The all-news channel that NBC, in partnership with the Microsoft Corp., plans to start next month has become entangled in a dispute between cable operators and the network. Several senior cable operators are threatening to balk at NBC's plans to distribute the new all-news channel in place of its current America's Talking channel.
NBC is responding in kind, saying that any cable system that refuses to carry the news channel in place of America's Talking will face an immediate lawsuit, and, more ominously, will no longer get any programming from the top-rated broadcast network. That includes the 1996 Olympic Games from Atlanta, which begin only four days after the scheduled start of MSNBC.Many of those involved said the threats, in and of themselves, amounted to posturing and were less important than the deep-seated bitterness they reflected. NBC's cable executives said they were confident they would win this tussle and that MSNBC would be available by in all 20.5 million homes that now receive America's Talking and in another million or so homes by July 15.
Thomas Rogers, the president of NBC Cable, said there were three reasons for that confidence: "Almost all the cable operators are embracing the channel as a real upgrade over AT. No one is telling me they're not going to carry it. And our discussions with cable operators are about incremental distribution. What gets said beyond that sounds like posturing to me."
The bitterness of some cable operators can be traced back two decades to their resentment of the power wielded by their broadcasting rivals over the advertising marketplace. Later, when broadcasters decided that cable television was going to be a good business, they were quick to criticize the closed nature of the industry they once scorned. One senior NBC executive, in 1989, said that trying to work with the cable industry was like "dealing with the mob."
Many cable executives have neither forgotten nor forgiven that remark.
Cable operators like Rob Stengel, the senior vice president of programming for Continental Cablevision, the country's third largest cable operator with 4.3 million customers, say NBC created the problem by announcing the switch without consulting the cable operators.
"It's a serious issue for us because of the precedential impact of the notion of flipping a channel to a different format," Stengel said. "There was no discussion. It was basically just announced."
The America's Talking channel was originally set up as a result of a government-brokered deal between broadcasters and cable operators. In return for being permitted to retransmit broadcast signals over cable channels, cable operators reluctantly agreed to carry new cable channels owned by three of the four broadcast networks. Not only did they have to carry the channels, they had to pay broadcasters for them.
With that history, NBC's unilateral decision to put MSNBC on a retransmission channel without consultation was particularly galling. "I don't think the dust has settled on what's going to happen with that channel yet," said another senior cable system executive who insisted on anonymity.
Looming over the negotiations is the pending merger of Time Warner with the Turner Broadcasting System, which would result in cable's biggest operating systems gaining control of cable's biggest programmer. That merger is already under federal antitrust scrutiny, a factor NBC's executives say they are certain helps them because NBC's news channel would become a competitor to Turner's Cable News Network.
Presumably neither Time Warner, which expects to annex Turner, nor Tele-Communications Inc., the largest cable system operator, which also controls a 23 percent share of Turner and has negotiated a 9 percent stake in the merged company, could afford to take a stand opposing NBC's plans, because such objection might nudge the government's antitrust concerns into action to block the merger.
At this point, most executives believe the dispute will be settled and MSNBC will go on as scheduled. But, beyond highlighting the lingering ill will between cable operators and traditional broadcasters, the conflict underscores how entangled many of the interests of the biggest players in cable have become as competitors turn into partners as a result of big corporate mergers.
Also complicating the picture is the all-news channel being pushed by Fox Inc., a unit of Rupert Murdoch's News Corp. that is headed by Roger Ailes, who created America's Talking for NBC.