Renewals Hang Over ABC Family

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This fall, Time Warner Cable in Orlando, Fla., moved Fox Family Channel from
a prized analog slot, relegating the network to a digital tier. The cable
operator said it was a one-time deal -- a unique situation to make room for WE:
Women's Entertainment.

But a number of programming officials and industry veterans have a different
view. They saw the switch as Time Warner's 'warning shot' to the renamed ABC
Family's new owner, The Walt Disney Co., and a demonstration of the network's
current vulnerability.

Time Warner's affiliation deal with ABC Family expires at year's end, several
sources said. But renewing with Time Warner -- which declined to specify when
its carriage agreement ends -- is only one of Disney's challenges with respect
to ABC Family.

The cable network is already out of contract with a number of its other
distributors, including Charter Communications Inc., Mediacom Communications
Corp. and Cablevision Systems Corp., according to sources. New affiliation deals
with those companies must be nailed down.

It won't help that Disney -- which postponed the launch of its preschool
channel, Playhouse Disney, until late next year -- is expected to seek hefty
license-fee increases to help recoup some of the $5.2 billion it paid to acquire
Fox Family Worldwide Inc.

Disney has set up meetings with operators at the Western Show this week in
Anaheim, Calif., to discuss plans to revamp ABC Family.

Ben Pyne, senior vice president of affiliate sales and marketing for the ABC
Cable Networks Group, has already written affiliates a letter with a sketchy
description of Disney's and ABC's plans to bring 'quality' family programming to
ABC Family.

In the interim, some observers said, ABC Family is on shaky ground.

'Right now, Fox Family is as vulnerable as it ever will be,' a rival
cable-network official said. 'It's got an indistinct brand.'

A big part of Disney's burden will be trying to overcome the strained
relationships it has with MSOs over its other cable networks, ESPN and Disney
Channel.

ESPN's annual double-digit rate hikes and the conversion of Disney Channel to
a basic network from a premium service created bad blood with a number of cable
operators, including Time Warner, sources said.

Disney has used up its retransmission-consent chips with many operators,
including Time Warner, following a bitter, public battle -- in part over Disney
Channel's conversion -- more than one year ago.

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