Charter Threatens FX Drop as Pact Expires

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Charter Communications, which hasn't reached a deal
yet to renew its contract with FX, is threatening to drop the service in at least one of
its cable systems in California.

Last week, a former Marcus Cable system in Whittier,
Calif., now owned by Charter, was running an on-screen notice telling subscribers FX may
be coming off its channel lineup. The crawl reads, "Please be advised that it may be
necessary to replace FX network with alternative programming July 1."

That particular system reaches roughly 76,000 subscribers.

Tom Schaeffer, senior vice president of Charter's
Western region, referred questions about FX to corporate spokeswoman Anita Lamont, who
said executives familiar with the situation couldn't be reached for comment.

So it wasn't known if Charter was running its message
about possibly switching out FX at just that one system, or on other systems, as well --
or if Charter was considering dropping FX at systems in addition to Whittier.

FX's five-year charter carriage deals with cable
operators expired June 1, and the programmer is still negotiating a renewal with Charter.
The network has successfully locked up renewals with MSOs representing about 85 percent of
its subscriber base, or 35 million homes.

So far, it has deals with cable operators including Cable
One, Century Communications Corp., AT&T Broadband & Internet Services, MediaOne
Group Inc., Cablevision Systems Corp., Cox Communications Inc. and the National Cable
Television Cooperative.

FX only had a brief response to Charter's threat to
drop the service in Whittier, and it wouldn't comment on whether the MSO was seeking
to switch it out in other systems.

"Charter is an important and valued customer,"
said Lindsay Garner, executive vice president of affiliate sales and distribution for
Fox/Liberty Networks, FX's parent. "Both sides are currently in good-faith
negotiations, and we expect a mutually beneficial resolution."

It remains to be seen if Charter follows through on its
warning to drop FX, or if the operator is just running the message as part of the
posturing and saber-rattling that often accompanies contract negotiations.

This go-around, unlike 1994, FX didn't have
retransmission consent as a bargaining chip. Five years ago, the network was able to
exchange carriage of Fox owned-and-affiliated TV stations to get its own distribution from
cable operators.

This year, without retransmission consent, FX has been
giving operators discounts on license fees for Fox Sports Net's regional sports
services in exchange for renewal deals.

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