• by David Goetzl  @dgoetzl, December 16, 2010

With the fate of millions of Time Warner Cable's TV subscribers in the balance, the Sinclair station group said TWC has lanced a proposal to settle the parties' differences through binding arbitration. The two are negotiating how much TWC will pay Sinclair to carry stations covering the slew of TWC customers.

Separately, Sinclair is negotiating with Bright House Networks about how much that cable operator will pay to offer stations in the Tampa market and several others.

Sinclair said the amount of homes its stations reach between the two operators is about 5 million.

TWC said in a statement that Sinclair had proposed arbitration on Monday, and TWC said yes. But Wednesday, Sinclair declined to go forward. TWC said it balks at arbitration being used to settle carriage payments for Sinclair's CW and MyNetworkTV stations. In fact, it doesn't want to pay to offer them at all.

"Their programming is not as attractive to customers as other content we could be carrying in its place," the cable operator said, adding  that Sinclair is attempting to use bundling tactics that could hurt consumers and hold them "hostage." "Unfortunately, this sort of behavior is typical when negotiating with Sinclair," it said, adding that it would still be open to arbitration.

Sinclair countered that arbitration would only cover a few of the stations involved, while TWC wants to limit evidence an arbitrator could consider. One of Sinclair's arguments is that TWC wants "the arbitration ... conducted in complete secrecy with no access to information for the public."

But Sinclair is unlikely to agree that all details be made public, including rates that Sinclair receives from all operators and particulars of those deals.

Separately, a series of public-interest groups, including the Jesse Jackson-led Rainbow PUSH coalition, have called for stations involved in carriage disputes not to black out programming during the holiday season. (It did not mention the operators that could in theory cut signals.) In addition to Sinclair-TWC, Hearst is negotiating with DirecTV, but in a less contentious manner so far.

The Sinclair-TWC dispute could lead to many Sinclair stations being blacked out on TWC come Jan. 1. Among the stations are many affiliated with Fox.

With Sinclair saying that all of the stations -- Fox and others -- that could go dark account for 5 million-plus homes served by TWC and Bright House combined, it is difficult to gauge the breakout, but at least 2.6 million would be TWC homes and likely many more.

TWC listed 12.6 million as its total customer base of Sept. 30. Stations involved for TWC are in markets such as Raleigh-Durham and Columbus.

But TWC has a big card to play. An agreement with Fox allows it to continue airing Fox programming on its cable system should a Sinclair blackout occur. That could hinder Sinclair's efforts to rally public support for its side, since it can't argue that viewers would be deprived of top Fox shows. It would have to resort to promoting the value of its local news and syndicated programming.

The public-interest groups calling for no blackouts also include LULAC (League of United Latin American Citizens); National Consumers League; and Public Knowledge. The 10 groups stated that they "call on the broadcasters to declare a moratorium this holiday season on viewer blackouts."