Viacom and Time Warner Cable Reach Accord

There was good news in the early hours of Thursday for tiny tots in New York, Los Angeles and other large cities: The “Sponge Bob” blackout has been avoided.

The ball had already dropped in Times Square, but MTV Networks and Time Warner Cable kept talking through Wednesday night and into the early New Year and concluded a deal in principle that insured that shows like “Sponge Bob Square Pants” and “The Colbert Report” would still be available to the 13.3 million subscribers to the Time Warner Cable service.

The final terms, which were not disclosed, will be worked out in talks in the next few days, a Viacom executive said.

The two sides had faced a deadline of midnight to renew the contract under which Time Warner pays MTV a rights fee for its 20 cable networks, which include MTV, Nickelodeon, Comedy Central, VH-1, TV Land, BET, and Spike.

MTV’s parent, Viacom, had been demanding an increase of about 23 cents per subscriber to cover its full portfolio of channels, under a threat that it would pull all 20 networks off Time Warner’s systems. Viacom’s chief executive, Philippe Dauman, defended the increase as justified because, he said, MTV Networks had been underpriced as compared to other cable networks with fewer viewers.

But Time Warner Cable had resisted the demands, saying that with the national economy under duress, it was no time to be seeking higher fees from consumers. A Time Warner executive had labeled the MTV Networks demands outrageous.

In the past, when cable channel owners like MTV Networks have moved to take their programs away from cable systems over fee disputes they have invariably won because viewers generally expect cable systems to provide the programs they like-- and are paying for -- and protest loudly if those shows are blacked out.

That is what seemed to have happened again in this negotiation, which followed by a day a series of newspaper ads placed by Viacom that urged fans of its networks’ shows to lodge protest calls to Time Warner Cable. Though the announcement of the agreement reached in the early hours Thursday did not include any specifics about the financial terms, and executives on both sides agreed not to disclose the numbers, an executive with knowledge of the negotiation said that Time Warner had given in and agreed to pay a higher fee to MTV Networks.

Some or all of that fee increase is likely to be passed on to Time Warner Cable subscribers. But now none of them will be deprived of seeing Jon Stewart, “Dora the Explorer” or the fractious young women of “The Hills.”