What was that all about? Last week's blundering effort by Time Warner Cable to use its local monopoly power to bring the Walt Disney Co. to heel was almost a perfect illustration of how not to run a business. By depriving 3.5 million households in seven markets, including New York City and Los Angeles, of their God-given right to watch Regis Philbin, some very highly paid people at the world's largest communications company leaped into an early lead for a coveted trophy--the one inscribed "Worst P.R. Move of the Year."
Not that Disney wins prizes for anything other than superior corporate mud wrestling. By provoking Time Warner into a foolhardy act that outraged both companies' customers, Disney invited onlookers--from channel surfers to Washington watchdogs--to turn away in disgust. Jeffrey Chester, executive director of the Center for Media Education, a Washington advocacy group, says, "Disney and Time Warner deserve a consumer award. They have taken an issue that was the preserve of techies and lobbyists and thrown it onto the front page."
One would have thought that Time Warner (parent company of Time Inc., which publishes TIME) would be on its best behavior while awaiting regulatory approval for its mammoth merger with America Online. But in its effort to win an arm-wrestling match with Disney, TW displayed the attributes of some of its prize properties: the discretion of Jenny Jones, the gentleness of Tony Soprano.
The issues of the fight were, in the end, less important than the tactics. In December, according to Time Warner, after months of negotiation, the two companies had come to a deal regarding the fees TW would pay to carry various Disney-owned channels on its cable systems and--most notably--to convert the Disney Channel from a premium service to basic cable. Disney negotiators deny they had got that far. And certainly after Time Warner announced its merger with America Online on Jan. 10, Disney didn't feel it had a deal. What it had then was leverage. Figuring that TW would tread lightly lest it disturb Washington's slumbering regulators at the Federal Communications Commission and the Federal Trade Commission, Disney asked for that one thing all negotiators hold out for when they've got the upper hand: more.
According to Time Warner, Disney tacked $300 million onto the price that TW would have to pay to carry the channels, an increase that would have raised the cable company's costs to $1.3 billion over 10 years. Disney naturally disputes that amount.
In any case, Time Warner Cable chairman Joe Collins held an apparent ace. He could shut down access to Disney's ABC network on TW systems at the beginning of May, the "sweeps month," which determines ad rates for the coming broadcast season. But if Collins did play that card, Disney executives surely realized, the public relations victory would be theirs. If you begin with the premise that people don't like their cable company, it would have been hard for TW to win a hearts-and-minds-of-the-public battle with Attila the Hun.