Fox-Cablevision negotiations continue

Updated: October 17, 2010, 6:48 PM ET
Associated Press

NEW YORK -- For the fourth time this year, Cablevision's 3 million subscribers in New York and Philadelphia are at the mercy of one of its disputes with networks, and caught in the middle are sports fans who missed playoff baseball and Sunday's New York Giants game.

Negotiators for Cablevision and Fox parent News Corp. failed to reach an agreement over rates Sunday, more than a day after their deal expired amid negotiations for a new one. Fox pulled its channels and programming while the two sides discuss how much Cablevision will pay to carry them.

The two sides will meet again Monday, Fox spokesman Scott Grogin said. "House," the drama that's among Fox's highest-rated shows, airs Monday night at 8 p.m. EDT.

Cablevision spokesman Charles Schueler reiterated that arbitration would be "the fastest and fairest way to return Fox programming to Cablevision customers."

Fox 5 and My9 in New York and Fox29 in Philadelphia were dark, as well as cable channels Fox Business Network, NatGeo Wild and Fox Deportes.

"This is ridiculous!" said Kevin Ryan, owner of Denny's Bar, a family business in Brooklyn's Kensington neighborhood. "I'm relying on people to come in who are Giants fans -- and they're walking out, even though I pay for the football package."

He blames his debacle on "typical billionaire behavior, against the small businessman like me; and regular, everyday people get caught in the middle."

Ryan said he expected to lose "a good amount of money over three big events": the Giants' 28-20 win over Detroit and the first two games of baseball's National League Championship Series between San Francisco and Philadelphia.

Cablevision subscribers have been victims of multiple blackouts this year. In March, customers lost their ABC station in New York in the hours leading up to the Oscars. Viewers missed the first 15 minutes of the awards show before Cablevision and Walt Disney Co. reached a tentative deal.

Scripps Networks Interactive Inc.'s Food Network and HGTV also went dark for three weeks in a similar dispute. Separately, Cablevision's Rainbow Media unit played hardball this summer with AT&T Inc. in fee negotiations over three channels: AMC, IFC and WE tv. That threatened customers' ability to watch the season premiere of AMC's "Mad Men."

Other industry standoffs this year have pitted Time Warner Cable Inc. against News Corp.'s Fox channels, which threatened the college bowl season and new episodes of "The Simpsons," and Mediacom Communications Corp. against Sinclair Broadcasting Group.

The latest dispute is another example of how networks are struggling to find profits as advertising revenue dwindles and programming costs grow. Networks are transmitted freely over the airwaves, but expensive event programming has increasingly led the companies behind them to demand fees from cable TV and satellite operators for retransmitting those signals.

Networks claim that cable companies charge customers hefty sums each month -- about $18 -- for basic broadcast signals but don't pass on enough payment to networks. Most broadcasters get a fee -- say, $1 per cable subscriber -- for allowing pay-TV providers to carry the channels on their lineups.

As the recession forced businesses to cut budgets for TV advertising -- traditionally the main source of revenue at broadcast stations -- television networks started asking for a higher fee per subscriber. The cable TV companies have resisted, saying higher fees get passed along to customers in the form of higher cable bills.

Where does that leave customers hoping to watch big sporting events and their favorite shows? Some analysts say that the more signals get pulled, with customers hurt, the more the industry is taking the risk that government will intervene.

"I'm not big on government intervention -- they should go to binding arbitration and get a fair rate for everybody," said Tony Bastone, manager of Yankee Tavern near Yankee Stadium. "This is just flat-out greed; they can't make money on ads, so they're trying to make it through subscribers."

He said his bar drew customers Sunday because the football game was on DirecTV.

A coalition of pay-TV providers -- including Cablevision, Time Warner Cable, DirecTV Inc., Dish Network Corp. and Verizon Communications Inc. -- have seized on these incidents to ask the FCC to rewrite the rules governing so-called retransmission consent negotiations. They want the agency to prohibit broadcasters from pulling signals during negotiations or before popular events, and to mandate binding arbitration in disputes.

Cablevision has called on News Corp. to put Fox5 and My9 back on Cablevision immediately and submit to binding arbitration under a neutral third party. It says Fox is making "outrageous fee demands." Cablevision says it pays $70 million a year for access to 12 Fox channels, including those in dispute, and that News Corp. is now asking for more than $150 million a year for the same programming.

But Fox has blamed Cablevision for the impasse, saying the two remain "far apart." It rejected the call for arbitration, saying the process would "reward Cablevision for refusing to negotiate fairly." Fox has said Cablevision is "hypocritical" because it pays more for two of its sister company channels, MSG and MSG Plus, than it does for all 12 Fox channels. MSG and MSG Plus are owned by Madison Square Garden Inc., which like Cablevision is controlled by the Dolan family.

The FCC has encouraged the two parties to agree to binding arbitration.

In a separate dispute with satellite TV company Dish Network Corp., Fox cut access on Oct. 1 to 19 regional sports networks, FX and the National Geographic Channel for some 14.3 million Dish subscribers. That fight foreshadows more tough negotiations, as the deal for Fox broadcast signals on Dish expires Oct. 31.


Copyright 2010 by The Associated Press

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