For the second time this year, Fox marshaled all its market heft to prevail, amid intense public scrutiny, in a contentious retransmission consent battle.
In the process, Fox’s stare-down of Cablevision solidified the going rate for carriage fees from subscription TV providers for Big Four affiliated stations.
News Corp. prexy Chase Carey and his top TV lieutenants demonstrated nerves of steel in riding out the 15-day blackout of Fox’s New York and Philadelphia stations for tention that the Cablevision-Fox standoff received from local pols and regulators, the legacy of the lengthy disruption may be to spur an overhaul of the nearly 20-year-old retrans law. Sen. John Kerry (D-Mass.) is pushing for changes that would undercut broadcasters’ bargaining power by making it much more difficult for a station owner to pull a signal (Daily Variety, Oct. 29).
Deal reached Saturday brought the stations back to Cablevision’s air about 7 p.m. ET, just in time for the first pitch in Game 3 of the World Series on Fox O&Os WNYW New York and WTXF Philadelphia. It also came in time for WNYW’s Sunday telecast of the New York Jets-Green Bay Packers game. Although Cablevision only wanted to do a deal for Fox-affiliated WNYW and WTXF, the deal encompasses Fox’s WWOR (affiliated in primetime with MyNetwork TV) and three cable channels that previously secured carriage only because Fox horse-traded its retrans rights for them: Fox Business Network, Nat Geo Wild and Spanish-lingo Fox Deportes.
In the Cablevision situation, Fox clearly played its sports cards smartly, starting with the Oct. 15 timing of the expiration of the previous one-year retrans pact with the cabler. That ensured that Fox would have marquee sports events to use as immediate leverage, at the bargaining table and with Cablevision customers — many of whom were none too happy to lose easy access to the baseball playoffs and NFL coverage.
Financial details of the deal were not disclosed. But it’s a safe bet that Fox secured rates similar to the hard-fought deal it struck with Time Warner Cable in talks that went down to the wire over the New Year’s holiday. Those monthly fees start at a little less than 50¢ per sub and climb to nearly $1 by the end of the deal’s five-year term. The pact with Cablevision is believed to run for four years.
Fox on Friday also completed a retrans deal with satcaster Dish Network at similar terms. That deal upped the pressure on Cablevision to blink because it demonstrated that even one of its rivals that is known to be tightfisted with programming fees agreed to Fox’s terms. Indeed, the first negotiations between Fox and Cablevision in more than a week were initiated after the announcement of the Dish deal covering all 27 of Fox’s stations (given the satcaster’s wider national scope than Cablevision’s New York-area stronghold).
Cablevision for weeks had been asserting that Fox was seeking exorbitant increases in fees for the stations. James Dolan, prexy-CEO of the cable giant, pushed for the dispute to be taken to binding arbitration while the stations remained on its air. It also publicly called for FCC intervention, but the commission refused to wade directly into the business aspects of the fight. (The commission did ask both sides to prove that they had been operating in accordance with the provision in the retrans law that calls for good-faith negotiations.)
In a sign of how bitter relations between the sides have become, Cablevision included a heated statement in its news release confirming the deal — and that drew a quick response from Fox.
“In the absence of any meaningful action from the FCC, Cablevision has agreed to pay Fox an unfair price for multiple channels of its programming, including many in which our customers have little or no interest,” Cablevision said. “Cablevision conceded because it doesn’t think our customers should any longer be denied the Fox programming they wish to see.”
Even before the stations went dark on Oct. 16, Fox execs were convinced that Cablevision’s goal was to run out the clock and hope the feds would get involved in a blackout situation.
Fox, in a statement sent an hour after Cablevision’s news release was distribbed, blasted the cabler for “complaining about fair market price.” Fox asserted that the standoff was actually driven by “Cablevision’s misguided efforts to effect regulatory change to their benefit.”
A clutch of major cable, satcaster and telco operators have already filed a petition at the FCC urging a revamp of retrans that would mandate arbitration for fee disputes while limiting the possibility of service disruptions. That petition was filed in March, on the heels of Cablevision’s scuffle with Disney over retrans rights for WABC-TV New York.
But no matter what happens down the road in Washington, Fox lodged a big win for broadcasters in standing firm in the Cablevision standoff. Fox was the best-positioned of the Big Four to lead the charge for serious retrans bucks for net-affiliated stations, thanks to its lineup of sports rights and its “American Idol” franchise.
Fox’s fees rep the top of the market — non-Fox affils can’t command the same coin — but it still establishes the precedent that subscription TV providers should compensate top broadcast stations along the lines of prominent basic cable channels such as TNT and USA Network.
News Corp.’s Carey has sounded the alarm about broadcasters’ urgent need for real retrans coin from subscription TV providers, which charge their customers for programming packages that include highly rated local stations. Carey has said Fox affiliates are actually worth much more than the roughly $1 a sub price that it set out to achieve. With Cablevision now inked, News Corp. has done the hard work of plowing the fields that it and other broadcasters will harvest.