Cooling-Off Period, Cold War

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Even during last week's so-called cooling-off period,
when both sides went back to the table to negotiate, The Walt Disney Co.'s ABC
Inc.'s KTRK-TV and Time Warner Cable in Houston still took public swipes at each
other.

Time Warner officials claimed that they had no choice but
to retaliate, with TV spots and print, to KTRK's continuing ad campaign against it.
The TV station was still promoting, with full-page ads in the Houston Chronicle,
its offer to give Time Warner subscribers $99 rebates if they switched to DirecTV Inc.
service.Both DirecTV and EchoStar Communications Corp.'s Dish Network carry
KTRK in Houston.

"There was a cooling-off period, and they violated
it," Time Warner spokesman Michael Luftman said. "They never stopped running
their ads. It was a real breach of trust."

In response, the Houston cable system began running three
cross-channel spots discussing its situation and talks with Disney.

In one TV commercial, Ron McMillan, president of Time
Warner Houston, told viewers last week, "If KTRK had a nose, it would be growing like
Disney's character, Pinocchio."

In another spot, McMillan said Time Warner had already
distributed 10,000 "Tune to 13" kits, which included A/B switches and antennas.
The system had another 27,000 kits ready to hand out last week.

Time Warner also began running print ads that described its
own rebate offer. The ads said, "Time Warner will give you a $99 rebate, and you
don't even need to buy a dish to get it."

In Time Warner's ad, subscribers who had rebate
coupons from KTRK for DirecTV were told to send them to the cable system. In exchange,
they would get $10 credits on their digital-cable bill for 10 months or free installation
and one free month of service for Road Runner.

KTRK had initially said it would give out rebates to 1,500
Time Warner subscribers, but by the end of last Thursday, 5,000 vouchers were out and
would be honored, according to an ABC spokeswoman.

But a DirecTV spokesman said it was "a little
premature to say it will directly result" in that many new customers for the DBS
service. In fact, DirecTV -- which began carrying KTRK Dec. 18 -- doesn't know how
many subscribers it has gained in Houston due to the KTRK flap.

--Linda Moss

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