Academy Awards High Stakes Standoff Ends 13 Minutes into Telecast

A high-stakes "Academy Awards" game of chicken ended 13 minutes into the telecast when Walt Disney Co. and Cablevision Systems Corp. settled their dispute over a new contract.

Disney had said it would pull the ABC feed from Cablevision if the cable operator did not negotiate a more-favorable contract, potentially affecting about 3.1 million homes in the New York area.

The drama, some might say, could have been higher only if the contract dispute had occurred in the hours and minutes leading up to the Super Bowl.

The contract dispute, and temporary programming interruption, underscores the increasing financial stress in the multi-channel video entertainment ecosystem. Both broadcasters and distributors face rising programming costs, lower profit margins and growing competition.

In past years broadcasters have struck different deals, agreeing to allow "no incremental cost" carriage of local broadcast feeds in exchange for operators agreeing to add new cable networks to their program lineups. Programmers essentially bartered "free" local station carriage in exchange for carriage of new cable networks.

But that was then, and this is now. These days, both broadcasters and distributors are trying to squeeze more profit out of their video operations. And consumer opposition to ever-increasing monthly subcription fees is a background issue, at the same time distribution alternatives are growing.

In a sense, the broadcast networks also are looking over their shoulders at the potential threat Internet distribution represents. But so are the cable operators. After watching the music industry become disrupted by online distribution, as well as the continued decline of newspapers, video content owners are trying to avoid "no incremental cost" distribution of their content.

Given those pressures, it does not seem likely this will be the last tussle threatening program carriage. Versus, for example, now is dark on DirecTV and has been for months, as those two firms have not agreed on new contract terms, either.

As content ecosystems are rearranged, disputes between partners are bound to grow. The same sort of ecosystem change is behind the network neutrality debate as well.