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In a chilling indication of what the future may have in store, Time Warner cable systems on May 1 dropped the local ABC stations in seven markets due to a contract dispute. About 3.5 million cable homes were affected by the removal of seven Disney-owned ABC stations. The affected markets included New York; Los Angeles-Fresno; Houston; Flint, Michigan-Toledo, Ohio; Philadelphia; and Raleigh-Durham, North Carolina. After a 39-hour blackout, Time Warner agreed on May 2 to extend negotiations on retransmission until July 15, allowing ABC stations to return to Time Warner cable systems. The Federal Communications Commission had given Time Warner until the close of business on May 2 to explain its decision to pull the plug on stations owned and operated by ABC.

Time Warner charged that the Walt Disney Company, which owns ABC, was to blame for the blackout. "Disney is trying to inappropriately use its ownership of ABC to extract excessive and unreasonable terms for its cable channels--terms that would add hundreds of millions of dollars in costs for Time Warner Communications," Time Warner said in a message to its Los Angeles subscribers.

Arnold Kleiner, president and general manager of television station of Los Angeles' KABC, did not let Time Warner's statement go unchallenged. "This is a punitive act, but Time Warner is punishing their own customers," he said. "This blackout is a frightening foreshadowing of the implications of the Time Warner-AOL (America Online) merger."

Time Warner's contract to carry ABC stations officially ended December 31, 1999, but negotiations to renew that agreement continually stalled over how much Time Warner should pay to carry ABC's programming, as allowed under the 1992 Cable TV Act.

AOL and Time Warner (parent of Time Magazine and CNN) combined on January 17^th of this year to create a $350 billion parent company--AOL Time Warner--in the biggest merger in history. Time Warner was originally formed by the merger of Time, Inc., and Warner Communications. The media giant later acquired Turner Broadcasting Corporation before merging with AOL.

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