Fox vs Time Warner Cable retrans dispute could get political

December 18, 2009

AmericanIdol-Fox (Photo: Reuters)

Fox Networks went public today in what it said has been a fruitless nine-month-long carriage negotiations with Time Warner Cable, the No.2  U.S. cable company. It said there is the very real possibility that popular shows like American Idol and NFL Football could disappear from the air if you’re one of the Time Warner Cable’s nearly 14 million customers.

Fox wants to get paid for giving Time Warner Cable the right to carry its free-to-air Fox broadcast network for around $1 a subscriber every month. The talks also include negotiations for Fox’s bevy of entertainment cable networks including FX, Speed and Fuel but does not include its news networks. See Fox’s marketing campaign website keepfoxon.com here.

Time Warner Cable executives don’t want to pay a buck for so-called retransmission rights and claims it is has recently agreed to pay affiliate broadcasters  around 25 cents per sub. See Time Warner Cable’s earlier marketing campaign warning customers of programmers plans here.

Pali Research analyst Richard Greenfield said in his blog (subscription required) today that in retransmission consent negotiations the side with the most leverage always wins. Usually the weaker side is the cable or satellite company as they get the calls from irate customers if their favorite shows get blacked out. What may be different this time around is that Fox leverage might be hampered by a growing political intervention risk if the Government gets involved, said Greenfield:

While Retrans negotiations are all about leverage, the benefits of leverage to a broadcaster could evaporate if the government chooses to get involved going forward – in turn, a fine line must be walked.  Remember, broadcasters are using public spectrum to broadcast and a now Democratic-majority FCC may not be as willing to let consumers pay the penalty for retrans battles the way prior administrations did (whether it be via higher video pricing and/or signal loss).  We are actually quite surprised at how openly (and aggressively) the senior executives of the four major (owned and operated) station groups are talking about retrans – as we would fear that the government would begin to look at them as a cartel.

3 comments

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If I have to choose between giving in to blackmail and standing firm against higher cable bills I can go without Fox for a while. Let Fox explain to their advertisers why they have so much less of a market share without Time Warner and let Fox feel the heat from their affiliates when their advertising revenue drops. Then we will see who is in the drivers seat!
Why should cable companies have to pay for doing what the “broadcasters” no longer do and make sure their signal is “broadcast” to the most people. It would be one thing if Fox was an ad free station that depended on fees but this is just not the case. Fox asking for money from the cable companies that are giving them viewers and increasing their advertiser presence is completely backwards. It is Fox who should be paying Time Warner for making their advertising more valuable.

Posted by barryp3403 | Report as abusive

If Time Warner canot supply me with Fox and the other channels then I have no choice but to drop Time Warner and go to Dish Network for less. I hope other Time Warner customers follow suit because I am tired of this every year. Time Warner wake up to the music and deliver or become extinct like T-Rex.

Posted by batman55 | Report as abusive

This fight is ridiculous and pathetic Fox is soooo greedy!
you cant get more greedy they just want cable to pay them more now because their carrying MLB world Series and American Idol the is nonsense i mean cable should just drop Fox and we should find someone else that carries these channels for a lesser value thats not soo greedy!

Posted by Giveback88 | Report as abusive