Will You Still Be Able To Watch The Daily Show with Jon Stewart? - December 31, 2008

Is your favorite television program being shut off for the New Year? In a statement released earlier today, Viacom (VIA), which controls MTV, Nickelodeon, Comedy Central and 16 other cable channels, stated that Time Warner Cable (TWC) is undervaluing Viacom’s cable programs.

"Time Warner Cable has dismissed our efforts at a fair compromise," Viacom said in a statement. "As a result, we are sorry to say that for Time Warner Cable customers our networks will go dark as of 12:01 on January 1st."

The channels that would be affected are: Comedy Central, CMT: Pure Country, Logo, Palladia, MTV, MTV 2, MTV Hits, MTV Jams, MTV Tr3s, Nickelodeon, Noggin, Nick 2, Nicktoons, Spike, The N, TV Land, VH1, VH1 Classic, and VH1 Soul.

Viacom is currently seeking a fee increase from Time Warner that would amount to only $0.23 per month per customer. With TWC currently having some 13 million subscribers, the total would come in at roughly $36M in lost revenues.

Time Warner, on the other hand, cites that Viacom is owed nothing and representative Alex Dudley said Viacom was asking for a fee increase that was too steep, despite the fact that "ratings are sagging" at most of its networks.

In response, "We make this request because TWC has so greatly undervalued our channels for so long. Americans spend more than 20% of their TV viewing time watching our networks, yet our fees amount to less than 2.5% of what Time Warner generates from their average customer," Viacom added. "Throughout the country, we have negotiated equitable license agreement renewals, or are in the final stages of renewals, with virtually every cable and satellite carrier. Nevertheless, Time Warner has dismissed our efforts at a fair compromise and has effectively chosen to deny its customers some of the most popular TV shows on the air."

One of the thorns in the side of Time Warner is that many of the shows that are first broadcasted on Viacom’s network are re-aired on the Web where Viacom receives additional advertising revenues, which is then not shared with Time Warner.

In late afternoon trading, shares of Viacom were up over 5% to trade at $20.24 per share, while shares of Time Warner Cable were down nearly 1% at $21.58 per share.

For more information on the stock and options markets check out the wealth of information at BetterTrades.