NCTC Seeking Arbitration on FSN
By Tom Steinert-Threlkeld -- Multichannel News, 1/31/2007 12:26:00 PM
Henderson, Nev. -- The National Cable Television Cooperative filed for mandatory arbitration on how much independent cable operators will have to pay to carry the signals of seven FSN networks, president Jeffrey L. Abbas said Wednesday morning.
The NCTC Tuesday sought the arbitration on behalf of 30 of its members, which Abbas declined to identify. The NCTC is authorized to act as bargaining agent for those operators under conditions placed on the sale of satellite service DirecTV to FSN parent News Corp. in 2004, Abbas said.
“While we had hoped to get the value [of the networks] determined through negotiation, we weren’t able to do so,” he added.
“We received notice from the NCTC to arbitrate on behalf of some of its smaller members, and we will continue to proceed according to FCC [Federal Communications Commission] rules,” an FSN spokesman said. “We look forward to an amicable resolution.”
The notice of intent to have terms of carriage determined by the American Arbitration Association covers seven regional sports networks: FSN Florida, FSN North, FSN Northwest, FSN Ohio, SportsSouth, FSN South and FSN Southwest.
For arbitration, the NCTC produced a proposed agreement of terms for a pact with FSN that would invoke most-favored-nation status for its members. In effect, the NCTC is trying to get the lowest price FSN has agreed to for its channels as the market value that is stipulated in a final agreement.
FSN has two days to respond with its own proposed set of terms for carrying the networks, Abbas said.
He added that he could not establish what the value of each channel is in the proposed agreement because FSN included confidentiality clauses in each agreement it signed with the NCTC’s members. In effect, the NCTC members are prohibited from telling the NCTC -- even acting as their bargaining agent -- what the current terms of their agreements are.
By seeking arbitration, Abbas actually hopes to achieve a negotiated settlement.
Putting the two sides’ positions in writing for an arbitrator to review and seek details on market prices establishes a “bid” and an “ask” price. An arbitrator picks one or the other -- nothing in between.
“One’s going to win and one’s going to lose,” Abbas said. “Now, you want to talk about it?”
The notice of intent to arbitrate the value comes after close to two years of trying to negotiate agreements with the networks, Abbas said. More critically, he added, “we had to do it now” because there are only three years left on a six-year window where the NCTC could seek mandatory, binding arbitration under terms stipulated by regulators on News Corp.’s acquisition of DirecTV from Hughes Electronics in 2004.
Also, News Corp. signed a deal with John Malone’s Liberty Media to sell DirecTV. That deal is expected to be completed this year.
News Corp. became a nationwide distributor of TV programming at that point, and it is a producer of programming, as well. As part of the deal, News Corp. is required to bargain in good faith on carriage of its channels with other distributors, such as cable operators.
The 30 members’ deals with the FSN services expired Dec. 31, Abbas said. They were operating under the prior terms and now, with the notice, FSN can’t kick off the distributors, he added. The NCTC filed a notice of intent to arbitrate Dec. 28.
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