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FCC Scolds Time Warner, Disney

Updated:
NEW YORK (AP) — The chairman of the Federal Communications Commission scolded Time Warner and the Walt Disney Co. for taking ABC off the air for 3.5 million customers, saying viewers shouldn't be held hostage to their dispute.

``This should never happen again,'' William Kennard said Tuesday, shortly after ABC's signal was restored following a 39-hour blackout.

Kennard's warning came after the corporate warriors put off, but didn't settle, their quarrel over what Disney would be paid to provide its cable channels to Time Warner customers.

Viewers became a part of the long-running dispute at 12:01 a.m. Monday, when ABC service was cut off for Time Warner customers in seven cities, including New York, Houston and Los Angeles. The blackout started a run on rabbit-ear antennas and satellite TV systems.

Even with the temporary agreement, newspaper ads ran today in some markets, including New York and Los Angeles, with ABC offering 1,000 Time Warner subscribers in the affected region a $198 rebate on a satellite dish and installation of DirecTV service.

``If Time Warner can dish it out, so can we. At no cost to you,'' the ad said.

The truce came suddenly during a Tuesday news conference called by Time Warner Cable chairman Joseph Collins. He offered Disney a six-month extension to continue airing ABC's signal, putting off their fight over the cable channels.

Disney had earlier rejected an eight-month extension. Collins said ABC programming would not be restored until ABC had agreed to the extra time.

While he was talking, his remarks televised live by Time Warner-owned CNN, Disney executives faxed a statement saying they would agree to put off the dispute to July 15. Collins stepped away from the microphone to confer with his associates.

``We're going to accept this,'' he said.

Within a half hour, WABC-TV in New York was back on the air, showing ``General Hospital.''
ABC said it was ``gratified that Time Warner is now making the viewers their first priority.''

Disney had asked the FCC to rule on its contention that Time Warner violated the law by dropping ABC's signal during a ratings sweeps month. Agency officials said Tuesday's agreement does not preclude the FCC from acting on the request.

Time Warner claims that Disney is insisting upon an additional $300 million to air its cable channels, including The Disney Channel, Toon Disney and the Soap Opera Channel. Disney said that's a fair price, considering Time Warner is getting ABC for free.

The impasse had driven down Disney's stock over the past two days as investors feared that a prolonged showdown could have an impact on ABC's revenues.

There has been speculation that Time Warner wanted resolution of the dispute delayed as long as possible, until after federal regulators ruled on the company's merger with America Online. Disney has opposed the merger of its rival media giant.

The affected customers were in seven markets served by ABC-owned television stations. About 1.5 million were in the New York City area, 665,000 in Houston and 440,000 in Raleigh-Durham, N.C. Smaller numbers of customers in the Los Angeles; Philadelphia; Toledo, Ohio; and Fresno, Calif., areas were also blacked out.

Time Warner's competitors were only too happy to step into the breach. EchoStar Communications was offering affected Time Warner customers a free satellite dish and free installation of its Dish TV service if they signed up for a year of programming. ABC was also talking with DirecTV about paying for customers' new dishes.

``This is certainly a dispute that we're seeking to capitalize on,'' said Bob Marsocci, spokesman for DirectTV.

The lost viewers didn't put much of a dent in the ``Who Wants to Be a Millionaire'' juggernaut Monday, though. The celebrity version drew the largest audience ever for television's most popular show, an estimated 35.8 million viewers, according to Nielsen Media Research.

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