Dueling sides detail history of failed talks

Cablevision and Fox continued to point fingers as to the culprit in the contract battle that has kept Fox stations off Cablevision systems for the past 11 days.

In letters sent to the FCC on Monday, execs from both companies detailed the yearlong history of the negotiations that hit a final roadblock Oct. 15, the day Fox’s last retransmission consent pact with Cablevision expired.

The FCC requested info on the negotiating process from both companies Friday to determine whether they were living up to the good-faith provision in the law governing retrans negotiations between subscription TV providers and broadcast TV station owners. It also invited the companies to provide examples of the other side’s good-faith violations.

The letters did not go into the specific dollars and cents of the deals proposed by each side, but the chronology of the talks offer a rare glimpse into the complex world of cable carriage negotiations among media titans. Since May, the sides have gone back and forth on proposals for a three-year pact that included all manner of fee bundling for the broadcast stations and other Fox-owned cable outlets, even those that already have long-term contracts with Cablevision. Last week, News Corp. prexy Chase Carey flew to New York for a face-to-face meeting with Cablevision prexy and CEO James Dolan, which failed to make any dent in the impasse.

Cablevision’s letter, signed by Dolan, cited numerous examples of what it views as Fox’s violations of the good-faith clause with what it described as Fox’s “take it or leave it” pricetag for carrying stations New York stations WNYW and WWOR and Philadelphia’s WTXF. It also asserted that News Corp. has a “special responsibility” to negotiate in good faith because the FCC has granted the company regulatory waivers that allow it to operate two TV stations and two newspapers (New York Post and Wall Street Journal) in the Gotham market.

As the contract expiration deadline approached, Cablevision began pushing News Corp. to submit to binding arbitration that would allow the stations to remain on Cablevision’s air until the fee dispute was settled. Cablevision in its letter urged the FCC to mandate arbitration. The FCC has the authority to fine companies found in violation of the good-faith clause, but it’s still a gray area as to whether the commission can intervene in a more forceful way.

In Cablevision’s view, the FCC has the authority “to redress News Corp.’s violations of the good-faith requirement by ordering News Corp. to submit to arbitration and by requiring News Corp. to immediately allow Cablevision to carry the Fox stations during the pendency of the arbitration.”

Fox’s letter did not cite examples of Cablevision good-faith violations, saying it still hopes to resolve the standoff at the negotiating table. “Making charges of statutory violations will not advance this process,” Michael Hopkins, Fox’s prexy of affiliate sales and marketing, wrote in his letter.

But Fox has adamantly resisted the push for arbitration.

“Granting Cablevision’s demand for arbitration would open the door to every future negotiation being distorted by arbitration demands in lieu of marketplace negotiations,” Hopkins wrote.

According to Cablevision, the sides had entered into month-to-month retrans deals for Fox stations for 15 years, until last year, when Fox provided a legally mandated 30-day shutoff notice unless they negotiated a long-term pact. In October 2009, the sides agreed to a one-year extension. Fox had let it be known to Cablevision and other cable operators that it would seek significant fees in its next round of retrans deals.

Cablevision, according to Fox, asked for the one-year extension while Fox wrangled deals with larger operators like Time Warner Cable, which set the template for Fox’s retrans pacts in a hard-fought deal inked in January.

Among Cablevision’s complaints is that Fox has asserted that it cannot drop its price for the stations for Cablevision because that would trigger a favored-nations clause in its deal with Time Warner Cable, forcing Fox to reduce the fees it secured from TWC. Cablevision continues to insist that Fox is asking for higher fees for WNYW and WWOR than it pays for the Gotham O&Os of ABC, CBS, NBC and Univision combined.

The letters paint sharply divergent pictures of which side was willing to bargain and come up with creative dealmaking options, given all the assets they both bring to the table. Cablevision asserted that at one point, it sought to include Fox News Channel in the station negotiations, given that its contract for the top-rated news cabler expires in December.

According to Cablevision, Fox came back with an offer that encompassed a 44% fee hike for an extension of its Fox News carriage agreement.

In Fox’s view, Cablevision eventually began to balk at Fox’s proposals because “it was becoming clear that Cablevision intended to pursue a path geared to a larger agenda of political and regulatory intervention” on the retrans front.

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