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Time Warner Cable decides to bow out of Ovation

By Liana B. Baker

(Reuters) - Time Warner Cable, the second-largest cable TV distributor in the United States, said on Tuesday it is planning to drop arts-focused cable channel Ovation, citing its low ratings relative to the cost of carrying the network.

Time Warner Cable said in a statement that Ovation is one of its "poorest performing networks," attracting less than 1 percent of its 12 million customers. Yet the company said "in the past several years" it has paid Ovation more than $10 million in fees.

Ovation will be removed from Time Warner Cable's channel lineup when its contract expires on December 31.

For its part, Ovation, which is available in 51 million homes, called the move "ill-conceived." The network, which airs programs such as "Song by Song," a documentary miniseries about singer Johnny Cash, and "A Chance to Dance," a reality competition show about dancing, also criticized Time Warner Cable for investing billions in the past year in its new regional sports network featuring Los Angeles Lakers basketball games.

"While they are investing huge amounts in sports programming, they've chosen to limit their customers' viewing options by cutting the only arts network in their lineup," said Brad Samuels, Ovation's executive vice president of content distribution.

Time Warner Cable counters that Ovation airs too many repeats and infomercials "unrelated to the arts."

DISTRIBUTION DISPUTES

Disputes between pay TV distributors and cable networks have been on the rise in recent years, with the most high-profile incident occurring last summer when 26 of Viacom Inc's networks, including Nickelodeon, were blacked out from DirecTV's 20 million customers for about nine days. Dish Network Corp also blacked out four of AMC Networks Inc's cable networks from July to October.

As an independent network, Ovation lacks the leverage of large media companies like Walt Disney Co or Viacom which own a stable of cable networks and can package them together - known as "bundling" - to gain negotiating leverage with distributors. Disney, for example, can bundle ESPN with its lower-rated networks in carriage negotiations with cable distributors. Essentially, that means that if a distributor wants ESPN, it also has to take some other networks it might not necessarily want to carry.

Glenn Britt, the chief executive of Time Warner Cable, said at an investor conference in early December that the company would consider dropping low-rated channels because of high programming costs.

"We are going to have to start cutting things off," he said. "Those services that cost too much relative to the viewership or value of the service, we are going to drop them."

Reuters reported in April that Time Warner Cable was considering dropping Al Gore's Current TV if it did not reach certain ratings thresholds.

Time Warner Cable shares ended 0.4 percent higher at $96.27 on Tuesday.

(Reporting by Liana B. Baker in New York; editing by Peter Lauria and Matthew Lewis)

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