Cablevision-Fox Fight Heads to Extra Innings

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The Cablevision Systems-
Fox retransmission-consent battle
entered its seventh day last Friday
with no apparent end in sight.

And as the Major League Baseball
playoff s wind down (Game 6 of the
National League Championship Series
was slated for last Friday night)
and the World Series approaches
(Oct. 27), one question remains unanswered:
Who will blink first?

Fox pulled its television stations
in New York; Secaucus, N.J.; and
Philadelphia, as well as its cable networks
Fox Deportes, Nat Geo Wild
and Fox Business Network, from
Cablevision Systems at 12:01 a.m.
on Oct. 16.

Talks have steadily degenerated from heated
in-person meetings at Fox offices in New York
early on to phone calls between Fox officials in
Los Angeles and Cablevision representatives in
New York to full radio silence. The two sides did
not talk last Thursday and hadn’t spoken as of
press time last Friday (Oct. 22).

In the meantime, Fox’s battle with Dish
Network regarding cable channels FX, Nat
Geo Wild and 19 Fox Sports Net regional
sports channels moved into its fourth week.
Fox pulled those channels from Dish on Oct.
1 and faces another deadline with the satellite
giant. Its carriage agreements with Dish
for its owned-and-operated broadcast-TV stations
expire on Nov. 1.

Already, Cablevision customers have
missed the first six games of the National
League Championship Series, pitting the
San Francisco Giants against the Philadelphia
Phillies. But some analysts wonder
if the MSO can continue its stance against
the network as the World Series approaches.
Even if the New York Yankees don’t make
the series (and that is a distinct
possibility, as they trailed the Texas
Rangers in the American League
Championship Series two games to
three as of last Friday afternoon),
some analysts believe that missing
the Fall Classic may be too much
for Cablevision to bear.

For Fox, it seems as if it’s beginning
to be too much already.

“We urge those Cablevision subscribers
who want to see the World
Series (beginning Oct. 27) to switch
providers or purchase an over-theair
antenna now,” Fox said in a statement
last Friday.

Both sides have managed to lob
ever-larger grenades at each other
in the press, though — Cablevision
has called Fox “greedy,” Fox has called Cablevision
“hypocritical” — and literally dozens
of state, local and federal legislators have
chimed in, echoing Cablevision’s call for
binding arbitration to settle the matter. Fox
has declined Cablevision’s repeated requests
for binding arbitration, adding that it would
only reward the MSO for not negotiating in
good faith (the channels would go back on
Cablevision’s systems during negotiations)
and arguing that the best path to a resolution is through direct business-to-business
negotiations.

Last week, the biggest news was the increasing
ire of federal regulators over the
suit. Last Tuesday, U.S. Sen. John Kerry (DMass.)
introduced draft legislation that
would address changes to retransmissionconsent
laws. And FCC chairman Julius
Genachowski last week called for Fox and
Cablevision to end the dispute, adding, “The
time for petty gamesmanship is over.”

The FCC stepped further into the fray last Friday
when Media Bureau chief Bill Lake sent a
letter to both companies asking them to explain
how their actions constitute “good faith negotiations.”
Lake wanted his answer by Oct. 25.

Cablevision executive vice president of
communications Charles Schueler welcomed
the FCC’s involvement.

“Whether through FCC action, binding
arbitration or any other means, the time has
come for News Corp. to end the Fox blackout
of 3 million Cablevision households,”
Schueler said in a statement.

Fox kept its thoughts closer to the vest.

“We will respond directly to the FCC,” Fox
said in a statement.

BTIG Research analyst Richard Greenfield
is doubtful that the Cablevision-Fox skirmish
will result in any meaningful legislation
soon. But in a research note, he added
that it could be laying a foundation.

“The only advantage we see to the current
battle they are waging is to draw political attention
in hopes that Congress at some point in
the future decides to amend the 1992 Cable Act
to diminish the current leverage held by broadcasters,”
Greenfield wrote in a blog posting.

Pivotal Research Group principal and media
and communications analyst Jeff Wlodarczak
took another tack, adding in a note
last week that Cablevision’s strategy may pay
off in lower rates.

“We believe there is a good chance a deal
will be signed at more attractive economics
for Cablevision either via News Corp. or FCC
forced binding arbitration, and potentially
all the press may force FCC/Congress to reexamine
the retrans regulatory monopoly,”
Wlodarczak wrote.

John Eggerton contributed to this report.

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