Fox, Time Warner Cable reach agreement

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Fox Networks and Time Warner Cable announced an agreement Friday that will avert the disruption of Fox network programming to 15 million subscribers of Time Warner Cable and an affiliated company.

The agreement, the terms of which were not disclosed, was announced several hours after a midnight deadline and just before Fox was to air the Sugar Bowl football game between Cincinnati and the University of Florida.

"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, deputy chairman of News Corp., in a statement.

"We're happy to have reached a reasonable deal with no disruption in programming for our customers," said Glenn Britt, chairman of Time Warner Cable.

Time Warner Cable and News Corp. (NWS, Fortune 500), Fox's parent company, had been locked in a public battle over how much the cable giant should pay for the right to deliver Fox networks into its subscribers' homes.

If a deal hadn't been reached, all of the Fox-owned broadcast networks and some of its cable channels would have disappeared for most of Time Warner Cable's 13 million subscribers, affecting broadcasts in cities such as New York, Los Angeles and Dallas. Also affected would have been 2 million subscribers of Bright House Networks, with operations in 5 states including central Florida.

News Corp. had wanted to charge Time Warner Cable (TWC) -- which was spun off from CNNMoney.com parent Time Warner Corp. earlier this year -- $1 per subscriber for airing its broadcast station, Fox. The contracts for six Fox cable channels -- FX, Speed, Fuel TV, Fox Reality, Fox Soccer and Fox Sports en Español -- as well as certain regional sports networks were also slated to expire. Fox News Channel and Fox Business Network were not affected.

Public officials weigh in

Fox refused an offer made by Time Warner Cable Wednesday to enter binding arbitration with the FCC. That offer stemmed from a suggestion made in a letter written Sen. John Kerry, D-Mass., who is the chairman of the Senate Commerce Subcommittee on Communication, Technology and the Internet, addressed to both companies.

Kerry issued a statement Friday, before the agreement was reached, praising the two sides for continuing the talks.

"I am pleased that Fox has not pulled its programming and that the parties remain at the table," said Kerry. "I encourage a long-term, mutually agreeable solution that does not strip consumers of programming unnecessarily and believe that good faith negotiations should result in an agreement."

The dispute reflects television's changing business model, as programming choices continue to expand and advertising revenues plummet, noted David Wertheimer, chief executive of the Entertainment Technology Center at the University of Southern California.

Cable networks have always counted on revenue from both advertising and subscriber fees. So even as ad sales have declined, cable channels have stayed afloat on those fees, which Wertheimer says have remained steady. But broadcast networks that rely solely on ad revenue are casting about for new sources of revenue, which is likely what's driving Fox's bid for higher fees.

At the same time, providers like Time Warner Cable are in a costly battle to retain subscribers as they fend off threats from satellite TV and Web-based programming. Time Warner Cable argues that Fox is charging too much to renew the contract and that any cost increase would only hurt consumers.

End-of-year standoffs between cable providers and TV networks aren't uncommon, since these deals typically expire on Dec. 31.

Cablevision drops Food, HGTV

In a separate dispute, Cablevision Systems, which delivers cable programming to homes in the New York metropolitan area, said Friday it was no longer carrying channels operated by Scripps Networks, including The Food Channel and HGTV.

"We are sorry that Scripps' current financial difficulties are making it impossible for them to continue our relationship on terms that are reasonable for Cablevision and our customers," Cablevision said in a statement. "We wish Scripps well and have no expectation of carrying their programming again, given the dramatic changes in their approach to working with distributors to reach television viewers."

"Viewers love our talent and our shows, which is why Food Network and HGTV rank among the top networks in cable," said Kenneth W. Lowe, chairman of Scripps Networks Interactive, in a statement. "But our valuable networks simply are not being compensated like top ten networks by Cablevision."

Scripps says it has launched viewer Web campaigns aimed at getting the two networks back on Cablevision, which says it has 4.7 million customers in the New York area.

In a another cable retransmission negotiation, Baltimore-based Sinclair Broadcasting said Thursday it has agreed to an 8-day extension of its agreement with cable operator Mediacom, to midnight ET on Jan. 8. The negotiations affect customers in markets that include Minneapolis-St.Paul. St. Louis, Milwaukee and Nashville, Tenn. To top of page

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