News Corp. finds Time for a deal

Co. signs retransmission deal with Fox O&Os through 2005

As normally bitter rivals News Corp. and Time Warner continue to make nice with one another, the latest example of their newfound cooperation comes on the stations front.

News Corp.’s Fox Television Stations division announced Tuesday it has inked a long-term retransmission deal with Time Warner Cable.

The new pact, which lasts through 2005, will keep the analog and digital signals of Fox’s 22 owned-and-operated stations on all applicable Time Warner cable systems. In exchange, News Corp. will receive additional distribution for its cable networks Fox Sports World and FXM: Movies From Fox on Time Warner system digital tiers.

“We’re pleased to be working with Time Warner Cable to provide digital services in such important consumer markets,” said Chase Carey, Fox Television chairman and CEO, and co-chief operating officer of News Corp.

News Corp. and Time Warner divisions have sealed a number of new pacts in recent months, the result of a decision between respective company toppers Rupert Murdoch and Gerald Levin to put aside past differences (including the legendary feud between Murdoch and Time Warner second-in-command Ted Turner) in order to assist each other globally.

Most recently, News Corp.’s FX cable network landed a deal with Time Warner Cable for a guaranteed circulation boost of 7 million subscribers over the next three years. As part of that arrangement, Time Warner received a sweet 10-year deal for Fox’s regional sports networks.

Also, Time Warner just extended its deal with 20th Century Fox to continue feeding feature films for an additional six years to premium services, including HBO.

Cultural similarities

“At the core, it’s about creating shareholder value and participating in this communications and media revolution,” said Lindsay Gardner, exec VP of affiliate sales and distribution for the Fox Channels Group. “Culturally, you’d be hard pressed to find two organizations more similar than Time Warner and News Corp.”

On the retransmission front, Fox has aggressively locked up most of its MSO and satellite deals in recent months, reaching agreements with AT&T, Comcast, MediaOne, Cablevision, DirecTV and EchoStar. In most cases, Fox has been pushing digital carriage of Fox Sports World and FXM.

“Every major distributor –including both satellite providers — has concluded extremely amicable retransmission consent deals with Fox,” Gardner said.

Cox battle

But the network has hit a stalemate with Cox Communications, which so far has refused to carry Fox Sports World and FXM in exchange for local Fox station signals.

Cox refers to Fox’s push for digital carriage of those two cable networks as “extortion” on its Web site.

With negotiations between Cox and Fox on hold, it appears likely that Fox’s Washington, D.C., outlet WTTG will be dropped from Cox’s Fairfax, Va., system. Also, Cleveland’s WJW will be dropped from that market’s system, and Houston’s KRIV and Dallas’ KDFW will be dropped from a few small Texas systems effective Jan. 1.

Cox spokeswoman Amy Cohn said the MSO has requested a 30-day extension to keep the Fox signals on those Virginia, Cleveland and Texas systems, but so far Fox has refused.

Signals in jeopardy

“They’ve been trying to secure carriage (for Fox Sports World and FXM) with our digital tier,” Cohn said. “We’re not willing to do an across-the-board deal that would require us carrying those networks. Unless we can work out some reasonable compromise with them, it’s looking likely we’ll have to remove those signals from our systems.”

On its Web site, Cox carries the following statement: “If we were to give in to the demands of (Fox), it would set a precedent that could allow the broadcasters to have a greater voice in determining our programming lineup than the customers we serve.”

But Gardner said Cox has stubbornly refused to negotiate.

“Every major distributor has done something comparable as to what we’re seeking from Cox,” he said. “Unlike every one of their peers, Cox is refusing to negotiate and they’re refusing to attach any value to retransmission consent.”

The next Cox battleground will be in Orange County, where the MSO’s retransmission deal for Fox-owned KTTV Los Angeles expires at the end of January.

As for Time Warner Cable, the next heavy retransmission negotiation will be with ABC. Rights to ABC-owned stations were extended until Jan. 15, and negotiations are ongoing. ABC is pushing distribution for its new SoapNet channel. Time Warner last year signed retrans rights with CBS through 2008.

News Corp. execs said Fox’s retransmission deals prove that digital must-carry regulations are unnecessary.

“We’re sending a very clear message to Washington and the Federal Communications Commission,” Gardner said. “We’re sitting squarely with the cable operators. Let the market decide this stuff.”

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