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Fox News and Time Warner Cable strike new deal

August 07, 2012|By Joe Flint
  • Time Warner Cable subscribers don't have to worry about losing Fox News or Bill O'Reilly.
Time Warner Cable subscribers don't have to worry about losing Fox… (Associated Press )

After weeks of quiet but intense negotiations, Time Warner Cable and Fox News have struck a new long-term affiliation agreement.

The talks between the two giants remained mostly under the radar, unusual in today's media environment where loud and often nasty battles between programmers and distributors have become commonplace. Last month, Viacom pulled its cable channels from satellite broadcaster DirecTV for almost two weeks and the two ran public campaigns criticizing each other until a new accord could be reached.

While terms of the Fox-TWC deal were not disclosed, people familiar with the talks said Fox News was able to extract a major increase in the fee Time Warner Cable will pay to carry the popular channel. According to industry consulting firm SNL Kagan, Fox News is averaging about 89 cents per subscriber, per month from distributors. Under the Time Warner Cable accord, Fox News will get north of $1 per subscriber in the first year of the deal, with increases in the years that follow, these people said.

The jump in fee puts Fox News in the same league as popular entertainment channels including Time Warner's TNT. Fox News and its parent, News Corp., have made no secret that they believe the cable channel is undervalued by distributors. Last year,  News Corp. President Chase Carey told analysts that the next round of contracts for Fox News "will take subscription fees to a whole new level."

Prior to a deal being reached, both sides had anticipated a public fight. However, cooler heads prevailed and when Time Warner Cable's previous deal with Fox News expired at the end of July, the two agreed to extensions until a new contract was approved.

Although Fox News got the rate hike it wanted, Time Warner Cable didn't walk away empty-handed either. At the start of discussions, Fox News and parent News Corp. wanted to use the leverage of Fox News to renegotiate deals for several other less popular channels whose contracts weren't up.

Time Warner Cable pushed back and renewed deals only with Fox News, Fox Business Network and the Fox Movie Channel.

Both sides had reason to keep the peace. Time Warner Cable owns systems that have more than 10 million subscribers and Fox News didn't want to lose that -- especially in the midst of election season. Time Warner Cable knew that Fox News has a loyal and vocal audience and it saw little upside to getting on their bad side and face subscribers fleeing for another distributor.

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