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Fox and Time Warner Cable reach a deal

COMPANY TOWN

A new contract ends the loud financial dispute that threatened to deprive customers of numerous stations.

January 02, 2010|By Joe Flint

The first big media showdown of 2010, which threatened to break out in war, ended with a peace treaty.

After weeks of posturing and mudslinging media campaigns, an agreement was reached Friday afternoon that will keep News Corp.'s Fox television stations and several of its cable channels on Time Warner Cable systems in Los Angeles and nationwide.

The deal was struck less than a day after the previous contract expired, averting a potential public relations disaster for both companies. Otherwise, Time Warner Cable customers would have had to find alternative ways to watch the college bowl and National Football League games broadcast on Fox during one of the biggest sports weeks of the year.

News Corp. granted extensions to Time Warner Cable to keep the Fox signals on the air while talks continued, and viewers were spared having to wonder what happened to their programs.

Such standoffs between programmers and distributors, once rare, are becoming more commonplace. With advertising dollars tougher to come by and audiences fragmenting, broadcasters are seeing fees from cable and satellite operators to retransmit their signals as a crucial component of their financial health.

Washington lawmakers pressured News Corp. and Time Warner Cable not to drag consumers into their financial dispute by allowing the Fox signals to go dark just before the network started airing a series of popular bowl games.

Sen. John F. Kerry (D-Mass.), chairman of the Senate Commerce Subcommittee on Communication, Technology and the Internet, and Julius Genachowski, chairman of the Federal Communications Commission, praised the two companies for reaching the accord.

In addition to the Fox TV stations -- including KTTV-TV Channel 11 and KCOP-TV Channel 13 in Los Angeles -- several cable networks, including FX, Fuel and local sports channels Prime Ticket and Fox Sports West, are covered by the new contract. Fox News has a separate deal with Time Warner Cable and was not part of the dispute.

News Corp. had been seeking a fee of $1 per subscriber, per month, to carry its Fox TV stations. Time Warner countered with an offer in the neighborhood of 30 cents. In pressing for the $1 fee, News Corp. argued that cable channel TNT gets about that amount with a smaller audience.

Time Warner Cable contended that Fox was trying to extract too high a price and bought advertisements in newspapers accusing it of trying to hold consumers "hostage."

Neither Time Warner nor News Corp. would provide details on the new agreement. In a statement, News Corp. President Chase Carey said the pact was "fair" and "recognizes the value of our programming." Time Warner Cable Chairman Glenn Britt called it a "reasonable deal."

Although News Corp.'s Carey had talked tough about sticking to Fox's demands, analysts viewed the $1 fee as a jumping-off point for negotiations. Typically, carriage deals last at least three years, and often five, with the fees paid by the cable operator rising over the period of the deal.

Though the Time Warner and Fox corporate slugfest ended without any signals being lost, fans of Food Network and Home & Garden Television were not so lucky.

Those cable channels, operated by Scripps Networks Interactive Inc., went off the cable systems of Cablevision Systems Corp., which serves parts of Long Island, New York City and Connecticut, because of a similar dispute.

Bobby Flay, a chef who has a show on Food Network, told his Twitter followers to "bang away at Cablevision."

Another retransmission fight is occurring between Maryland-based Sinclair Broadcast Group, one of the nation's largest owners of TV stations, and Mediacomm Communications Corp., a cable operator with systems in 23 states.

Time Warner Cable, which is also negotiating with Food Network, may face another such scenario this year when it has to sign a new agreement to continue carrying Walt Disney Co.'s ABC stations, including KABC-TV Channel 7 in Los Angeles. Those two companies are no strangers to bitter fights. In 2000, the signals for ABC's stations went off of Time Warner for almost two days during a public battle.

Despite the public acrimony between News Corp. and Time Warner, the private negotiations were for the most part amicable, people close to the situation said.

The negotiations were held on the Fox lot in Century City. Mike Hopkins, who oversees distribution for Fox, and Melinda Witmer, Time Warner Cable's programming chief, would huddle with their respective teams in a conference room in a studio office building. Then each side would retreat to a war room and debrief their bosses and analyze the proposals.

That didn't mean there weren't some testy moments.

Early Friday morning Time Warner Cable ran an announcement on some of its East Coast systems that said it had "reached an agreement with Fox that protects our customers' pocketbooks." In fact, no deal had been reached, and the triumphant tone of the announcement irritated Fox executives.

Representatives of Time Warner Cable acknowledged the foul-up but declined to explain how it happened.

joe.flint@latimes.com

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