Time Warner Offers Freebies for ABC Cutoff

Time Warner Inc. is offering rebates and premium channels to the 3.5 million customers it cut off from ABC this week during a contract dispute with ABC’s parent, Walt Disney Co.

Details of the offer to the roughly 500,000 customers Time Warner serves in Los Angeles, Orange County and Palm Springs will be noted on this month’s bills.

The rebates will cost Time Warner about $3.5 million. That brings the cost to Time Warner of its flap with Disney to about $170 million, counting the 33,000 cable customers who plan to switch from cable to DirecTV as a result of a near-giveaway of the satellite dishes by Disney in Los Angeles, New York and Houston. Cable customers are valued at about $5,000 apiece.

In the western San Fernando Valley, Time Warner will refund customers $1 for the 24-hour blackout of KABC-TV. It also plans to give customers a free month of HBO Family--a Time Warner-owned channel--worth $10. It is working out details with the city, which may require the cable operator to notify customers in writing before providing the channel.

Time Warner’s West Valley system said it also responded Friday to a Tuesday letter it received from the city. The letter notified the company that it was in breach of its local franchise because it failed to properly notify customers that it would be dropping ABC.

Time Warner said banners airing across its channel guide intermittently since November warned customers that ABC might be dropped and constitute ample notification.

Time Warner cable systems in other affected areas will also give rebates and a free month of premium service. Those areas include New York, Houston and parts of North Carolina, Ohio and Wisconsin.

Time Warner dropped ABC’s signal Monday in a battle over compensation for Disney’s cable networks.

The signal was restored the next day after the two companies reached a truce and set a July 15 deadline to resolve the dispute.