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Consumers are held hostage in fight between Fox and Cablevision

More than 3 million cable subscribers have been without Fox programming since early Saturday because of a contract dispute between News Corp.'s Fox and the cable company.

October 19, 2010|By Joe Flint and Meg James, Los Angeles Times

James Pelletier was not a happy camper Sunday.

The 31-year-old Brooklyn logistics director was looking forward to watching the New York Giants battle the Detroit Lions, only to learn that his cable company — Cablevision Systems Corp. — was no longer carrying the local Fox TV station that was airing the football game.

"I actually just bought my first big-screen TV. I was really looking forward to watching the Giants," Pelletier said. "It's pretty upsetting."

He's not alone. More than 3 million Cablevision subscribers in New York, New Jersey and Connecticut have been without Fox programming since early Saturday as a result of a contract dispute between News Corp.'s Fox and the cable company.

Fights between cable system operators such as Cablevision and programmers such as Fox are starting to feel like everyday occurrences.

This year Walt Disney Co., parent of ABC, briefly pulled the network's signal from Cablevision homes, causing movie fans to miss a portion of the Oscars broadcast. This month Fox pulled its 19 regional sports networks and the FX channel from satellite broadcaster Dish Network. And in less than two weeks, Dish customers — including about 600,000 in the Los Angeles metropolitan area — might lose the Fox broadcast network, perhaps during its coverage of the World Series.

Viewers such as Pelletier often find themselves caught in the middle of these battles between media giants. They are barraged by noisy public relations campaigns that both sides unleash in the local media.

On Monday, for example, Cablevision bought a full-page ad in the New York Times showing a little girl sitting on a couch with a sad look on her face. "Hey News Corp.," the advertisement said, "do I look like a bargaining chip?"

Fox, meanwhile, contended that it offered Cablevision "the exact same price that other companies are paying for our stations. But for some reason, Cablevision thinks that it deserves special treatment."

For now, there is not much cable and satellite subscribers can do except wait for a new agreement to be struck or find other pay-TV providers. The Federal Communications Commission has asked both sides to extend the current contract and consider bringing in an arbitrator, but the regulatory agency does not have the authority to force the channels back on while negotiations are underway.

That could change, though. Many politicians are growing increasingly frustrated with these showdowns and the disruptions they cause for constituents.

"We need new rules of the road," said Sen. John F. Kerry (D-Mass.), chairman of the Senate Commerce Subcommittee on Communications, Technology and the Internet. He promised to introduce legislation that would get the FCC involved in the process to limit signals going dark until the agency could evaluate whether both sides were negotiating in good faith.

Congress gave broadcasters the right to negotiate for retransmission fees almost 20 years ago. The cable industry, however, resisted paying for broadcast signals because those channels were available free to consumers who did not have cable.

So instead the broadcasters created their own cable channels. Fox, for example, launched the FX channel. Cable and satellite operators paid to carry FX and with it got access to Fox's broadcast stations as well.

"The cable companies would give the programmers space for new cable channels, it didn't cost them too much, and the customers were happy with more channels," said Barry Cassell, a cable attorney with the New York law firm of Golenbock Eiseman Assor Bell who is not involved in the Fox-Cablevision showdown.

Now, though, there really isn't much of an appetite for new channels, and the weak economy has Fox, CBS, ABC and NBC trying to create another source of revenue to augment what they generate from advertising. Without it, executives warn, broadcasters will be unable to compete against cable networks that already have two sources of revenue.

"We know that in order to keep this network viable and energetic, we have to have a second revenue stream," said Tony Vinciquerra, chief executive of Fox Networks Group.

Cablevision and other pay-TV distributors contend that those new cable channels are in fact the second revenue stream and now the broadcasters are gunning for a third stream.

"Our customers should not have to pay for something that other folks are getting for free," Cablevision CEO Jim Dolan said when asked about retransmission consent at a Morgan Stanley investor conference.

Cablevision says in its campaign against Fox that it is already shelling out $70 million a year for channels and is now being asked for an additional $80 million.

Vinciquerra said, "We've done a couple of hundred deals in the past year, and we've had problems with two companies," referring to Cablevision and Dish Network.

If this fight drags on, both sides will face continued heat from politicians and anger from consumers, who may just decide to cut the cord on television.

"I was already thinking about getting rid of cable altogether and just going with the Internet and stuff I can watch over my laptop," Pelletier said. "There are so many things I can get for free anyway."

joe.flint@latimes.com

meg.james@latimes.com

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