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Disney advances TW/AOL concern

Luftman calls claims 'completely wrongheaded'

WASHINGTON — Disney lobbyists were busy on Capitol Hill Wednesday making sure members of Congress knew Time Warner Cable is blocking elements from a broadcast signal that helps consumers program their VCRs.

The latest campaign is part of Disney’s effort to raise concerns in Washington about Time Warner’s pending merger with America Online.

Although Disney has no investment in Gemstar, the company behind the VCR-Plus technology, it has been distributing the company’s FCC complaint against Time Warner Cable to more than 100 members of the House and Senate.

In the one-page cover sheet that accompanies Gemstar’s FCC filing, Disney writes, “The Gemstar complaint depicts a perfect example of the discriminatory conduct that we fear — using control of the pipeline to discriminate and compete unfairly.”

How it works

Gemstar has deals with TV stations in every market in the country that allow the company to embed program information into broadcast signals. VCRs equipped with Gemstar’s VCR-Plus technology can then decode the signal, making it easier for consumers to record television programming. It’s that encoded material that Time Warner is stripping out of TV signals in several markets.

The Disney packet was being delivered Wednesday by its key congressional lobbyist, Bill Pitts, a Hill veteran who is well-respected on both sides of the political aisle. Pitts refused to comment on Disney’s strategy, but the fact that the company felt it was important for Pitts to personally deliver the Gemstar complaints says a lot about the emphasis the company is placing on the Time Warner merger.

The Disney packet states in the opening paragraph that the Mouse House “does not oppose the merger of AOL and Time Warner.” However, the big question, suggests Disney, is whether “AOL/Time Warner as the owner of a combined cable television/broadband Internet pipeline to the home discriminate(s) in favor of its own channels and program content and against channels and program content owned by others.”

TW: Mouse ‘wrongheaded’

Time Warner spokesman Michael Luftman called Disney’s claims “completely wrongheaded.” Luftman argued that Time Warner should be compensated by Gemstar if the company is going to “piggyback” a product over its cable systems. “We are supposed to receive compensation,” Luftman said. “I don’t see that Disney gives things away as charity as part of their corporate soul.”

Gemstar agrees with Disney’s logic that Time Warner’s attitude toward VCR-Plus might be a good indication of how AOL Time Warner might behave as a giant Internet company.

Said Gemstar executive vice president and general counsel Stephen Weiswasser: “I think one should measure the sincerity of their promises against the way they actually behave.”

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