Fox Defends Bargaining With Cablevision On Retrans

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Fox has told the FCC it has "carefully complied" with a statutory duty to conduct retransmission-consent negotiations with Cablevision in good faith.

The News Corp.-owned programmer detailed aspects of its months-long talks with the cable operator in a letter Monday (available at this link) in response to a request from the Federal Communications Commission's Media Bureau. The bureau asked for a description of the negotiations by both sides in a retransmission dispute that has seen Fox stations in New York, New Jersey, and Philadelphia go dark on Cablevision systems early on Saturday, Oct. 16.

While Cablevision said Fox was not bargaining in good faith, Fox did not make the same accusation. The FCC had also asked for evidence of either side not negotiating in good faith.

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Fox did not say it lacked that evidence, only that it was not offering it up. "We respectfully decline to do so at this time. We remain hopeful that negotiations will continue and ultimately result in a retransmission consent agreement acceptable to both parties," the letter from Fox Networks affiliate sales and marketing president Michael Hopkins to media bureau chief William Lake said.

Broadcasters have argued that the retrans system is working, so it would not have been in Fox's interest to suggest it is not. Cablevision has, by contrast, called for FCC intervention in the process.

Like Cablevision, Fox said it had been able to reach deals with others, but was discouraged by its failure to do so in this case.

Fox said it recognized its approach to retrans had changed from seeking to launch cable nets to getting cash, but that today it was imperative to tap a second revenue stream or it would not be able to acquire the major sports events (the absence of which from Cablevision lineups has been one of the key drivers of Washington's interest in the issue).

Fox alleges in the letter that, in meetings with Cablevision, its CEO, James Dolan, said that Fox is "worth what we are asking, if not more," which Fox saw as a "gentlemen's agreement" to pay the market rate Fox had established in a deal with Time Warner Cable for carriage on New York systems. Instead, says Fox, it got an offer for "vastly expanded rights" that Fox calls unprecedented.

Fox says it did not present its offers as take it or leave it, and that at one point (on Oct. 20) News Corp. president Chase Carey rearranged his schedule to fly cross country for a meeting about the impasse. At that meeting, says Hopkins, Dolan made it clear that Cablevision's preferred path was to continue to seek political or regulatory relief.

In an interesting twist, Fox says that on Monday, Oct. 18, two days after the stations went dark on Cablevision, the cable operator "suggested it might be willing to purchase WWOR-TV from Fox."

Fox told the FCC that it was willing to negotiate "any time in any place," but said it did not think outside binding arbitration would be an "effective path" to the resolution of this or other retrans disputes. For one thing, said Fox, that would open the door for every future negotiation to include arbitration demands and would distort the process.

Fox went further, suggesting that appeals for help from Washington have helped prevent a deal. "[T]he specter of a politically imposed arbitration or heightened regulation has become an impediment to reaching a business solution."

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