Cable Operators

Fox News 'Bucks’ the Odds

4/14/2006 8:06 PM Eastern

Is Fox News Channel worth a buck? Affiliates will decide. Officials at the network are floating a proposal seeking a license fee of $1 per month per subscriber.

The asking price represents a steep hike over its current rate, largely in the 25 to 30 cents range, according to distribution executives.

The proposal, a copy of which was obtained by Multichannel News, also calls for a standalone 10-cent monthly fee for its oft-talked-about new business news channel.

DEALS ROLLING OFF

Whether distributors, whose original decade-long deals begin to expire this fall, and potential new carriers think that’s fair and balanced will play out over the coming months.

There are also combination rates and volume discounts that would bring pricing for both services under $1.

Tim Carry, senior vice president of affiliate relations at Fox News, confirmed the pricing for the cable news leader. “We’re starting out with a dollar for Fox News,’’ he said.

Should Fox News get its price, only ESPN and regional sports networks would command higher rates in ad-supported cable.

Carry said the proposal was sent to “new people” in the market — presumably, telcos Verizon Communications Inc. and AT&T Inc. and their respective FiOS TV and U-Verse video services — a few weeks ago. Incumbents began receiving the information at the National Show in Atlanta last week.

Fox News — with parent News Corp. paying distributors $10 per subscriber — launched in October 1996 in about 17 million homes via 10-year deals. Those original contracts begin to roll off on Sept. 30.

Now, Fox wants five-year deals, with the proposal also covering provisions for a 3-cent hike in the monthly fee for the news network over each year of the contract; and a 1-cent annual increase for the business channel.

If a distributor carries both, the year-to-year increase in the monthly fee would be 3 cents, according to the document.

Carry and his affiliate team have spent a year conducting a road show trumpeting “Fox News Channel: America’s Most Valuable Cable Network.” The presentation touted ratings gains against Cable News Network, which gets about 40 cents per subscriber, and MSNBC; growth against broadcast news (Carry says Fox is grabbing 45% of all the viewers the older medium is losing in the genre); brand equity and consumer-resonance attributes; and Fox News’s value as a local ad-sales vehicle.

The network is gearing up for its first local ad sales initiative, tied to a “Breakfast with Fox & Friends Sweepstakes.”

“This was the best [National] Show for Fox News in the past five or six years,” Carry said. “We’ve had a lot of good discussions with distributors about our brand value. We’re going to get close to a dollar.”

Said one distributor executive: “For a lot of people, Fox News is the only channel. There will be push-back, but it’s going to be difficult for someone not to take it.”

BIZ NET 'OFFSET?’

A veteran cable operator said the “offset” could come on the business-news side.

“The ratings for CNBC and Bloomberg have been stagnant for so long, there may be an opportunity in the business segment with a different approach,” the executive said. “I’m going to try to justify [to management] the investment of a dime as part of the package, for a channel that could be worth 25 cents or more within a few years.”

Carry declined to discuss the business channel, which has been the subject of many reports and debut dates. Evidently, the combination plans are being used as an incentive and gauge to determine the proposed service’s viability.

September