Some 16 million Time Warner Cable (NYSE:TWC) subscribers just breathed a sigh of relief, after learning yesterday that they can still watch The Daily Show, South Park, and Spongebob Squarepants. Viacom (NYSE:VIA.B) has settled its feud with TWC.

A crisis ...
Earlier this week, the news looked bleaker. Nineteen Viacom channels were set to go black for Time Warner subscribers, as Viacom threatened to pull programming over what amounted to about a penny-a-subscriber-a-day fee hike. According to Viacom, its networks (including Comedy Central, Nickelodeon, and MTV's multiple iterations) account for 20% of TWC's viewership, but TWC pays Viacom just 8% of total license fees.

TWC rejected Viacom's demand for double-digit fee hikes, on the grounds that it was unfair to ask its customers to foot the bill for a fee hike in the midst of a recession. (Suggestions that TWC could alleviate the unfairness by eating the penny-a-day extra cost itself were laughed out of the room.)

... averted
As in past disputes, such as the Viacom-EchoStar brouhaha of 2004, or the Time Warner (NYSE:TWX)-Disney (NYSE:DIS) dispute of 2000, both sides waged a media war in defense of their respective positions. TWC made Viacom out to be the greedy bad guy. Viacom incited a fifth column within its antagonist's customer base, urging TWC customers to defect to rival providers like DirecTV or Verizon (NYSE:VZ).

Yadda, yadda. Ultimately, the parties came to terms, and TWC seems ready to pay a "modest" fee increase to ensure that its customers' supply of The Colbert Report remains uninterrupted.

Viacom's greedy and its mama dresses it funny
If that were the whole story, it would hardly be worth mentioning. But in this particular dispute, TWC played a new card. In addition to calling Viacom greedy, the cable company said Viacom was, well, stupid. The problem wasn't that Viacom isn't being paid enough, said TWC, but that the media giant is "putting most of their top-rated content on the Web for free."

You could almost see the wheels turning within the TWC execs' heads as this crisis came to a head: Viacom wants more money? Fine. We'll put up the requisite fuss, then just turn around and stick our customers with the bill -- maybe even pad it a bit. Viacom gets its money. We maintain our 18% operating margin. Everybody's happy.

The king is dead
And then came the doubletake: But wait! How do we know the customers will pay this time? If they've got the option of watching Daily Show reruns on the Web, and if they can entertain the tykes just as well by streaming Dora the Explorer and Spongebob online, then all of a sudden, TWC's audience begins to look a lot less captive.

That's why I place this dispute in a wholly different class from the content provider-cable company disputes of years past. I think we just saw a paradigm shift, Fools. The cable kingpins have lost their thrones to a new ruler: content.

Long live the king?
TWC can complain all it likes, but in my opinion, Viacom was actually stupid like a fox (to quote Homer Simpson). Giving away programming "for free" on the Web may sound like a crazy way to make a profit, but doing so helped Viacom severely weaken TWC's negotiating position in the ensuing fee dispute.

Basically, Viacom had TWC over a barrel. If TWC refused to pay the fee increase, Viacom might not only raid its customer base, encouraging defections to DirecTV and Verizon, but also divert ad revenue from TWC's TV channels to Viacom's Web sites.

Foolish takeaway
If I'm right, and this is a sea change in content's kingship, it could signal bad news for cable providers like TWC and Comcast (NASDAQ:CMCSA). Conversely, the new trend could favor those forward-thinking content providers who've led the move to put free programming on the Web, including General Electric's (NYSE:GE) NBC and Disney's ABC, for example.

Time will tell. Foolish investors should watch for the next network-cable company fee dispute, to see whether TWC's novel lament becomes a chorus of dismay among its peers. In the meantime, keep enjoying Jon Stewart and Spongebob.

Fool contributor Rich Smith does not own shares of any company named above. Walt Disney is a Motley Fool Stock Advisor and Motley Fool Inside Value pick. The Motley Fool's disclosure policy, as luck would have it, is available for free viewing on the Web.