What were they thinking?
By BroadCasting & Cable Staff -- Broadcasting & Cable, 5/7/2000 8:00:00 PM
We can only presume Time Warner wants to kill its merger with AOL. Why else would it have taken its nasty channel-carriage negotiations with Disney public by pulling the ABC-owned stations from its cable systems last Monday and then pinning the blame on Disney? While Time Warner was telling the world, "Disney has taken ABC away from you," Disney was running around New York and Los Angeles with proof that the opposite was true: a letter giving Time Warner Disney's "unconditional and unequivocal consent" to continue carrying ABC through May 24.
Time Warner's actions were a lightning rod for the mounting concerns about its AOL coupling. Since announcing the merger last January, Time Warner has been trying to persuade the public and Washington policymakers that it would not become the big, bad gatekeeper, who would use the power of its broadband pipe into 20 million homes to muscle content providers. But by Tuesday morning, that's exactly what it looked like. It was like handing your PR department the second flight of the Hindenburg to promote. By noon Monday, Disney even had New York Mayor Rudy Guiliani rooting against the home team. Had the blackout gone on another day, the mayor might have been persuaded to wear a California Angels cap to Yankee Stadium.
The fallout was as predictable as snow in International Falls. The FCC and the House said they would have to hold hearings on the merger. The Senate said it needed to hold hearings on how to ensure that cable subscribers are not jerked around. Then, on Friday, The New York Times weighed in with a lead editorial that will fuel anti-Time Warner-AOL sentiment. The Times concluded that AOL-Time Warner and, presumably, other large cable operators should be regulated as some sort of common carriers. Echoing Disney, the paper says AOL-Time Warner should not be allowed to discriminate against outside content providers or in favor of its own.
We cannot endorse Time Warner's tactics last week (who could?), but we are extremely wary of regulations or merger conditions that would further diminish Time Warner's, or other operators', right to decide what content they put on and how they put it on. Discrimination is a word with all kinds of ugly connotations in our society today. But the fact is, that is what every media outlet does every day: discriminate. It chooses to offer this content. It chooses not to offer that content. The Times would defend to its last agate line its right to discriminate (i.e., to make editorial judgments). Yet, it glibly dismisses Time Warner's right. Disney discriminates, too. No matter how compelling you think your programming is, it's not going to get on the ABC schedule, or wabc's, for that matter, unless the Mouse says so.
We hope Time Warner and Disney can resolve their differences and successfully conclude a carriage deal by July 15-the new mutually agreed-upon deadline. We see nothing wrong with Disney's using its retransmission consent rights as leverage for carriage of cable networks, greater affiliate fees and preferential treatment for its Web services. And we can't blame Disney for trying to increase that leverage by hitting every pressure point in Washington: Congress, the FCC, the Federal Trade Commission. But it's a dangerous business. Disney and Time Warner are similar companies. If Time Warner is painted as an out-of-control media monopoly inclined to favor its own programming over that of others, Disney will have a hard time escaping a similar portrait. And once you invite government to the party, it's hard to get it to leave.
And a word of advice for Time Warner: If on July 15 you still find yourself at odds with Disney, whatever you do, don't pull the plug.
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