Cablevision Responds to Fox's Defense of Negotiations

Rutledge says News Corp. has negotiated in bad faith; matter at an impasse

By John Eggerton -- Broadcasting & Cable, 10/27/2010 9:56:35 AM

In what has become something of a regulatory game of "tag, you're it," Cablevision Tuesday responded to Fox's response to Cablevision's allegations the broadcaster was negotiating in bad faith.

In a letter to Media Bureau Chief Bill Lake, Cablevision COO Tom Rutledge said that Fox's response, in which it illustrated why it thought the negotiations were in good faith, said that instead, Fox's defense had made two points clear: "News Corp. has negotiated in utter bad faith and the matter is at an impasse."

The latter of those certainly seemed true in whichever latest letter or explanation to FCC staffers or commissioners was at issue.

Cablevision focused on the most favored nation clause in a News Corp. agreement with Time Warner Cable that it said News Corp. did not want to trigger by agreeing to pay Cablevision's price, which it said was the market rate. That clause means that if Cablevision pays News Corp. less that Time Warner Cable, TWC would then get to pay that lower rate as well.

Cablevision argues that TWC's price was based on an agreement covering a "variety" of cable nets and broadcast stations, i.e. a package deal that "cannot possibly" be the market rate for Fox's WNYW in New York.

Cablevision reiterated its call for FCC intervention, calling it "critical."

A senior FCC official, speaking on background, appeared Tuesday night to be losing patience with the ongoing appeals from Cablevision, saying: "It's encouraging that Cablevision has a new 'constructive offer' and is prepared to negotiate in 'good faith.' But they should spend less time writing publicity-seeking letters to the FCC, and more time at the negotiating table reaching an agreement." Cablevision CEO James Dolan also wrote FCC Chairman Julius Genachwoski Tuesday to ask him to step in personally and broker a meeting with News Corp. President Chase Carey.

All the letter-writing came as the Wednesday start of the World Series (on Fox) drew near, with Cablevision viewers in New York, New Jersey and Philadelphia facing the prospect of switching carriers, hooking up the old rabbit ears or heading to a local sports club to catch the first game, though there may be slightly less urgency since their respective home teams were knocked out in the two league championship series.

The current impasse affects about 3 million subs, but many more could be affected if Fox and DISH do not strike a retrans deal by their Nov. 1 deadline.

"Cablevision has and will continue to negotiate in good faith," said Cablevision EVP Charles Schueler. "We are trying to reach a deal that is fair for everyone, including our customers, but there has been absolutely no movement by Fox in their attempts to gain massive fee increases from Cablevision customers to carry broadcast signals that are free over the air."

"The FCC is the government agency charged with protecting television consumers and oversight of broadcast licenses. We do not understand how protecting and interceding on behalf of TV viewers in 3 million blacked out households in the Northeastern United States does not fall under the FCC's purview. The FCC has the facts and our customers are demanding that the FCC act."