Time Warner reaches tentative deal with Disney over ABC

NEW YORK - Time Warner Inc. and The Walt Disney Co. have reached a tentative agreement that would end a fight that peaked when Time Warner took Disney's ABC signal away from millions of its cable subscribers.

Responding to a question Thursday at Time Warner's annual shareholders' meeting, chairman and CEO Gerald Levin said the two sides had reached an agreement in principle.

Officials from both companies declined to elaborate and emphasized that the agreement was not final. ''We need to have a signed agreement, and we're working towards that,'' said Mike Luftman, a spokesman for Time Warner Cable.

The spat between the two media titans turned into a public relations disaster for Time Warner after it pulled ABC from 3.5 million homes around the United States for a day and a half earlier this month. Each side blamed the other for the impasse, though the Federal Communications Commission determined that Time Warner had broken federal rules.

News of the agreement came one day after Time Warner signed a deal with General Electric Co.'s NBC to carry that network's signal through 2008. The NBC deal, which also included the cable channels CNBC and MSNBC, left ABC as the only major network with which Time Warner did not have a retransmission agreement.

Time Warner, the nation's second-largest cable company, and Disney have been negotiating over retransmission rights to ABC since last fall. Neither company would describe what compromises were reached in the deal.

Time Warner had said Disney was asking for too much, including shifting the Disney Channel from premium cable to regular cable, which would have meant lower revenues for Time Warner. Disney had said it was only seeking fair compensation for its top-rated network.

Disney, which has opposed Time Warner's acquisition by America Online Inc., has been making political hay of the dispute, calling it an example of monopolistic behavior.

Time Warner has sought to make amends with its cable customers by offering rebates and premium channels to customers whose access to ABC was cut off.