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Spin war as stations go dark

Negotiations between Fox, Cablevision stall over carriage fees

Fox, Cablevision negotiate over dark stations

Fox’s New York stations went dark for Cablevision’s 3 million subscribers at midnight Friday after a marathon meeting between the sides failed to produce a new carriage agreement for the stations and three other cable channels.

Seconds after the signals came down, the spin war went into overdrive. Fox accused Cablevision execs of breaking off negotiations hours before the midnight deadline approached. Cablevision charged Fox with putting “greed” ahead of the interests of viewers, who will lose access to key sports programming on Fox’s WNYW New York this weekend. And FCC chairman Julius Genachowski weighed in with a stern statement on the flap, saying that the commission had issued a “consumer advisory” on the FCC website to make sure “consumers are aware of their options.”

Cablevision and Fox execs huddled at News Corp. headquarters in Gotham all day and up through the late evening in a bid to hammer out a deal to keep WNYW, WWOR New York and WTFX Philadelphia from coming off of Cablevision’s systems, which serve subs in Long Island, New Jersey and Connecticut, as well as outlying areas of the Philadelphia market.

But as the midnight expiration approached, the talks broke off, according to Fox execs. In addition to Fox’s Gotham and Philly broadcast stations, which are skedded to carry key NFL and baseball playoff games this weekend, cablers Fox Business News, Nat Geo Wild and Fox Deportes were dropped as part of the contract wrangle.

“In an effort to avoid this very situation, we started this process in May and made numerous reasonable proposals to Cablevision,” said Mike Hopkins, prexy of Fox Networks affiliate sales and marketing. “However, we remain far apart and Cablevision has made it clear that they do not share our view regarding the value of Fox’s networks. After days of posturing and the appearance of negotiating, they formally stopped even the pretense of negotiating at 8pm – declaring an ‘impasse’ – and made no further efforts toward reaching a new agreement before the expiration.”

As it has for the past few days, Cablevision continued to blast Fox for rejecting calls from pols and other elected officials to take the contract flap to binding arbitration that would ensure the stations stayed on Cablevision’s air while the sides dickered. But Fox has steadfastly resisted any move toward arbitration, asserting that the dispute should be settled by private negotiations between the sides.

Cablevision referred to Fox’s retransmission consent standoff with Time Warner Cable earlier this year and its ongoing carriage fight with satcaster Dish Network in accusing the company of taking an unreasonable stance in negotiations.

“News Corp.’s pattern of destructive tactics has become clear. First, they terrorized Time Warner Cable customers for weeks; then they pulled regional sports and cable channels off Dish Network; and now they have pulled the plug on (WNYW) and (WWOR) for 3 million Cablevision households,” said Charles Schueler, Cablevision’s exec veep of communications. “Further, they are now threatening to pull their broadcast stations away from Dish Network’s 14 million customers in two weeks. It is clear that News Corp. will pull the plug on any viewer, served by any cable, satellite or phone company, to get the money they want.”

Even as the execs met behind closed doors, the sides got into a sparring match in the late afternoon over the binding arbitration issue and whether the FCC had contacted the sides to serve as a mediator. With the companies bickering over the differing interpretations of the FCC’s outreach, it was clear that there wasn’t much progress being made at the negotiating table.

It’s understood that a senior official from the Federal Communications Commission contacted the sides in the late afternoon. Cablevision in a statement indicated that the FCC had made a more substantial move to require the companies to submit to arbitration, though a commission source disputed that interpretation.

After the signals were dropped, Genachowski was quick to wag his finger at both sides. He stopped short of promising that the FCC would intervene in the dispute but he emphasized the “responsibility” that both companies have to viewers.

“Each year, thousands of agreements between broadcasters and pay-TV providers are reached without interruption of customer viewing. I remain hopeful that these two companies will do what is in the best interest of consumers and find a way quickly to resolve their differences,” he said. “While federal law provides that the terms will be set by agreement between private companies, Fox and Cablevision share responsibility for protecting their audience’s interests. I expect both companies to live up to this responsibility…I have and continue to urge Fox and Cablevision to engage in good faith negotiations and to reach an agreement that will end this viewing interruption as quickly as possible.”

The FCC’s “consumer advisory” explained the basic details of retransmission consent law and spelled out the two obvious options for Cablevision subscribers: 1) subscribe to a new subscription TV service, though it did warn of the looming Nov. 1 deadline for Fox’s retrans talks with Dish Network; 2) watch the Fox stations the old-fashioned way using an antenna.

The carriage fight between Fox and Cablevision boiled over during the past two weeks as the deadline drew near. Fox is going dark for Cablevision subscribers on the weekend when WNYW is carrying Sunday’s Detroit Lions-New York Giants game and it is carrying the start of Major League Baseball’s National League Championship Series.

Cablevision maintains Fox is asking for extraordinary increases in the retransmission consent coin for its broadcast stations. Cablevision asserts that it now pays News Corp. $70 million a year in carriage fees for its entire fleet of cable channels, and that Fox’s proposal for new carriage deals including the broadcast stations would hike those fees to $150 million a year. Fox has been quick to point out that Cablevision forks out a whopping $124 million a year to two channels that it owns, MSG and MSG Plus, that draw significantly lower ratings than Fox’s top outlets.

Cablevision’s push for arbitration in carriage disputes echoes a proposal that Cablevision and other cable giants have pending at the FCC to overhaul the retransmission consent law that mandates cable and satellite operators obtain agreements with broadcast station owners to carry their signals.

At least one analyst who has followed this year’s spate of retransmission consent scuffles predicts that Cablevision is fighting a losing battle in trying to stare down News Corp.

“News Corp. is not going to give an inch, we highly doubt the government (FCC) is going to get involved if the Fox signal gets pulled and Cablevision cannot be without Fox programming for more than a few days,” wrote Richard Greenfield of BTIG Research.

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