Retrans War Gets Nasty in Ohio

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The retransmission-consent brouhaha between Time Warner
Cable and the local CBS affiliate in Columbus, Ohio, has escalated into an all-out brawl,
with both sides launching ad campaigns over the issue of whether Ohio News Network should
win carriage from the operator.

As a result of the ongoing spat, Time Warner may not be
able to carry WBNS-TV's signal as of Jan. 1. WBNS is owned by Dispatch Broadcast
Group, which also owns ONN.

In exchange for retransmission consent for WBNS, Dispatch
wants Time Warner to carry ONN on basic to its 305,000 subscribers. Dispatch is also
seeking to land a digital-cable slot in the future for a new weather service, Ohio Weather
Network, now in development.

Last week, Dispatch rejected a three-pronged offer Time
Warner made to try to settle the WBNS-ONN dispute, according to Time Warner spokeswoman
Mary Jo Green.

As part of that package, Time Warner offered to carry ONN
on a digital tier in Columbus; to also carry it on digital in its Northeast Ohio division,
which covers Akron-Canton; and to keep the regional news channel on analog on the AT&T
Broadband & Internet Services and MediaOne Group Inc. systems that Time Warner has
acquired in the Ohio region.

Digital carriage for ONN is unacceptable to Dispatch and to
WBNS, according to officials at those entities. As a result, in the battle's latest
salvo, Time Warner is now threatening to drop ONN from its acquired systems that now carry
it.

The acquired systems are carrying the news channel on a
month-to-month basis. That switch-out would mean a loss of 135,000 subscribers, or roughly
25 percent of ONN's 550,000-home distribution, Green said.

Since Dispatch rejected Time Warner's settlement
offer, Green said, "We could exercise the option to drop ONN with those 135,000
subscribers. We had left ONN on those systems as a good-faith showing while we worked on a
settlement."

Obviously, Dispatch and WBNS are not happy about the
prospect of being yanked from the MediaOne and AT&T Broadband systems.

"Time Warner has threatened to pull ONN off those
acquisitions," said Tom Griesdorn, ONN's vice president and WBNS' general
manager. "It's a retaliatory action."

Ohio isn't the only place were tension is developing
over retransmission consent purportedly being linked to the launch of new cable services.

Last week, officials from The Walt Disney Co. denied that
they were forcing cable operators to carry new cable network SoapNet in order to get
retransmission consent for ABC-owned TV stations. Disney owns ABC Inc. and SoapNet. Disney
officials declined to comment on the situation for a story in the Nov. 1 issue of Multichannel
News
.

"SoapNet is one option for retransmission
consent," Disney Channel senior vice president of sales and affiliate marketing
Charlie Nooney said. "We are not threatening to take off an O-and-O [ABC
owned-and-operated TV station] if an operator doesn't launch SoapNet. It is not a
forced situation. We are trying to be flexible."

Nonetheless, several small MSOs -- in different markets --
maintained that they have basically no option but to carry SoapNet, a 24-hour soap-opera
channel that debuts in January, in order to secure retransmission consent for the ABC
stations in their DMAs.

Matt Polka, president of the American Cable Association,
which represents independent operators, said that despite Disney's claims to the
contrary, "You have to get beyond the surface to see what's going on. A large
company like Disney has the ability and leverage to force carriage [of SoapNet] on small
independent operators. Unless they capitulate, they are going to be left without an
important TV station in their markets."

One small cable operator that closed a deal with Disney --
which included retransmission consent for an ABC station and SoapNet carriage -- said the
five-year agreement included $2-per-subscriber launch fees for SoapNet, only three years
of retransmission consent and two years of free carriage for the soap-opera channel. After
that, SoapNet's rate card starts at 10 cents per subscriber, per month, increasing
each year to 13 cents.

Without retransmission consent, Disney is reportedly
offering $3-per-subscriber launch fees for SoapNet and three years of free carriage for
the service, sources said.

In the retransmission-consent situation in Columbus, the
WBNS-Time Warner dispute grew nasty after WBNS began running print ads in a newspaper
that's also owned by Dispatch, The Columbus Dispatch.A full-page ad
Oct. 24 in particular got Time Warner's goat.

That ad said, "If you're a subscriber to Time
Warner Cable in Columbus, you may soon be saying goodbye to all of your favorite shows on
WBNS-TV. That's because Time Warner says that beginning Jan. 1, it may no longer
carry WBNS-10TV and continue to deny you WBNS' cable partner, the Ohio News
Network."

Some of WBNS' and ONN's ads have also told Time
Warner subscribers they should switch to rival Americast, which carries ONN.

Green said the latest round of ads brought the conflict to
a new level. In the past, WBNS' ads just asked viewers to tell Time Warner they
wanted ONN, according to Green.

With the Oct. 24 ad, Green said, for the first time, the
emphasis was on WBNS, making it sound like it was purely Time Warner's decision not
to carry the station as of Jan. 1, rather than saying it was being withheld as part of
retransmission consent, she added. "They were pointing the finger at us," Green
said.

So Time Warner began placing its own ads -- including
full-page ads Oct. 28 and 31 -- in The Dispatch and other papers, stressing that
the cable operator needs WBNS' permission to carry the TV station.

According to Griesdorn, "They suggest that we are
holding them hostage and blackmailing them. But I think it's hard to blackmail a $30
billion-plus company, Time Warner Inc."

Time Warner said it is trying to reach a compromise with
WBNS and ONN. "We did offer them carriage on the digital tier," Green said.
"They declined that offer."

Digital carriage is unacceptable for ONN because it is
carried on basic throughout central Ohio, Griesdorn said, adding, "We have never had
subscribers have to pay additional for ONN."

Griesdorn added that as part of the negotiations, Dispatch
was seeking "a bookmark for the future" on Time Warner's digital tier for a
regional weather channel that's being developed.

Time Warner will have to give subscribers 30 days'
notice, by Nov. 30, that it may stop carrying WBNS effective Jan. 1.

"I'm sure the ad wars will continue,"
Griesdorn said.

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