

WealthTV’s broadside – headlined “BIG BUSINESS AT ITS UGLIEST: Time Warner’s Media Might Punishes Small Family Owned Business After it Speaks Out to the FCC” – came from sheer frustration, Herring and company president Charles Herring say.

The Herrings see the In Demand channel Mojo, which relaunched this year as a male-targeted high-definition service, as “a WealthTV knock-off.” Time Warner Cable owns part of In Demand.

WealthTV said it provided HD on-demand programming for free to Time Warner Cable this year, anticipating a carriage contract for its 24-hour service, but a deal couldn’t be reached, ending WealthTV’s time on Time Warner Cable.

The Engadget commentary – which the site says was not an attempt to aid TWC — was the last straw, the Herrings said.

They said they didn’t want to attack Time Warner. “It would have been nice to stay in the back room and kept quiet and kept negotiating,” Robert said. Added Charles: “We won’t be popular within our own industry — and I say our own industry because we consider ourselves part of it.”

They say it’s time for measures that help independent programmers gain a “level playing field,” adding that independent services like theirs help push TV technology forward.

Time Warner Cable’s response: “We have reached mutually beneficial agreements with hundreds of networks, large and small, over the years. We reach agreements through successful private negotiations, and we are always willing to look at new programming options, if the programming is of value to our customers. With regards to the recent Wealth TV press release, we have been negotiating with them but have no interest in participating in a public negotiation. We’re not going to comment on that release other than to say that it’s inaccurate.”

While Wealth TV is hoping that its offense will prove to be the best defense, Retirement Living TV president Brad Knight thinks his Baby Boomer-targeted service, backed by retirement-community mogul John Erickson, is better served using carrots not sticks to gain carriage for its 24-hour service.

“You’ve got to be careful when you hit a monopoly with a stick,” Knight said. “So we’re keeping our swords sheathed.”

RLTV has paid for carriage on Comcast’s CN8 network and on DirecTV during the day, demonstrating its seriousness, and is signing deals with small operators, notably Bend Broadband last week.

Knight said RLTV’s business plan assumes it costs about $200 million to establish a new network, and RLTV has spent about $75 million so far, mostly on a programming library. “And there’s launch-support coming because nobody launches you for free. But John [Erickson] plays long ball.”

One carrot RLTV’s offering affiliates are public-service announcements about the coming transition to digital TV. It even recorded one with FCC chairman Kevin Martin.

Different situations, different approaches. A stick worked for The America Channel. Maybe a carrot will work for RLTV.

September