Fox News Wants To Double License Fees...
By John M. Higgins -- Broadcasting & Cable, 5/5/2005 9:56:00 AM
At least. Cable operators are already bracing for tough negotiations to renew Fox News Channel, but News Corp. is signaling just how tough.
The network is looking to at least double the license fee it charges DBS and cable systems to carry the network. Currently, Fox News’ fee averages around 25 cents per month, per subscriber.
On News Corp.’s earnings conference call Tuesday, President Peter Chernin said that he is looking at another 25 cents per month, at least. “Trust me, we think we're worth a hell of a lot more than that,” Chernin said.
Since Fox News reaches more than 80 million subscribers, that increase “its worth $250 million to the bottom line.”
Fox News launched in 1996, so its carriage deals start expiring next September.
The network’s average license fee is 37% less than the 40 cents rival CNN has managed to secure for its two networks (CNN and Headline News), growing the price gradually over 25 years.
But Fox has dramatically eclipsed CNN in the Nielsen ratings and wants to leapfrog the network’s license fees as well. “We invested a lot of money and worked really hard to achieve this over the ten years, and we believe we should get an appropriate payback,” Chernin says.
The quest will be difficult.
First, cable and DBS operators are fiercely fighting increases in programming costs. Second, a major reason Fox News’ fees are even as high as 25 cents is the massive upfront payments the network offered operators to launch the channel that exceeded $300 million, including payments of around $12 per subscriber to the then-top operators, Tele-Communications Inc.
Fox has a ton of leverage, including retransmission consent rights and the fierce loyalty of its audience base. “We probably have the most loyal viewers of any channel in the universe at the moment,” says News Corp. Chairman Rupert Murdoch.
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