New York-based GiSCO is raising a stink after having been turned away from buying TV advertising on Time Warner Inc. (TWX) cable systems in its region because it wasn’t allowed to advertise in areas where the media giant is rolling out the high-speed Road Runner service.
Time Warner says it’s not a corporate policy, but that regional offices are free to reject such advertising.
“We typically do not accept advertising from companies that offer competing products,” says Michael Luftman, vice president of corporate communications for Time Warner Cable. Luftman noted that you’re unlikely to see, for example, advertisements for satellite dishes on Time Warner cable systems.
The policy raises big questions about the future, since America Online (AOL), the nation’s biggest ISP, has agreed to acquire Time Warner. The deal would effectively give Time Warner an Internet access business in every market, making every other ISP a competitor.
“We first learned of the policy against ISP advertising when we attempted to purchase ad spots in the Syracuse, New York, Market in the fall on 1999. Time Warner refused to run our ads in that market because Road Runner is being offered there,” says Paul Barton, president and chief executive officer of GiSCO.
GiSCO charges that the policy inhibits fair competition in the market for Internet service providers.
National ISPs like EarthLink (ELNKD) and MSN (MSFT) are apparently not having the troubles that GiSCO is encountering, evidently because they place their ads through advertising agencies. Or it could be because they, seeking national buys, can deal directly with the cable networks rather than the regional Time Warner cable systems.
The advertising policy may actually become more to GiSCO’s liking as the acquisition by AOL comes to fruition, say Time Warner officials. The merged company is already committed to allowing open access to its system, AOL being a founding member of the openNET coalition. That means other ISPs would be able to offer access through Time Warner’s cable wires, so, perhaps, every regional office would take advertising from these ISPs, as well. Decisions on these matters are still being worked out.
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