This should explain it all:
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DirecTV says may drop ABC Family over price rise
Reuters, 03.07.03, 6:35 PM ET
LOS ANGELES, March 7 (Reuters) - No. 1 satellite television company DirecTV may drop the ABC Family Channel at the end of the month instead of paying the 35 percent price increase The Walt Disney Co (nyse: DIS - news - people) is demanding, the company said on Friday.
ABC Family would lose about 13 percent of its audience, or 11.3 million of 85 million homes, if DirecTV pulled the channel from its basic package that is available on its U.S. network.
An ABC Cable Network spokesman said talks would continue.
"We are surprised and disappointed that DirecTV has chosen to threaten their viewers with the loss of ABC Family at this early stage of our negotiations with them," the spokesman said.
DirecTV spokesman Bob Marsocci said there had already been several months of talks.
"Taking down a channel is always a last resort," he said.
But, he added: "A 35-percent rate increase is unreasonable. There has not been a dramatic change in programming on ABC that justifies such a price increase."
DirecTV, which is owned by Hughes Electronics Corp. (nyse: GMH - news - people) the satellite subsidiary of General Motors Corp. (nyse: GMH - news - people), on Thursday began running a banner on ABC Family advising viewers that the channel might be dropped on March 31.
The two companies last announced a renewal of their contract in May 2002.
ABC Family last year ran into trouble with DirecTV competitor EchoStar Communications Corp. (nasdaq: DISH - news - people), which Disney sued after it tried to drop ABC Family from its DISH network. The two reached an agreement with undisclosed terms, although DISH kept ABC Family.
EchoStar also tried to buy DirecTV, but abandoned the bid after regulators raised anti-trust concerns.
Disney bought ABC Family for $5.2 billion, including assumed debt, in 2001, and the channel currently is available in nearly every U.S. home with cable or satellite television.
Copyright 2003, Reuters News Service
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Direct TV has significantly more clout than Dish Network* (but Dish Network has far better service at a lower price. Believe me, I LOVE my Dish Network!), so it is going to be very interesting to see how this plays out. If Direct TV goes through with this, it will likely do ABC Family in as every other major satellite and cable provider will feel that they have a chance to drop the channel.
