Fox: Cablevision Needs To Negotiate With Broadcaster, Not Government

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"Cablevision's assertions that Fox has been operating in violation of the Federal Communications Commission's good faith rule should be dismissed," Fox told the agency Tuesday.

"Once Cablevision realizes that it has to negotiate with Fox, rather than the government, they will hopefully come back to the table and begin negotiating again in earnest."

Fox was responding to Cablevision's letter to the FCC Monday in which it alleged the programmer was not bargaining in good faith. Both Cablevision and Fox were asked to defend their bargaining or criticize the others. While Fox chose not to accuse Cablevision of not bargaining in good faith Monday, it defended itself against Cablevision's allegations and characterizations.

Fox said that there was no basis for Cablevision's assertions that it sweetened its deal while Fox refused to make concessions.

Fox also warned that if the FCC weighed in against most-favored-nation clauses, which are essentially minimum price guarantees, it would destabilize the industry. "Fox, like other programmers, has the right to use its business judgment in determining an acceptable price for its programming, taking into account all factors, including MFNs," said the company. Fox pointed out the Federal Trade Commission has even made MNF provisions conditions in mergers to insure nondiscriminatory terms to competitors.

Fox told the FCC that its negotiator's three-word sentence, "this is it," if he in fact said that, does not constitute a single, unilateraly proposal, but must be seen in context of what happened before and after. It said good faith does not mean requiring a broadcaster to reduce the amount it is asking, though it does require broadcasters to be open to more than one form of consideration. Fox said it made "multiple, serious attempts" at such good faith negotiation. Fox said that there is nothing that would prevent it from timing its agreements to expire coincident with must-see programming.

Cablevision argued that because Fox has waivers to own multiple media properties in New York it has unfair leverage in the market and should be subject to different standards. Fox countered that the FCC's public -nterest requirements "have never been extended to require broadcasters to reach deals with al MVPDs for retranmission consent, regardless of the price we are offered."

As to leverage, Fox suggested it was the pot calling out the kettle. "If the FCC feels a need to look at the relative negotiating leverage of the two parties in this context, it should also look at the properties owned by Cablevision in the New York metropolitan area" said Fox. That includes local newspaper, Newsday; a free daily newspaper, weekly shopper, regional sports nets MSG and MSG+, News 12, and Rainbow Media Holdings (AMC, IFC, Sundance, We.TV, Wedding Channel). Fox also pointed to its bundled high-speed Internet and voice service.

Fox said the FCC does not have the authority to order arbitration, and that if it tried to compel carriage, it would be a violation of the First Amendment and the takings clause of the Fifth Amendment. "The Commission cannot mandate carriage of a broadcaster's signal without its consent," Fox said.

Cable operators are quite familiar with the argument. They themselves have made it in arguing for getting rid of the must-carry requirement in which the government mandates carriage of a broadcasters' signal whether cable operators consent or not.