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Time Warner, Fox in truce
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July 23, 1997: 3:12 p.m. ET
News Corp. and media conglomerate agree to end all pending litigation
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NEW YORK (CNNfn) - After nearly a year of harsh words and rancorous court battles, Time Warner Inc. and News Corp. said on Wednesday they have reached a settlement ending all litigation between the two media giants.
The accord gives News Corp.'s Fox News Channel initial access to about a third of Time Warner Cable's 12.4 million subscribers, including the one million or so subscribers that make up the crucial New York City market, a source familiar with the deal told CNNfn.
"This is a major step for Fox News, because this is insurance of our viability," said Roger Ailes, Fox News chairman and chief executive.
Under the terms of the agreement, Murdoch could also gain access to some 65 percent of Time Warner Cable's systems over a four-year time frame, a person familiar with the deal said.
Financial terms of the deal weren't disclosed.
Analysts speculated that News Corp. may have had to pay Time Warner Cable to be placed onto the systems. When Fox News launched last year, for example, trade press reported that Murdoch paid cable operators such as Tele-Communications Inc. about $10 per cable subscriber for access onto systems.
In return, some observers believe, Time Warner is hoping to ultimately gain access to Murdoch's vast network of international satellite television systems amassed in Latin America, China, the U.K. and other parts of the world.
However, that statute isn't formally part of the agreement, the person familiar with the settlement told CNNfn.
"There is no agreement on that," the person said.
The settlement is intended to end a bitter dispute that erupted last fall when News Corp. sued Time Warner after executives complained the cable operator broke an agreement to carry Fox News, which has about 22 million subscribers.
Fox News had accused Time Warner of dropping plans to carry the network in the New York market in order to protect the market dominance of Ted Turner's CNN, which was purchased last year as part of the Turner Broadcasting System acquisition.
"It's not important in terms of the number of eye-balls. What's critical about the [NYC] market is who those eyeballs are," said Stuart Rossmiller, a media analyst at Deutsche Morgan Grenfell.
The dispute was so heated last year that it drew New York City Mayor Rudolph Giuliani into the picture. Giuliani tried to force Time Warner to carry the Fox programming on a city-controlled cable channel. However, in November a judge ruled in Time Warner's favor, prompting the city to appeal the decision.
Two weeks ago, the Second Circuit Court of Appeals upheld the November ruling. It was this ruling that served as the catalyst for the latest agreement, a person familiar with the deal said.
"That's what made the Time Warner people feel vindicated," the person said.
As part of the settlement, Time Warner will also discontinue all lawsuits against New York City, the companies said in a joint statement.
Time Warner is the parent company of CNN and CNNfn.
-- Robert Liu
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