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Oh yeah? How about, "Viacom cuts its own throat"?

December 31, 2008 | 11:13 am

Spongebob_2I'm a Patt Morrison fan, but my view of the dispute between Time Warner Cable and Viacom is quite a bit different from hers.

Maybe it's because I don't have cable, but I feel compelled to stand up for Time Warner here, even as it prepares to cut much of the country's televisions off from SpongeBob, Jon Stewart and the genius of Jimmy Neutron. At the heart of the matter is Viacom's demand for more money for the privilege of carrying its channels. IMHO, it's the wrong demand at the wrong time. And the big loser here could be Viacom, which needs Time Warner more than Time Warner needs Nickelodeon, MTV, BET and the host of other Viacom cable networks.

You could argue that recessions are good for cable operators -- people spend less on entertainment away from home, raising the value of packaged home-entertainment bundles such as cable and satellite. But as the jobless rate climbs, it's hard to imagine Time Warner extracting sizable rate increases from their subscribers in 2009. More important, as Patt notes, Viacom puts its shows online, free of charge. So while it's asking Time Warner for more money for its channels, it's flooding the market with a cheaper version of the same product. This may be just the first in a long series of battles between multi-channel video providers and TV networks, and Time Warner CEO Glenn Britt seems eager to fight them.

Today, the amount of ad revenue generated online is a fraction of the $21.8 billion that cable networks collect through the Time Warners of the world. In a similar dispute with broadcaster LIN TV earlier this year, Time Warner held its ground for almost a month, keeping the LIN channels off the air before the two sides settled (terms were not disclosed, so there's no telling which side caved). During that time, the cable operator helped its customers hook their TVs up to the Internet to catch some of the programming that LIN had provided. My guess is, most cable customers would be willing to do that for a few channels, as long as they continued to get the bulk of their favorites through the usual route. That's why I think Time Warner's got the stronger hand here.

SpongeBob image courtesy of Nickelodeon

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