Newscorp, Time Warner, parting ways.

[SirNitram]

Link

Dec. 30 (Bloomberg) -- News Corp. said it’s not likely to reach an agreement with Time Warner Cable Inc. and expects to pull Fox broadcasting from the cable system when their deal expires tomorrow.

“We deeply regret that millions of Fox customers will be deprived of our programming,” Chief Operating Officer Chase Carey said today in a memo to employees. “We need to receive fair compensation from Time Warner Cable to go forward.”

The two sides have been unable to come to terms since midyear, Carey said. Time Warner Cable would accept federal mediation, Chief Executive Officer Glenn Britt wrote in a letter to U.S. Senator John Kerry of Massachusetts, a proposal News Corp. rejected. Both sides will continue to negotiate up to the deadline, Carey said.

“Fox isn’t looking for fair compensation and we too are prepared to be without the Fox signal,” Alex Dudley, a Time Warner Cable spokesman, said in an interview. “We hope Fox doesn’t punish our customers, but that decision is up to them.”

The dispute centers on the price News Corp. wants New York- based Time Warner Cable, the second biggest U.S. cable operator, to pay for Fox programs including college and National Football League games and “American Idol,” the most-watched U.S. TV series. Fox has attracted the biggest 18-to-49 age audience, a group that advertisers target, since 2004, Carey said.

Fox can’t continue to operate at the same level with only advertising revenue, Carey said.

“It’s mutually assured destruction if they don’t reach an agreement,” Matthew Harrigan, an analyst at Wunderlich Securities in Denver, said in an interview. “This is a real face-off and these guys aren’t posturing.”

Arbitration Welcome

As an alternative to arbitration, Time Warner Cable would like to enter into an interim agreement to continue carrying Fox programs including football games on New Year’s Day and beyond, Britt wrote. Carey ruled out an extension in the memo.

“Time Warner Cable welcomes your proposal to submit the dispute to binding arbitration,” Britt wrote to Kerry, a Democrat. Arbitration before the U.S. Federal Communications Commission can begin “immediately,” Britt said. A copy of the letter, dated Dec. 29 and released today by Time Warner Cable, was sent to Carey.

Scott Grogin, a spokesman for Fox, had no comment on the arbitration offer. Jen Howard, an FCC spokeswoman, declined to comment on whether the agency may mediate the dispute.

News Corp., the New York-based media company controlled by Chairman and CEO Rupert Murdoch, fell 6 cents to $13.91 at 4 p.m. New York time in Nasdaq Stock Market trading. Time Warner Cable dropped 60 cents to $41.83 in New York Stock Exchange composite trading.

Price Per Subscriber

News Corp. has asked Time Warner Cable to pay as much as $1 a month per subscriber for rights to Fox, home of “The Simpsons,” two people with knowledge of the matter said yesterday. Time Warner Cable favored about 20 cents, said one of the people, who declined to be identified because the talks are private.

“Fox, to ensure the long-term health of the broadcast business, needs to get more compensation,” said Harrigan, who recommends buying shares of both companies. “From Time Warner Cable’s vantage point, there’s not a lot of growth on the revenue side because there’s more competition, and programming costs keep going up more than the cost of inflation.”

Time Warner Cable may have to pay Fox at least 50 cents a month in retransmission fees, Rich Greenfield, an analyst at Pali Capital LLC in New York, wrote last week in a note.

In January, Time Warner Cable signed a new five-year agreement to pay for CBS Corp.’s flagship television network through 2013.

Fox can't continue with just advertising? How much are they shovelling at their news mouthpeices?

[Patrick Degan]

So that means all those poor Time/Warner cable viewers will be deprived of continuous propaganda from FoxNoise? What a shame...

[RedImperator]

So that means all those poor Time/Warner cable viewers will be deprived of continuous propaganda from FoxNoise? What a shame...

Actually, it means they'll be deprived of every network NewsCorp owns, including Fox broadcasting and all its football games...just in time for bowl season and the NFL playoffs.

[Sea Skimmer]

As I recall ESPN already does get close to a dollar per subscriber, with the cable companies keeping only a few cents on the dollar. Fox trying to get the same thing for multiple channels then that isn’t necessarily unreasonable by industry standards. They reep what they soe by accepting those kinds of fees.

Really its not unlikely that over the next couple of years some broadcast channels may even go off the air because they don’t want to or can’t exist with only ads. TV ad revenue has been declining for several years, and more and more of everything is shifting to the internet so the numbers may not recover. TV stations have a major disadvantage that the costs they incur are largely independent of viewership, unlike web bandwidth that can be purchased as needed.

[Patrick Degan]

So that means all those poor Time/Warner cable viewers will be deprived of continuous propaganda from FoxNoise? What a shame...

Actually, it means they'll be deprived of every network NewsCorp owns, including Fox broadcasting and all its football games...just in time for bowl season and the NFL playoffs.

As a point of curiosity, just how does Fox plan to get around the must-carry requirements of the Communications Act to pull their over-the-air network affiliates from the local cable services controlled by Time/Warner to make their threat effective?

[phongn]

So that means all those poor Time/Warner cable viewers will be deprived of continuous propaganda from FoxNoise? What a shame...

No. Fox News Channel and Fox Business Channel are under a separate contract.

As a point of curiosity, just how does Fox plan to get around the must-carry requirements of the Communications Act to pull their over-the-air network affiliates from the local cable services controlled by Time/Warner to make their threat effective?

If Fox Broadcasting owns the local affiliate (e.g. WTVT, WFOL) they can do as they please. Not all stations are under must-carry regulation: stations can opt for mandatory carriage ("must-carry") or retransmission consent ("may-carry"). These agreements are renewed and/or changed every three years.

[Andrew J.]

Fox and Time Warner come to a deal

By RYAN NAKASHIMA, AP Business Writer Ryan Nakashima, Ap Business Writer – Sat Jan 2, 6:54 am ET

LOS ANGELES — Football fans and "American Idol" devotees can breathe a sigh of relief. Fox and Time Warner Cable have reached a deal in principle that will keep the network on the cable provider after Fox threatened to pull the plug over a fee dispute.

Friday's agreement, which included Bright House Networks, ended a week of public sparring that had some viewers worried they'd miss Friday night's Sugar Bowl, Saturday's Cotton Bowl and Sunday's professional football lineup, as well as an array of other programming.

Fox had been threatening to force Time Warner Cable and Bright House to drop the Fox broadcast signal from 14 of its TV stations and half a dozen of its cable channels as a contract expired at midnight Thursday.

But signals were extended into Friday as talks continued, allowing more than 6 million cable subscribers in New York, Los Angeles, Orlando, Fla., and other markets to continue viewing programs.

Neither company would divulge the terms of the deal. Fox wanted to be paid $1 per cable subscriber each month for the broadcast signal it had once given away freely from the stations it owns. Other Fox affiliate stations that are owned by different companies had already cut deals to be paid by cable operators for a fraction of that fee.

"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," said Chase Carey, chief operating officer at News Corp., which owns Fox.

Time Warner Cable Inc. Chief Executive Glenn Britt said he was "happy to have reached a reasonable deal with no disruption in programming for our customers."

Politicians and regulators had gotten in on the dispute, especially because Fox sends its signals out freely on public airwaves on a frequency it obtained for nothing, with the obligation that it serve the public interest.

Federal Communications Commission Chairman Julius Genachowski congratulated both companies and his staff for the deal.

But Sen. John Kerry, D-Mass., raised concerns about the effectiveness of a 1992 cable law that allows broadcasters to seek compensation from cable and satellite operators for their signals.

"I will reach out to both parties, the FCC, and consumer advocates to assess lessons learned from this dispute and what, if any, changes to law are necessary," Kerry said in a statement.

Fox said it could no longer give away its stations' signals to cable companies because the network is facing stiff competition from cable channels, such as the Walt Disney Co.'s ESPN, which earn subscriber fees on top of advertising dollars.

That dual revenue stream allowed ESPN to outbid Fox for high-priced events such as the college football Bowl Championship Series — including the Sugar Bowl, Fiesta Bowl and Orange Bowl that are now on Fox — from 2011 to 2013.

Time Warner Cable, in the meantime, had vowed to hold the line on cable bill increases, and said the vast of majority of viewers who went to its Web site, http://www.rolloverorgettough.com, urged it to "get tough" and fight back against higher costs.