How much Time Warner Cable pays Fox to carry its signal might be a principal reason that Fox and Cablevision have reached an impasse on their programming-fee dispute -- which is cold comfort to millions of households facing a blackout of the World Series opener tonight.
Cablevision has offered to pay the same rate as Time Warner. Fox declined the offer this afternoon in pointed language.
"We remain committed to negotiating a fair deal with Cablevision, but today’s incomplete proposal is not acceptable. Cablevision is seeking a discounted 'package rate' without buying the entire package. We have told Cablevision all along we are willing to negotiate a deal – based on an entire suite of channels – under the terms we have reached with Time Warner Cable and other providers, or a stand alone agreement for WNYW FOX5, WTXF FOX29 and WWOR My9. Cablevision’s offer – sent to the press just as it was provided to us – is yet another in a long line of publicity stunts," Fox said in a release.
News Corp., Fox's parent company, "has claimed it cannot show any flexibility” over how much money it’s asking to carry Fox “because it is bound by the ‘Most Favored Nation’ (MFN) clause” in an agreement with Time Warner, wrote James Dolan, CEO of Cablevision, in a letter to the Federal Communications Commission.
The MFN clause means that if Cablevision pays Fox a lower rate than Time Warner Cable, TWC would be entitled to the lower rate. Rewriting a deal with TWC -- which counts 14.4 million subscribers to its video, high-speed data, and voice services -- could mean a big financial loss for Fox.
A spokesperson for Fox declined to comment on the terms of the deal with Time Warner.
Meanwhile, Cablevision customers in the New York area must prepare to miss out on the World Series, which airs on Fox starting this evening. Fox yanked its channels from Cablevision 12 days ago after the two companies failed to reach an agreement on carriage fees.
Cablevision claims that Fox is asking for $150 million, more than what the company pays for every other broadcaster in the market combined. Fox denies this figure, saying Cablevision is distributing false information.
As negotiations collapsed, an ugly PR battle has ensued, with each party accusing the other of being desperate to protect their profits and unethical business practices.
Cablevision called Fox’s request an “act of corporate greed” and claims the company is not negotiating “in good faith.” Fox has alleged that Cablevision is encouraging theft of copyrighted material by directing subscribers to illegal websites to view Fox content.
Both parties dispute the claims made by each other.
The FCC, which has little regulatory authority over the matter, tried to exercise its clout by having both parties write the commission to prove they have been negotiating “in good faith,” which is required by law.
But even if the FCC finds that one or more parties haven’t negotiated in good faith, the commission is limited to levying fines, not forcing a settlement, according to Howard Waltzman, a former chief counsel for the House Energy and Commerce Committee’s Telecommunications and the Internet Subcommittee.
In the first positive sign in days, Fox put out a statement saying the “Cablevision has a ‘constructive offer’ to discuss” and they “look forward to meeting with them at their earliest convenience to engage in serious, one-on-one negotiations.”
This article appears in the October 27, 2010, edition of National Journal Daily PM Update.