MEDIA WATCH: Time Warner, ABC spat puts both giants in bad light

Time Warner took ABC off the air for more than 24 hours on May 1, bringing a private dispute with Disney over payment for broadcasting into the public arena. Although this would be significant news in itself, the move was even more highly charged because it took place during the May ’sweeps’ rating period used to set advertising rates. Customers, outraged by the move, brought their opinions to Congress and the FCC. Time Warner and Disney stumbled into a PR nightmare, which ultimately damaged both companies.

Time Warner took ABC off the air for more than 24 hours on May 1, bringing a private dispute with Disney over payment for broadcasting into the public arena. Although this would be significant news in itself, the move was even more highly charged because it took place during the May ’sweeps’ rating period used to set advertising rates. Customers, outraged by the move, brought their opinions to Congress and the FCC. Time Warner and Disney stumbled into a PR nightmare, which ultimately damaged both companies.

Time Warner took ABC off the air for more than 24 hours on May 1,

bringing a private dispute with Disney over payment for broadcasting

into the public arena. Although this would be significant news in

itself, the move was even more highly charged because it took place

during the May ’sweeps’ rating period used to set advertising rates.

Customers, outraged by the move, brought their opinions to Congress and

the FCC. Time Warner and Disney stumbled into a PR nightmare, which

ultimately damaged both companies.



According to an analysis by CARMA, the majority of articles about the

blackout portrayed the press and analysts alike as surprised that Time

Warner took such a bold action. However, explanations of the dispute

painted Disney as equally responsible for the blackout, and analysts

concluded that the companies acted with a serious lack of judgment.

’These things don’t generally get this far, for the simple reason that

the PR damage is in the end not worth it. (There’s) an element of

’mutually assured destruction,’ ’ said Frank Biondi, former Viacom

executive (The Wall Street Journal, May 3).



The media positioned Disney as capitalizing on the blackout by turning

the media’s focus to the Time Warner-America Online merger. The media

speculated that this might be evidence for concern over monopoly power

not only in the cable industry, but also over the Internet. Disney execs

put pressure on Congress to scrutinize the proposed merger between AOL

and Time Warner. Robert Callahan, new president of the ABC Broadcast

Group, said, ’They have the potential to monopolize the Internet’ (USA

Today, May 2).



An article in The Washington Post (May 4) suggested Disney’s arguments

may be gaining ground. House telecommunications subcommittee chairman

Rep. W.J. Tauzin (R-La.) appeared to agree: ’Getting between an American

and his TV set is the second most dangerous place to be ... (The

AOL-Time Warner merger) does raise a caution flag about whether there’s

enough competition out there as these entities become bigger ...’



A number of journalists suspected Disney was over-dramatizing the

blackout because it stands to lose from the AOL merger. While The Boston

Globe (May 2) cited Disney executives’ concerns, articles also quoted

Time Warner officials on the motives behind Disney’s laments. ’They’ve

been trying to wrap this around the AOL merger from the beginning,’ said

one Time Warner official. ’We felt we had a deal, and suddenly the

ground rules changed from the Disney perspective.’



Time Warner execs appeared successful in defending their actions. They

blamed Disney for the blackout, defending the action as a cost-saving

measure for consumers. ’It’s abundantly clear ... this is about

extorting money from cable customers,’ said spokesman Michael Luftman

(The Dallas Morning News, May 2).



While the media debated fault for the blackout, and the implications for

the, journalists and analysts agreed that the consumer was made a pawn

in the fight.In the media’s opinion, the ends don’t seem to justify the

means, and both companies should be penalized for bringing the consumer

into the fray at all.





- Evaluation and analysis by CARMA. Media Watch can be found at

www.carma.com.



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