Time Warner Cable Submits To Fox Arbitration

by Wayne Friedman , December 30, 2009

Looking to avert possible consumer backlash, Time Warner Cable is now agreeing to arbitration, and/or an interim agreement, in attempting to resolve its retransmission contract dispute with News Corp.'s Fox Television group.

TWC made the offer Wednesday in response to Sen. John Kerry, chairman of the Senate Commerce Subcommittee on Communication, Technology and the Internet, who recently penned a letter to both companies in an effort to avert a midnight Dec. 31 deadline that would throw Fox TV stations off Time Warner systems. Time Warner is the second-biggest U.S. cable operator, with 14 million homes.

Kerry was moved in response to what's expected to result in consumer backlash, especially starting January 1, when Fox airs -- over a number of days -- four major end-of-the-season college bowl games: the Sugar Bowl, Cotton Bowl, Fiesta Bowl and Orange Bowl.

Even if Fox doesn't agree to arbitration, Glenn Britt, chairman and CEO of Time Warner Cable, said in the letter that he would go for an interim agreement with Fox.

Fox is looking for $1 per cable subscriber, which Time Warner Cable believes is too high. Recently, Time Warner Cable has made deals at around 20 cents to 25 cents a subscriber, according to reports. It recently inked retrans-consent deals with two TV groups: Sinclair Broadcast Group and Local TV LLC.

CBS has recently talked about making retransmission deals for its stations at around 50 cents a subscriber.

Both Time Warner Cable and Fox have been enlisting consumer support to boost their respective causes. Time Warner has been asking consumers for their opinions under its RollOverOrGetTough.com Web site; Fox has been doing the same under its KeepFoxOn.com.

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2 comments about "Time Warner Cable Submits To Fox Arbitration".

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Brian Collins from JAS, December 31, 2009 at 9:33 a.m.
It seems that both Fox and Time Warner should want to encourage MORE viewers by keeping fees low and not offend them by looking like greedy corporate giants, especially in hard economic times brought on (at least partially) by greedy corporate giants. Besides, isn't there be an economy of scale here? It costs the same to produce the content whether there are one or 1M viewers, right? And more viewers equals more ad revenue, so it's in both parties' interest to increase distribution, not retard it through public tantrums and short-sighted displays of egomaniacal chest puffing. Taking Fox channels of TW will only hurt BOTH companies and irritate viewers. Now knock it off, both of you, or I swear I'll just go back to reading more books.
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Brian Hayashi from ConnectMe 360, December 31, 2009 at 2:29 p.m.

I disagree that settling things for the sake of "more distribution" is a good idea. Lost in the TW/Fox kerfuffle is a redux of the old retransmission/consent debate, made more intense by the changing economics of sports broadcasting.

For years, the hikes in cable fees were largely due to the gigantic carriage deals done by ESPN and regional sports networks. It is no surprise that the broadcasters demanding the highest subscriber fees are also the ones that have spent the most on the NFL. And now, the NFL is on the brink of a strike - NFLPA executive director DeMaurice Smith has warned players to plan for a nuclear winter event - driven by the perception of easy corporate giant dollar signs.

By setting this precedent now - before the NFL and NFLPA start conducting talks - it creates another pot of money that allows both parties to continue their way of doing business, without having to make real concessions. And, like classic Washington inside-the-beltway politics, this puts off having to deal with the real problem: the salaries of sports athletes have got to come from somewhere.