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TW Cable, FX near deal

Fox’s basic cable network FX is near a carriage deal with Time Warner Cable, the nation’s second-largest cable operator with 7.1 million subscribers.

But the Fox-Time Warner deal won’t cover anywhere near that number of homes. According to sources at the cable operator, Time Warner will carry FX in only about 100,000 homes at launch date. None of those homes is expected to be in top 10 markets where Time Warner has cable systems.

Time Warner and FX executives could not be reached for comment on the status of negotiations.

The biggest stumbling block for Time Warner has been FX’s price tag. Fox is asking 25 cents per subscriber for the new service — a price normally reserved for established networks including ESPN and MTV.

But Fox won’t — or can’t — back down from that price. FX’s deal with Tele-Communications Inc., the nation’s largest cable operator, is said to have several most-favored-nation clauses. In other words, if FX lowers its price for Time Warner, it must go back to TCI and lower their price too.

FX was born out of retransmission consent negotiations. When broadcasters were given the right by Congress to charge for their local signal, Fox decided to launch a new cable web. Operators who pay for FX could then carry the local Fox station for “free.”

FX executives have been meeting with operators regularly to hammer out deals before the scheduled June launch. Currently, all the Fox TV stations carried by cable operators not committed to FX have carriage agreements that expire later this week. Deals that are still not completed will probably be extended once again.

While Fox has signed up some 25 cable operators to FX, it still does not have deals with such major operators as Time Warner, Continental Cablevision, Comcast Corp. and Cablevision Systems. Those four operators have almost 15 million cable subscribers between them. Executives at all three companies have privately expressed concern about price and are apparently willing to take the service only if they can roll it out to as few subscribers as possible.

Fox has yet to say how many subscribers the new service will launch with. Some have anticipated that with all the operators it has signed, it could have a record launch in the 20 million range. But since it is unknown how many subscribers the operators are committing to FX, the launch could actually be much smaller.

TCI is said to be putting FX into 2.5 million cable homes.

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