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.