Fox Gets Tough With TWC
Programmer Counters With Its Own Grassroots Consumer Effort
by Mike Farrell -- Multichannel News, 12/21/2009 2:00:00 AM
In the looming retransmission-consent battle between Time Warner Cable and News Corp.’s cable and Fox Broadcasting television properties, Fox has decided to “Get Tough.”
In what appears to be a direct response to Time Warner Cable’s “Roll Over or Get Tough” campaign, a grassroots effort aimed at educating consumers on rising programming costs, News Corp. has launched its own media blitz. It started to run ads on television Friday, with newspaper ads to follow, and is creating a Web site (www.keepfoxon.com) to show viewers what they could be missing if a carriage agreement with the MSO isn’t reached by Dec. 31.
The carriage deals affect about 13 million Time Warner Cable subscribers (3.9 million for the broadcast stations) and include Fox TV stations in New York; Los Angeles; Austin, Texas; Dallas; Detroit; and Orlando and Tampa, Fla. Also in danger of being dropped are Fox cable channels FX, Speed, Fuel TV, Fox Movie Channel, Fox Reality Channel, Fox Soccer Channel, Fox Sports en Espanol, and nine regional Fox Sports Net channels (FS Arizona, Florida, Houston, Midwest, Southwest, West, Prime Ticket, SportsSouth and Sun Sports).
According to Fox, if a deal is not reached, Time Warner Cable subscribers would miss major sports programming like the National Football League playoffs (including the NFC Wildcard on Jan. 10, the NFC divisional playoffs on Jan. 16 and 17, and the NFC Championship on Jan. 24); the Bowl Championship Series college football bowl games (including the All State Sugar Bowl Jan. 1, the AT&T Cotton Bowl Jan. 2 and the Fed Ex Orange Bowl on Jan. 5); as well as the season premieres of broadcast staples American Idol (Jan. 12) and 24 (Jan. 18), and a fresh episode of House (Jan. 11).
News Corp. has reportedly been asking for $1 per month, per subscriber for its TV stations and has been pressuring affiliate station groups to allow it to conduct negotiations for their retrans deals.
Time Warner Cable fired the first salvo in its negotiations with Fox, filing a comment with the Federal Communications Commission earlier this month claiming that Fox “hijacked” its most recent retrans talks with affiliate Sinclair Broadcast Group. According to the FCC comment, which Time Warner Cable filed in support of Mediacom Communications’ dispute with Sinclair, Fox threatened that any deal reached with affiliates could be vetoed by the network. Time Warner Cable extended its pact with Sinclair for one year, a term that the cable operator stressed was not the industry standard.
Time Warner Cable spokeswoman Maureen Huff said negotiations with the broadcaster “are ongoing, but Fox’s cost demands are unreasonable and excessive, especially in light of the economic climate.”
Fox isn’t the only network group that could fall off Time Warner Cable systems by year end — the MSO is in negotiations with Food Network, The Weather Channel, Starz and GAC — but it is certainly the largest.
Fox counters that it is asking only for a reasonable return for the value it provides to cable operators. According to the new Web site, Fox claims that the amount it is asking for all of its networks is in the same ballpark as what Time Warner Cable pays for one network (ESPN at about $4 per subscriber, per month) and that based on its comparable cost of programming, could charge as much as $4 to $5 per month per subscriber.
“Moreover, Fox attracts more viewers than the five most expensive cable networks combined (ESPN, TNT, USA, ESPN2 and NFL Net),” the programmer stated. “The bottom line is that the Fox stations feature some of the nation’s most-watched programming with shows such as 24, American Idol, House, Glee and The Simpsons, as well as the most compelling sports on television with the National Football League, Major League Baseball and NASCAR. The price being asked for as compensation for all this value is extremely reasonable.”
Fox is also urging Time Warner Cable customers to switch to alternate providers like Verizon Communications’ FiOS and satellite services DirecTV or Dish Network if an agreement cannot be reached. That threat is not lost on Time Warner, but the MSO added that those other providers could soon find themselves in the same boat.
“Customers can switch, but need to understand that every provider, including satellite and telco companies, faces rising programming costs and potential disputes,” Huff said.
In a research note, Pali Research media analyst Richard Greenfield wrote that the dispute has the makings of a “Battle Royale” — in addition to the NFL playoffs and college bowl games, the last week of the NFL season is Jan. 3 and includes two contests with teams inside Time Warner Cable’s footprint (New York Giants vs. Minnesota Vikings and Philadelphia Eagles vs. Dallas Cowboys).
And though Time Warner Cable will probably take a subscriber hit in the dispute, the impact may not be that bad, Greenfield wrote. In New York, which is dominated by apartment buildings, satellite service is not always feasible and FiOS service is not available in every area.
In addition, the analyst said that News Corp. may not want to attract the extra regulatory scrutiny that may come with a protracted and public retransmission battle in major markets.
“Fox has the upper hand, leverage-wise, but the battle is not as lopsided as it appears at first glance and the risk of regulatory intervention is not in anyone’s best interests,” Greenfield wrote. He added that he would expect that after some chest-thumping, Time Warner will agree to a 50- to 60-cent fee for the broadcast stations within days after the Fox signals are dropped.
The Fox dispute is reminiscent of other carriage scuffles the MSO has had in the past. Back in May 2000, Time Warner dropped The Walt Disney Co.’s ABC network in several markets, including New York, over a retrans dispute. An agreement was reached within 24 hours of TWC dropping that signal, after the MSO agreed to carry additional Disney cable networks.
Most recently, Time Warner Cable endured a bloody battle with Viacom, which last year peppered markets with ads of a crying Dora the Explorer, one of the most popular characters on its Nickelodeon children’s channel. That dispute, which involved 19 MTV networks, was resolved on Jan. 1.
Mike Reynolds contributed to this report.
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FOX is a very important station for me. I know that TWC has increased my monthly bill by $12 for the same service over the last two years and they have not given me an explanation of why the bill went up. $98/month for what? A phone which sometimes does not have a dial tone? An internet connection which is sometimes very slow? And some TV channels? And they can't afford to carry FOX? How about letting me choose my channels? I would keep FOX and get rid of the many channels in other languages which do not serve me. Why am I paying for those?
Lynda J Jones - 12/30/2009 3:54:25 PM EST -
You have contracts with TWC?
Wow, FOX and other stations have to pay for what they broadcast and feed it to Cable cable does not offer free subscriptions to customers.
The differance is Cable makes money from its comercials that are required to run on network TV air spots and teh subscriber base.
10 Billion income for 2009 with a hard economy and in 2008 6 Billion when things were not so bad.
And TWC can not afford to pay for RE-broadcast Rights.
The NFL rebroadcast cost that ESPN pays is heavy so who pays ESPN or FOX when they air FOOTBALL, BASEBALL, or other sports?
What would be the difference if it was PBS (public broadcast service) "Sesame Street, and all the children s shows" They do charity drives and pay for all the content that is rebroadcast free on CABLE. Not many ADs on PBS
Cable: Subscribers and advertisers
Networks: Advertising
Chris - 12/29/2009 8:01:58 PM EST -
BS Fox and the other Network companies already make enough money by playing commercials as you know it is not commercial free, in order for consumers to enjoy their shows they have sit there and watch those stupid ads, so don't make me and every viewer change to other shows as well as other media channels, just remember Internet TV is always free, besides FOX is not carrying Super Bowl so go ahead TWC do not give in. F-U is for FOX.
Ernesto - 12/29/2009 1:07:20 PM EST -
I could live with out fox or any of its a affiliates. As soon as my contract with time warner comes up I may drop the cable and fone for just internet and leave it at that. I rarley watch fox and would not miss one thing they air on there channels.
Jeremaih - 12/27/2009 8:53:36 PM EST
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