News Corp., Cablevision: A history of conflict

Pair have tussled repeatedly

News Corp. and Cablevision are at each other’s throats in the standoff over station carriage rights that’s heading into its third week. The fight that has kept Fox’s WNYW and WWOR New York off of Cablevision’s air isn’t the first time the two Gotham media titans have ended up at loggerheads.

First, there was the divorce: In 2005, Cablevision and News Corp. effectively divided up the china, splitting their joint holdings in the sports biz. News Corp. reclaimed Cablevision’s interest in Fox Sports Net and two regional sports networks. Cablevision took back News Corp.’s 40% stake in lucrative Manhattan venue Madison Square Garden (which it later spun off), as well as the New York Knicks, the Rangers and four regional sports nets.

Media analyst Hal Vogel of Vogel Capital noted that both companies are distinguished by strong, occasionally eccentric leaders: Rupert Murdoch for News Corp. and Charles Dolan and his son James, who is Cablevision’s CEO. Those forceful personalities and their ownership positions in the companies helps explain the standoff.

By contrast, “Time Warner and Comcast aren’t influenced by leaders with a deep personal interest,” Vogel said. But with News Corp. and Cablevision, “these are proud people, and they have plenty of money and firepower in terms of public relations. And they have plenty of money to spend on other media. This isn’t a tiny little cable system that’s going to fold — these guys are able to sustain their positions for a very long time.”

That would prove true again in May 2007, when the companies clashed in earnest. Cablevision planned to unveil the Remote Storage DVR, which would create a huge server base where customers could store shows they wanted to record and play back, thus saving Cablevision a huge amount of money in set-top box installation. News Corp., along with Time Warner and Disney, maintained that the plan would violate copyright law, and Judge Denny Chin (who would go on to oversee the Bernie Madoff case) ruled in their favor.

But the companies ran the case through the appeals process all the way up to the Supreme Court, which ultimately refused to hear the News Corp./Disney/Time Warner appeal. Cablevision announced earlier this year that it plans to roll out the controversial service.

It’s not as though lengthy litigation has spoiled anyone’s appetite for conflict, either. In March, Cablevision announced it would test a new PC-to-TV service allowing users to view Internet content on their television screens. It’s a move bound to have repercussions: Hulu — a joint venture of Disney, NBC Universal and yes, News Corp. — had already gone head-to-head with startup Boxee over the potential cost to content providers over a similar device.

When the retrans negotiations with Cablevision stalled recently, News Corp. made its position very clear. Flexing its muscle, the company briefly blocked Cablevision broadband subscribers from accessing online content on Fox.com and Hulu. Fox backed down after a few hours because of the heat surrounding Internet access issues and online video in Washington.

Murdoch and the Dolans have tussled over old media as well. Cablevision swooped in on News Corp.’s deal to buy Long Island newspaper Newsday from Tribune Co. in May 2008. News Corp. was closing in on a deal to buy the paper for $580 million, shortly after Sam Zell took control of Tribune, when he used Cablevision as a stalking horse to drive up the price for Murdoch. Rupe balked, and Cablevision wound up with Newsday for $650 million.

The feuding among the companies isn’t confined to the top. One of James Dolan’s prized assets, the NBA’s New York Knicks, is known as one of the toughest beats in the city for local reporters. Mike Vaccaro, a columnist for News Corp.’s New York Post, called the beat “the gulag” in a Nov. 27, 2007, article on the team’s famously frosty relationship with the press corps entitled “Life in Knicks Hell.”

“There’s History with a capital ‘H’ that influences this thing,” said Vogel. “Past experiences haven’t been exactly happy, and Rupert Murdoch has shown many, many times that he’s willing to stick with something even if it means taking a loss for a couple of years.”