Fox-Cablevision Blackout: The Ugliest Retransmission Fight Yet
by Gary Susman, posted Oct 18th 2010 5:00PM
But no fight this year has gotten as ugly as the current one between Fox and Cablevision, which has resulted in a blackout currently in its third day, a shutoff that has already cost 3 million households in three states the opportunity to watch some much anticipated baseball and football games.
The battle has even extended to the Internet, with Cablevision subscribers briefly unable to access such popular Fox websites as Hulu. And if it continues, the blackout could darken Fox's coverage of the World Series.
It's gotten so bad that national politicians have started to get involved, though even that may not be enough to bring both sides to the table and get them to negotiate an agreement over new fees.
So far, every cable battle this year has played out roughly the same way. As contracts between programmers and distributors have come up for renewal, the programmers have demanded a raise in retransmission fees, the money cable companies pay to carry each channel.
The cable companies balk, and the programmers threaten to yank their signal when the contract expires (and, in some cases, make good on that threat). A new deal is renegotiated just before the contract expires, or after a few hours of dead air. Terms of the settlement are not disclosed, but subscribers notice the difference a few months later when their monthly cable bills rise.
The programmers, dealing with a soft advertising market, are aiming to shore up their revenue streams by increasing these fees. The cable companies, understandably, don't want to pay more, though if they do, eventually pass the increased costs onto subscribers.
The programmers often make direct appeals to the customers, noting (in the case of broadcast channels like Fox) that viewers have alternatives to get their favorite programming, via digital converter boxes that can pull the free signal from the air, or online viewing at the networks' websites the next day. Cable companies also appeal to the customers, arguing that raised fees will mean higher cable bills, and that it's the programmers, after all, who are yanking (or threatening to yank) their signals if an agreement isn't reached.
It was Fox that got this whole ball rolling nearly a year ago via its retransmission dispute with Time Warner Cable. Similar clashes followed, including battles between Scripps (parent company of HGTV and Food Network) and Cablevision, between Disney and Cablevision, between the Weather Channel and Dish Network and between Disney and Time Warner Cable.
So far, Cablevision, which serves households in New York, New Jersey and Connecticut, seems to have been hit with the most new demands for higher fees; it's also been the provider most willing to endure brief blackouts, as it did with Scripps and Disney (which pulled the ABC Oscar telecast, one of the year's biggest TV events, until the dispute was settled a few minutes into the broadcast).
In the current squabble, Fox is demanding $150 million a year from Cablevision for the right to carry the Fox broadcast channel, as well as the Fox-owned My9, Fox Business, Fox Deportes (a Spanish-language sports channel) and NatGeo Wild. (Other popular Fox outlets, like Fox News and FX, are not affected.)
Cablevision has countered that that figure represents more than the provider pays for CBS, ABC, NBC and Univsion combined. Cablevision also notes that it already pays Fox $70 million a year for its channels, while Fox, in turn, argues that Cablevision pays more than that for just the two Cablevision-owned channels, MSG and MSG Plus, and that it's not earning a fee consistent with the Fox channels' popularity..
When the current contract expired Friday night at midnight, Fox pulled its signal. New York area sports fans who subscribe to Cablevision have missed Sunday's New York Giants game and two Phillies baseball playoff games.
If the blackout continues this week, Cablevision viewers could miss even more games, as well as popular Fox fare like 'Glee.' If it continues into the following week, Cablevision subscribers could miss the whole World Series, which Fox is scheduled to broadcast starting Oct. 27.
On Friday, with just hours to go before the threatened blackout, Cablevision called for both sides to submit to third-party mediation, a call that Fox rejected. At least 100 local and national politicians have weighed in on the issue, including FCC chairman Julius Genachowski, urging poth sides to work together to keep customers from losing Fox programming. Of those, at least 36 have echoed Cablevision's call for both parties to submit to binding arbitration. At least one politician seems to side with Fox; New Jersey Governor Chris Christie has blamed Cablevision for the blackout, saying the provider is "not fulfilling the obligation they have to ratepayers" who expect to see their NFL and baseball games.
For a few hours on Saturday, Fox also barred access to Fox.com and Hulu (part-owned by Fox) to Web users who use Cablevision as their Internet service provider. That set off alarms in Congress. Rep. Edward Markey of Massachusetts, who wrote the rules that govern retransmission negotiations 20 years ago, contacted the FCC, urging them to protect consumers' rights to open Internet access regardless of cable TV disputes. His colleague, Sen. John Kerry, who heads the Senate's communications subcommittee, said he would propose legislation to update Markey's rules, giving the FCC power to forestall signal blackouts in programmer/provider disputes and to make sure both sides are negotiating in good faith, forcing them to submit to binding arbitration if necessary.
Meanwhile, such battles will only continue. Next up: the fight between Fox and Dish Network that could result in Fox pulling its signal from 14 million satellite subscribers if its demands are not met by the time its current contract with Dish expires Nov. 1.
Who do you side with in this battle between cable companies and programmers? Or are they both wrong?