Time Warner Cuts News Corp. Deal

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The renewal of Fox News Channel and the “placeholder” provision for its proposed business channel with Time Warner Cable are components of a larger deal the cable operator struck with News Corp.

According to a Time Warner executive familiar with the deal, the broad-reaching contract, which was finalized Dec. 28, also encompasses retransmission-consent carriage for Fox’s owned-and-operated stations through 2009; renewals for Fox News and Speed Channel; the addition of Fox Reality Channel to its channel lineup; and a commitment to the business channel Fox News has been contemplating launching.

Another executive with knowledge of the deal placed the monthly per-subscriber fee for the proposed business channel in the 10- to 15-cent range.

A Fox News spokesman confirmed the extension agreement for the news service and the placeholder pact for the business channel, but declined to comment on any financial terms. Officials at Time Warner Cable and News Corp. officials declined comment.

Of the 35 stations in 26 markets comprising the Fox Television Station group, a number transmit in such Time Warner Cable-served DMAs as New York; Los Angeles. Dallas and Austin, Texas; Cleveland; Milwaukee; Kansas City; and Greensboro, N.C.

The Time Warner executive familiar with the pact said Fox’s O&Os had been out of contract with the cable operator since Dec. 1, 2004. The stations had remained on the air in the interim via month-to-month renewals under terms of the old contract, said sources with knowledge of the O&Os.

The far-reaching pact also covers a contract renewal for Speed, which counts nearly 70 million subscribers nationwide, as well as the launch of Fox Reality in roughly one-half of Time Warner Cable’s footprint. The Time Warner launch, coupled with a pact with Comcast, will push Fox Reality’s subscriber count into the 35 million-home range.

As for Fox News, Time Warner Cable's original 10-year contract with the cable news leader was set to expire in fall 2007, but it reached a multiyear contract extension covering some 13 million subscribers.

An executive familiar with the negotiations said the terms are similar to the ones Fox News reached with Cablevision Systems last fall in that there is an escalating license-fee structure. The agreement with Time Warner, this executive said, tops out in the 80-cent range in the latter years of the pact. The Fox News deals with Cablevision and Time Warner Cable average around 75 cents per subscriber, per month over the life of the contracts.

Fox News also inked renewal contracts with DirecTV and the National Cable Television Cooperative last year.

The Time Warner Cable/News Corp. contract also pertains to the proposed business channel Fox News has been eyeing. The executive familiar with the deal said the cable operator would pay a monthly per subscriber license fee in the 10- to 15-cent range should the service get off the ground.

Time Warner Cable’s large subscriber base -- particularly its strong presence in Manhattan, home to this nation’s financial district -- is viewed as critical for News Corp. to give the official go-ahead. Officials at the media giant have indicated that a business channel -- going after the same lucrative advertising base that is now the province of CNBC -- would need some 30 million homes before it would debut.

Fox News already has a commitment from DirecTV and a placeholder pact with Comcast for the business channel.

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