As the fee dispute between News Corp.'s Fox and satellite broadcaster Dish Network spills into its fourth week, hundreds of thousands of TV viewers are growing increasingly frustrated that they continue to pay for channels they do not receive. And soon, they could face even more blackouts.
Fox is threatening to pull the signals of the local TV stations that it owns — including KTTV-TV Channel 11 and KCOP-TV Channel 13 in Los Angeles — from Dish systems if the two sides fail to agree on payments for those signals by Nov. 1. Dish's 14.3 million customers have been without cable channels FX and National Geographic and more than a dozen regional sports networks since Oct. 1.
The new threat, if carried out, means Dish subscribers would miss Fox broadcasts of NFL football games and episodes of "House," "Glee" and "The Simpsons," unless they install a digital antenna to capture the stations' over-the-air signals. For nearly a week, a parallel dispute has been raging in New York and New Jersey, where more than 3 million Cablevision Systems customers have been without their local Fox stations.
Local hockey and basketball fans, in particular, are eager to see the dispute resolved because they are already missing L.A. Kings games; the Los Angeles Lakers and Clippers begin their regular season next week.
"Fox kind of has a monopoly on sports," said Jay Kravitz, 55, of Hollywood. "I just hope they settle, because I'd like to watch the Kings and the Mighty Ducks."
Fox and other programmers have demanded rate increases to cover what they say is the rising cost of programming. Fox has asked Dish and Cablevision to pay more than 50 cents per subscriber per month for the primary Fox stations' signals, even though the company in the past did not charge for retransmission of those over-the-air signals.
Fox argues that it needs help paying for popular yet costly broadcasts like pro football games; its contract with the NFL, for example, exceeds $700 million a year. But distributors such as Dish are loath to raise their fees when customers are squawking that their monthly bills are too high — and when they have other options like DirecTV, Time Warner Cable and telephone companies AT&T and Verizon, which now offer packages of TV channels.
On Thursday, Missouri's top law enforcement official urged Colorado-based Dish to resolve its ongoing fight with Fox. Atty. Gen. Chris Koster said he told Dish it was violating a voluntary agreement with state governments by failing to transmit such channels as FX, National Geographic and local outlets Fox Sports Midwest and Fox Sports Kansas City.
"Subscribers are paying for the cost of receiving Fox programming when they are not," Koster said in a statement. He demanded that Dish issue refunds or allow customers to cancel their contracts without penalty. "Dish Network is being unjustly enriched by engaging in this unfair practice," he said.
Dish said in response that "in this economy we feel a strong obligation to protect our customers from unreasonable expenses like the enormous rate increase" that Fox wants. "If anyone owes our customers a refund, it's Fox," the company said in a statement. Dish has offered substitute channels to make up for the loss of the local regional sports networks.
Fox said that Dish's blame was misplaced. "We are providing Dish with a service — our programming," said Fox spokesman Scott Grogin. "But it's Dish that sets the rates that they charge their customers."
Cable television analyst Derek Baine said the long-term contracts that cable and satellite TV providers are increasingly requiring customers to sign have actually contributed to the kind of fee disputes now raging between Fox and Dish.
"The cable companies know a lot of their customer base is locked into a contract, and [the customers] can't easily drop their service," said Baine, who is with consulting firm SNL Kagan. So the cable companies have dug in against programmers like Fox.
Long-term customer contracts have become standard because the devices used to deliver signals have become increasingly sophisticated and costly, and because there is increased competition from providers such as Verizon and AT&T.
"With the advent of DVRs and HD set-top boxes, these companies don't want to install $1,000 worth of equipment in people's homes only to have them drop their service two months later to switch to another provider," Baine said.
For example, a customer under contract with Dish who wants to terminate service early is required to pay $17.50 a month for each month remaining on the contract. That means a customer who had 12 months left on a contract would have to pay $210 to cancel.