UPDATED: Time Warner Cable Claims Fox Hijacked Retrans Consent Process
FCC filing in Mediacom-Sinclair flap says Fox is controlling affils' negotiations
By Melissa Grego and John Eggerton -- Broadcasting & Cable, 12/9/2009 10:15:26 PM
The filing comes as TWC, the nation's second-largest cable operator, is in the throes of a negotiation with News Corp. over carriage agreements for Fox-owned stations, cable networks and regional sports networks that expire Dec. 31. Fox is widely understood to be pursuing cash--a dollar per sub, according to a report in the Wall Street Journal--as part of Time Warner Cable's compensation for Fox's O&Os.
TWC announced Dec. 7 that it had agreed to a one-year extension of its carriage agreement with Sinclair, which has several Fox affiliates among other affiliate stations in TWC markets. That deal also was up at the end of the year. TWC's filing essentially claims their deal with Sinclair was controlled by Fox, in violation of the FCC's good faith bargaining requirement in retrans negotiations. TWC's FCC filing reads, "To the extent that Sinclair has ceded its authority over retransmission consent negotiations to Fox Broadcasting, it more fundamentally has transferred control of its broadcast licenses and violated the Commission's rules."
The filing says Fox has hijacked retrans by "threatening to exercise veto power over any station's negotiation of a retransmission deal that does not extract a satisfactory kickback for the network."
It further says that Sinclair claims distributors must meet price demands or the network in question (Fox) "will use contractual mechanisms to preclude any retransmission agreement."
Time Warner Cable's documents assert that Fox has been engaged in similar ways with other station owners' retrans deals.
Fox commented on TWC's filing Dec. 10 with the following statement:
"Time Warner Cable’s recent action is an extension of its desperate campaign to mask its impressive profits and instead malign its program suppliers’ efforts to receive fair compensation. Rather than legal and public relations maneuverings, Time Warner Cable would be better served by acknowledging the tremendous value provided by its content partners.
"Time Warner Cable has a signed agreement with Sinclair Broadcasting and there is no reason the FCC should intervene on a contract the Company executed in good faith.
"This filing (in a matter between Mediacom and Sinclair, not even involving Time Warner or Fox) is obviously just an attempt to undermine and interfere with Fox’s existing contractual relationship with its affiliate stations as well as artificially influence the negotiation process."
Sinclair could not be reached for comment.
A TWC spokeswoman said, "This issue affects all distributors--so customers can switch, but they can't hide. TV program providers demand outrageous price increases from DirecTV, Verizon FiOS, AT&T U-verse and Dish Network as well. DirecTV and Dish Network have had similar fights too, and the newer providers, AT&T U-verse and FiOS will encounter this more and more as they start to renew their agreements."
Fox and other broadcast network executives have made clear during recent earnings calls and speaking engagements that they intend to pursue a share of the compensation their affiliates receive in retrans negotiations. News Corp.'s Chase Carey indicated at the UBS Media Conference this week that affiliates should be driving harder bargains in retrans negotiations, saying "They're selling it cheap, that's pretty clear. We believe that what we'll be asking is more than fair."
In a Dec. 9 letter to Media Bureau Chief Bill Lake, Mediacom tried to buttress its case claiming Sinclair violates "good faith" retrans bargaining requirements by negotiating retransmission consent for both its owned stations and ones it has local marketing agreements (or, LMAs) within the same markets.
Mediacom Counsel Seth Davidson submitted copies of a bunch of letters that had been sent to the commission from members of Congress, state legislators, city officials and one University president over the past five weeks supporting the complaint and Sinclair's interim request for carriage while the complaint is being considered.
"We believe that it is imperative that the FCC use its authority to prevent any interruption in broadcast service during this round of negotiations between the parties," a group of seven congressmen, senators and representatives, wrote to FCC Chairman Julius Genachowski on Nov. 23, according to a copy of one of the letters.
He also complained about procedural objections Sinclair has filed "with respect to virtually every pleading submitted in these matters."
Cable operators argue that stations negotiating for their LMA partners are violating at least the spirit of FCC duopoly rules, and the FCC's retrans rule requiring good faith bargaining, a point echoed in Time Warner Cable's filing. Matt Polka, president of the American Cable Association, of which Mediacom is a member, interviewed last week about the growing retrans debate, said that networks negotiating for stations may violate the FCC rules that stations must exercise independent authority over their operations.
Broadcasters counter that the practice is widespread and that the Justice Department has not found LMAs to be noncompetitive. One veteran broadcast attorney who spoke on background points out that networks handling retrans negotiations for their affiliates is not a new phenomenon. He says Fox, for example, negotiated for affiliates in the first round of negotiations in the early 1990s, though in that case the compensation was not cash but carriage of the fledgling FX.
When asked if ACA had any problem with a network negotiating for their affiliates, Polka said: "There is currently a fire dance between networks and affiliates as networks look at the whole retrans marketplace and say, 'Hey, why aren't we getting our own cut?' Particularly that stations have talked about real money for retrans to the tune of five or six dollars a month per sub on the wholesales level when you add up all the stations in a market. Yes, that is a concern as we see the networks trying to hone in on the marketplace as well."
A veteran cable attorney says if the FCC gets involved, "it would react to problems that one or the other side has. The affiliates may not like it. If the affiliates suggest it is usurping their rights, the FCC might not like it for that reason. But the FCC has been pretty slow about getting into network-affiliate relationship problems."
As an LA resident (border of Burbank/LA) I can confirm that not everyone here gets broadcast TV readily.
Not only can we not get broadcast TV, we can't get radio, and cell-phones don't work unless you head out into the car park in our apartment complex.
DISH engineers failed to be able to get full service from our balcony, and DirecTV couldn't provide HiDef service either.
Time Warner were the only service able to provide everything - but the service quality is often lousy (image/audio breakup on a regular basis), and the related RoadRunner phone and Internet service goes out far too often.
But it's the only game in town for us, so on balance we find that Fox's behavior is reprehensible and we'll put up with losing their shows (they were probably going to cancel most of them soon anyway - you know how Fox execs are). Maybe we'll wait for the DVD compilations to come out.
Ancient Brit - 12/31/2009 9:06:05 PM EST
If I cannot get TV channels that I wish to watch, I shall go to a supplier that does have what I desire.
Maxine Lemke - 12/24/2009 7:30:45 PM EST
Excuse me, but I am the reader in Malibu, and I live in an area where we get NO, ZERO, ZIP local TV reception. I once put a large Channel Master antenna on a 30 foot pole, and was successful in obtaining 5 Tijuana signals over 150 miles of salt water. As a fan of FM radio, I know full well how "ducting" can occur during some weather conditions. Sometimes I get great FM from San Diego and Tijuana, 130 air miles and 150 air miles from my house. Most of the time, nothing. As a onetime cable TV commissioner for the City of Malibu, I am very well aware that there are a few spots where TV comes in OK here.
But the point is, there are millions of Southern California residents who do not get OTA coverage. The Santa Clarita Valley. South Orange county. The coastal strip. The inland empire. My house.
The broadcasters of Los Angeles have decided not to invest in repeaters, translators, or boosters. That os there choice. I say their decision means I should be able to use that spectrum to get competitive broadband.
Hans Laetz - 12/18/2009 10:22:30 PM EST
Time Warner seems not to want to give out the full story to their subscribers... I had to spend a full half-hour tonight, on the line with TWC, in order to get someone to confirm what channels they were talking about dropping.
For years, I have been forced to subsidize channels I have absolutely NO interest in, by my cable company. "Choice" seems to only be something certain people support in one arena... in every other arena, "choice" is a dirty word, it seems.
I have informed TWC that if they drop Fox, yet continue to charge me for sixteen "Espanol" channels I would never watch in a million years, for "O!" and for MSNBC and so on... I will immediately drop their service. There ARE options. I've allowed my money to be "redistributed" to channels I have no desire to support for decades, because that's been part of the system we have. But remove the channels I WANT, and I no longer have any incentive whatsoever to continue to allow my money to subsidize materials I consider to be "garbage."
Many of you, out there, disagree with me about what qualifies as "garbage." And you know what? That's perfectly all right. You shouldn't be forced to subsize channels YOU don't want to watch, either. You should have the right, for example, to not pay for Fox News.
There is a simple way to handle this. It's called "Ala Carte."
Of course, if the cable channels were forced to do that, their profits would fall through the floor, and many "lesser interest" channels would be weeded out through the electronic equivalent of "natural selection."
I, personally, would find the irony of having Keith Olbermann's show taken off the air due to "natural selection" to be absolutely priceless.
Cary L. Brown - 12/18/2009 5:39:10 PM EST
The whole point of a duopoly was to give a failing station a chance to stay on the air. Duopolies have become not public interest but simply a way to dump inferior programing the main station already owns. As for FOX they have the #1 show so they will have clout. Cable operators have to carry them. The only thing that will allow for real change is true competition for cable. We need to require cable operators to open their phone lines, like we did with AT&T. Take away their exclusive contracts and allow others to compete. This will drive down the rates. More channels is NOT equaling more programs. It's just more of the same shows on duplicate channels or more infomercials.
EricPost - 12/10/2009 5:48:43 PM EST
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