Network wants cut of local retrans coin

There’s a new front in the retrans wars: Fox vs. its affiliates.

The network is at loggerheads with its affiliate board as it seeks to negotiate deals that give the net a portion of the retransmission fees that affils are able to command from their local cable, satellite and telco service operators.

The Fox Affiliate Board has sought to negotiate a retrans-sharing agreement with the network that would cover all affiliates. But in a strongly worded to letter to affils sent late last month, board chairman Brian Brady accused the net of rejecting all of the board’s proposals and refusing to negotiate in good faith. The Jan. 28 letter, signed by Brady and six other members of the board’s negotiating committee, urges Fox’s 175-plus affils to resist the network’s effort to negotiate separate agreements with individual station groups.

“This is a fight for our survival. We can either stand and fight together or we may die apart,” Brady wrote.

Fox executives have disputedBrady’s characterization of the situation, saying that the network had discussions with the board for nine months before recently shifting the negotiations to individual station groups as their affiliation contracts with the net come up for renewal.

In a letter sent to affils in response to Brady’s letter, Mike Hopkins, Fox Networks’ prexy of affiliate sales and marketing, said the board had been “largely nonresponsive” to the network’s views. “Rather than continue to waste time on fruitless arguments, we feel it is time to move on and negotiate an equitable and practical agreement with each of you,” Hopkins wrote in his Feb. 4 letter.

Each of the Big Four networks is leaning on its affils to share the retrans spoils that broadcast TV stations have been commanding in recent months, particularly since Fox went to the mat in demanding significant coin from Time Warner Cable for its O&O stations. The Fox Affiliates Board maintains that Fox’s terms are “substantially worse” than the terms sought by ABC, CBS and NBC from their affils.

The specifics of how much coin the networks are receiving from affils and how those agreements are structured are very murky and vary in many cases from deal to deal. The Big Four maintain that they need contributions from affils to pay for high-priced original programming, like the NFL and other sports rights as well as pricey scripted series. The nets argue that affils command fees from local subscription TV providers because they are the exclusive local providers of network programming, so it’s in their own interest to help the nets shore up their foundation for paying for top-flight programming.

In Brady’s letter to affils, he asserts that Fox is pursuing a “divide and conquer” strategy with affils — though the other nets to date have negotiated deals with individual groups and not en masse with their affiliate boards.

Brady, who is prexy of Michigan-based Northwest Broadcasting, said Fox is asking affils to fork over more money than some stations will be able to realize in retrans fees, and he notes that local affiliate station owners don’t have the same level of clout in negotiations with operators as Fox enjoys thanks to its myriad cable channels. Moreover, cable, satellite and telco operators are lobbying hard in Washington to overhaul the retransmission consent laws in ways that make it harder for smaller station owners to exert the leverage of yanking their signal from an operator’s lineup.

Finally, Brady faults Fox for a provision in its hard-fought deal with Time Warner Cable that calls for Fox to provide a feed of network programming to Time Warner Cable in the event TWC cannot come to terms with the local Fox affiliate. That has rankled affils who feel it undercuts their leverage. From Fox’s perspective, TWC has to pay a very high price for that network feed, which gives them incentive to cut a better deal with the local affil.

Fox declined to comment on the situation with its affils beyond declaring that its “negotiations with our affiliates are a private business matter and as such these discussions are confidential.”

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