TELEVISION

Lights out for KXAN on Time Warner?

Unless a retransmission agreement is reached by midnight Thursday, KXAN and NBC programming will disappear from Time Warner Cable in Austin.

By Diane Holloway
AMERICAN-STATESMAN TELEVISION WRITER
Wednesday, October 01, 2008

If you're watching NBC's "Late Night With Conan O'Brien" on Time Warner Cable on Thursday, you just might be cut off at midnight, halfway through the show.

And Friday morning, you could miss "Today." You could also miss "The Office," "30 Rock," "The Tonight Show" or, gulp, "Sunday Night Football" on KXAN.

LIN TV, which is KXAN's corporate owner, and Time Warner are haggling over the station's retransmission contract, which expires at midnight Thursday. If an agreement is not reached — and both sides seem deeply entrenched in their opposing views — Cable Channel 4 will go dark, with a message from Time Warner that KXAN is not available.

"We didn't want to get to this point," said Stacy Schmitt, vice president of public affairs for Time Warner in Austin. "We're doing everything we can for this not to happen. There are no winners in this situation."

LIN, according to its own ads, wants the cable company to pay less than a penny a day per subscriber for permission to transmit KXAN's signal to its 311,000 Austin area subscribers. Time Warner argues that KXAN is a free, over-the-air signal and thus should be free to cable operators. Time Warner says it would be forced to pass on any additional cost to its subscribers.

"But they don't have to pass it on," KXAN General Manager Eric Lassberg said. "That's their choice. Here's our frustration: Smaller cable operators and satellite companies are paying fair compensation for our signal. To pay us nothing is to say we bring nothing to the table, and we know that's not true," Lassberg said.

For years, local stations passed their signals to cable operators for free, receiving promotions and advertising instead of payment. Cable provided clearer reception to outlying areas and increased the station's reach and audience size. But as stations saw cable networks such as ESPN, TNT and CNN rake in as much as $3 per subscriber per month from cable companies, local stations began to push for compensation.

"The trend nationally is definitely toward compensation," Lassberg said. "I believe it's inevitable that all cable operators, including Time Warner, will compensate local TV stations in the future. There are more and more of these retransmission battles going on."

Negotiations are continuing today between Time Warner and LIN, a Rhode Island-based media company that owns 15 TV stations around the country. Time Warner also is negotiating with other Austin stations, but, according to Schmitt, those talks are going smoothly with no threats of a breakdown.

This is not the first time LIN has opted to play hardball in retransmission negotiations in Central Texas.

Suddenlink, which provides cable service to about 30,000 households in Williamson County, faced a similar stalemate with KXAN and was forced to drop the station from January until March. Suddenlink substituted an NBC station in Temple, but that won't happen in this case. KXAN has an exclusive arrangement with NBC, and a regulation is pending before the Federal Communications Commission that would prevent a cable company from poaching network programming from another station.

KSAT, a San Antonio station affiliated with ABC, is facing a similar showdown with Time Warner. And Univision stations across the country are preparing for retransmission battles with Time Warner.

Time Warner is engaged in contract negotiations with LIN's other TV stations in Buffalo, N.Y.; Columbus, Toledo and Dayton, Ohio; Fort Wayne and Terre Haute, Ind.; Green Bay, Wis.; Indianapolis; Mobile, Ala.; and Springfield, Mass.

Most retransmission disputes that involve a station dropping off cable are solved in a matter of weeks, but some situations have been severe. A Fox station in Spokane, Wash., was dropped from Time Warner for 14 months before an agreement was reached. Viewers missed an entire season of Fox programming and popular Seattle Seahawks football games during that battle.

Because both sides in the retransmission battles sign ironclad nondisclosure agreements, the public is not privy to how these confrontations are resolved. Industry sources suggest that stations have been asking for fees ranging from 25 cents to $1.50 per subscriber per month, with some receiving cash compensation.

In the KXAN versus Time Warner showdown, Time Warner could face losing subscribers to satellite services or rival cable companies. Dish Network and DirecTV have seen their subscriber numbers spike during such cable showdowns elsewhere.

And KXAN could face a serious drop in viewership accompanied by a drop in ad revenue. Lassberg said about 48 percent of KXAN's viewers are Time Warner subscribers (21 percent come from satellite, 14 percent from over-the-air and the rest from smaller cable providers such as Grande Communications). Losing half the station's audience would necessitate negotiating lower ad rates.

Both KXAN and Time Warner would face an onslaught of angry customers if the clock ticks past midnight Thursday without a contract agreement.

Where to watch your TV shows

Program sources if KXAN drops off Time Warner:

DirecTV satellite

Dish Network

AT&T U-verse

Grande Communications cable (where available)

Suddenlink cable (where available)

NBC.com

Over-the-air (with rabbit ears or outside antenna)

dholloway@statesman.com; 445-3608