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After much sound and fury, and plenty of media attention, Fox programming remained on Time Warner Cable and Bright House Networks systems through the New Year’s festivities, as the three companies reached “an agreement in principle” to make cable customers ultimately pay more for the right to watch Fox broadcast stations and cable networks.
The wide-ranging agreement covers all of Time Warner Cable’s more than 12 million subscribers as well as 2.4 million Bright House customers. The deal encompasses Fox-owned, Fox-affiliated television stations covering nearly four million Americans and Fox’s sports and entertainment cable networks seen nationwide.
The major point of contention between Fox and the two cable companies was the fee for carriage rights to Fox television stations. Known as “retransmission consent,” cable operators must obtain permission from television station owners before they are allowed to put them on cable lineups. For years, broadcasters were happy just getting clear pictures to cable’s extended reach into suburban and rural communities. But over the years, broadcast interests have sought cash payments from cable operators in return for that consent.
Leveraging their popularity, station owners feel they have plenty to room to negotiate higher payments, and the cable industry has tried to avoid setting any precedent for cash payments, fearing a new benchmark set with one station owner will soon become the asking price for every other major station in a community. Cable operators have traditionally signed agreements that launch station or network-owned cable channels instead of large direct cash payments, but Fox’s game of hardball suggests those days are over.
While none of the companies involved would disclose the terms of the final agreement, industry analysts suggest the parties met somewhere near the middle of their respective asking price. Fox had demanded $1.00 a month per subscriber for each of its affiliated television stations, while Time Warner Cable suggested a quarter per month per subscriber was a fair offer. Most agree the final deal is in the 50-60 cent range, not including any extras Time Warner Cable threw in on the cable network side.
Chase Carey
All of the parties represented at the negotiating table were pleased with the outcome.
“We’re pleased that, after months of negotiations, we were able to reach a fair agreement with Time Warner Cable — one that recognizes the value of our programming,” News Corp. president and COO Chase Carey said in a press release. Time Warner Cable president and CEO Glenn Britt adds that his company is “happy to have reached a reasonable deal with no disruption in programming.”
Amusingly, Bright House Networks’ own press release is a mirror copy of Time Warner Cable’s — only the names have been changed:
“We’re pleased that an agreement has been reached with no disruption in programming for our customers,” said Steve Miron, Chief Executive Officer, Bright House Networks.
Who wasn’t represented at the negotiating table? Customers. Ultimately, whatever amount agreed to, it will be added to customers’ bills in future rate increases.
If other networks seek similar terms, cable operators may have to fork out as much as $5 billion a year — and would likely pass the cost on to subscribers, Craig Moffett, an analyst at Sanford C. Bernstein in New York told Bloomberg News.
“The broadcast networks are really struggling to find a viable business model,” Moffett said. “They’re looking at the cable networks that make money both on advertising and the money that the cable operators pay them and saying, ‘We need a dual revenue stream to survive too.’”
http://www.phillipdampier.com/video/CNBC TWC Fox Reach Agreement 1-4-10.flvCNBC reports on the deal reached just in time to prevents sports fans from missing out on their New Year’s football games on Fox. (2 minutes)
Other stories of interest:
- Bright House Networks Launches Its Own Version of “Roll Over or Get Tough” Campaign
- Last Day for Time Warner Cable-Fox Negotiations – Which One Will Cave First?
- One Day Left for Fox-Time Warner Cable Negotiations
- Fox – Time Warner Cable Battle Rages On, Cable Company Threatens Fox With A-La-Carte Option
- Time-Warner Cable Fox Negotiations Coming Down to the Wire
