Fox vs Time Warner Cable retrans dispute could get political
(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.
Time Warner Cable ready to fight high program costs
Time Warner Cable, the normally placid No.2 U.S. cable operator, is getting ready for a fight with its programming partners at the cable networks and broadcasters over rising affiliate fees. In truth, TWC has always been ready for a fight with the programmers. This time, it wants to make the first move and get its 14 million subscribers behind it.
The New York cable operator is launching an ad campaign “on behalf of its customers” to target what it sees as unfair price demands by programmers. It argues that these price demands, which usually come around this time of year at the end of programming contracts, can sometimes be as much as 300 percent increases. TWC says programmers make the demands “secure in the knowledge that video distributors are the ones who have to pass those costs along to customers and take the blame.”
So what’s Time Warner Cable going to do about it? They’re going to launch a website — yes, a website with the catchy URL: www.rolloverorgettough.com. News Corp, Sinclair Broadcasting and cable networks must be quaking in their collective fee-hiking boots.
(For the uninitiated: One way for companies to make money from their shows is to charge cable operators for the privilege of distributing them. Programmers like to raise those fees every so often. When cable operators resist, shows you like have a way of being held for ransom and sometimes disappearing for a while.)
Time Warner Cable’s website will allow customers to give their feedback and will be supported by ads in newspapers, TV and the Web.
“We want them to know why we fight so hard on these issues – if we Roll Over, they pay the price. If we Get Tough, they may lose their favorite shows until we reach a reasonable agreement.” said TWC CEO Glenn Britt in the press release.
It’s not the first time Time Warner Cable has tried to be principled about not overpaying for content. You might remember the great “Why is SpongeBob crying?” campaign of Dec 2008 when Viacom and TWC fell out over rising carriage fees.
I’m disturbed by this campaign. I’m a consumer and frankly Time Warner is the premium cable operator in my area. I pay almost 50% more for their service. They need to roll over and provide the channel lineup they commit too, or simply reduce the channels they offer and make their price competitive. Lets face it. Whatever results are garnered from this study could easily be overinflated. This is nothing more than a sob-story play by them and the customer’s concerns left on their “survey” site will likely be screened and only those aligned with their corporate strategy will be passed along to the broadcasters. Time Warner comes across as a sissy crybaby on a playground during recess in this campaign instead of acting like a national corporation. The Fortune 500 company I work for (Finance industry) would never advertise in such a shady and biased way. Shame on Time Warner. Sell commercials during these slots to make up your losses instead of pandering to customers for unjust sympathy.
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!