U-verse cries foul as ‘Mad Men’ season looms

By Reuters
Posted July 14, 2010 at 2:59 p.m.

AT&T Inc. accused Rainbow Media Wednesday of unfair negotiations in talks to continue carrying the AMC, IFC and WE TV networks less than two weeks before Emmy award-winning advertising drama “Mad Men” returns to the airwaves.

The telephone company accused Rainbow of giving a “competitive advantage” to its parent, Cablevision Systems Corp.

The latest season of the period drama “Mad Men” returns to AMC  July 25 as one of the main attractions of that network.

Rainbow hit back at AT&T’s claims, saying its executives spent several weeks at U-verse’s offices trying to hammer out an agreement.

“We are disappointed that AT&T is publicly threatening to take away our networks, including AMC’s ‘Mad Men,’ just days before the season premiere,” the company said in a statement.

Cable and satellite companies pay fees to cable network companies for the right to package and sell those networks to customers.

The agreement between AT&T and Rainbow expires at midnight Wednesday,  and the phone company said it has made numerous proposals.

“Cablevision’s Rainbow Media has rejected each of them, instead making unreasonable proposals that give it an unfair competitive advantage,” the company said in a statement.

AT&T U-Verse has around 2 million customers nationwide. AT&T previously said it believes Rainbow’s networks are “overpriced on a per-viewer basis” compared with other major networks.

This latest battle with AT&T puts the shoe on the other foot for Cablevision’s controlling shareholders, the Dolan family.

Earlier this year the cable distribution arm of Cablevision was involved in a protracted fee dispute with Scripps Networks Interactive Inc. over carriage of The Food Network and HGTV, which were taken off air until fees were determined.

Fights between cable distributors and owners of the networks have worsened since the beginning of the recession. With advertising revenue down from the highs of  three to four years ago, programmers are keen to ensure that their affiliate revenue continues to grow. Meanwhile, distributors feel additional pressure by free-to-air broadcasters to also charge for carriage rights for the first time.

No. 2 U.S. cable operator Time Warner Cable Inc. is in talks with Walt Disney Co. about cable programming rights that could come to a head Sept. 1.

Seeking to take advantage of the uncertainty, rival phone company Verizon Communications Inc. launched an ad campaign last week for its FiOS TV service in some of Time Warner Cable’s markets.

Time Warner Cable launched its own ad campaign Wednesday in a full page ad in the New York Times to counter Verizon claims.

It says: “Signing up with FiOS will not protect you from a channel blackout. Verizon must negotiate their own deals with network owners. They’ll have the same choice: pay the network’s demands and pass the higher costs on to their customers or face the threat of a blackout.”

On the New York Stock Exchange, Cablevision was down 43 cents, at $25.87, while AT&T edged down 9 cents, to $24.86 late Wednesday afternoon.

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