The gloves are off and knuckles are getting bloody in the increasingly public battle between Time Warner Cable and Fox over retransmission consent rights for Fox’s 27 TV stations and its 150-plus affiliate stations.
Fox and Time Warner Cable are facing a Dec. 31 contract expiration for the cable operator’s right to carry 15 Fox O&Os in various local markets plus the expiration of carriage agreements for key Fox-owned channels like FX and Fox Sports regional cablers.
Negotiations have been ongoing for nearly a year, but as the month winds down, the sides appear to be heading toward a New Year’s Eve showdown that could lead to some Fox O&Os going dark in Time Warner markets — including New York and Los Angeles — and possibly even FX getting yanked from all of Time Warner’s 14 million subscribers in 28 states.
News Corp. chief Rupert Murdoch and prexy Chase Carey haven’t been shy about saying that they are seeking a fee of about $1 per cable subscriber in retrans rights for the O&O stations. Murdoch and other industry execs, including CBS Corp.’s Leslie Moonves, have been arguing at investor conferences and other forums that the broadcast biz has changed so dramatically that they need the same kind of compensation afforded to powerhouse cable players like ESPN or TNT to survive. The Fox-Time Warner battle is being closely watched in the biz and is expected to set the bar for how much the market will bear for retrans fees in this go-round.
The CEOs of the Big Four net parent companies are always quick to note that, despite the array of channels on the average cable lineup these days, ABC, CBS, Fox and NBC still account for the majority of viewing, thanks largely to big-budget primetime skeins and costly franchises like the NFL.
Moreover, Big Four networks are leaning heavily on their affiliates to push hard for big retrans fee increases and pass along the lion’s share of the gains to the nets to help pay for all that pricey programming. That push is sure to create some intramural angst between networks and their affils in the coming months.
Time Warner Cable has launched an ad campaign to position itself as holding the line on behalf of its customers on unreasonable demands by programmers in advance of a possible service disruption next month.
If Fox stations are dropped just as “American Idol” is returning to the airwaves, or if viewers can’t get easy access to Fox’s Jan. 24 coverage of football’s NFC conference championship game, the switchboards at Time Warner Cable offices are sure to light up.
Time Warner Cable’s blurbs point subscribers to the website RollOverOrGetTough.com, which ostensibly solicits feedback from Time Warner subscribers on whether they want the cable operator to “roll over or get tough” with programmers. The website frames the terms of the debate with rhetorical flourish aimed at cost-conscious consumers: “You Can’t Get a 300% Raise. Why Should a TV Network?”
A Time Warner Cable spokeswoman said the campaign was not aimed at any specific company but rather to raise awareness among the general public of the business issues at stake that could later lead to price increases for subscribers. “We intend to put as much pressure as possible on programmers with unreasonable demands to get our customers the best prices we can,” Time Warner Cable prexy-CEO Glenn Britt said in a statement Monday.
Time Warner Cable, which was spun off as a separate entity from TW earlier this year, also last week filed a strongly worded petition with the FCC in support of fellow cable operator Mediacom’s official complaint about how Sinclair Broadcast Group handled its recent retransmission negotiations.
Mediacom and TW accuse Fox of “hijacking,” as Time Warner Cable put it, the retrans negotiation process by insisting that the network be allowed a veto right over independent affiliates’ retrans negotiations to ensure that the fees are high enough. Fox and other nets have long had the right to have a say in affiliate retrans deals, but nets have rarely if ever exercised those rights — until now.
Integral to Fox’s well-publicized campaign to reshape the economics of the television industry (is) strong-arming broadcast stations to be the middle men in obtaining retransmission consent windfalls at the expense of (cable/satellite/telco) providers,” Time Warner Cable wrote in its Dec. 8 FCC filing.
The requirement that cable operators negotiate retrans fees with broadcast stations has been the law of the land since the early 1990s, but for years major station owners often horse-traded those rights for carriage space on a cable lineup for their fledgling cable programming ventures, e.g., FX and MSNBC. But now the network O&O groups in particular are looking for cash.
Carey and Moonves spoke last week at the UBS Media and Communications confab in Gotham of the urgent need for broadcast nets to develop new sources of revenue in order to survive. Both execs emphasized that in today’s multiplatform world, there’s no rationale for treating CBS or Fox differently from ad-supported cable channels.
We put programming on that is the most highly valued programing, (and) we need to get fair value for it,” Carey said.
Local stations have been reeling from the steep drop in local advertising sales in the past two years as well as the phase-out of traditional network compensation fees during the past decade. An independently owned station in Macon, Ga., recently dropped its ABC affiliation in part because of the Alphabet’s demand for retrans fees.
Moonves is adamant that the networks need a share of affil retrans coin in order to keep the lights on.
We’re having ongoing discussions with our affiliates as their (retrans) deals come up,” he said. “Any way you look at it, there should be a sharing of retrans fees from the affiliates to us. The (operators) are buying the network programming by and large. They’re buying the NFL, they’re buying ‘CSI,’ ‘60 Minutes’ and David Letterman.”