Fox News Seeking Higher Fees

Carey compares channel to ESPN

By Jon Lafayette -- Broadcasting & Cable, 12/8/2010 2:30:03 PM

News Corp. is looking to increase subscriber fees for Fox News Channel in a new round of negotiations with distributors.

Chase Carey, COO of News Corp., speaking at the 38th Annual UBS Global Media and Communications Conference Wednesday, said Fox News gets only a small fraction of what ESPN gets.

"That channel in the cable world is right there with ESPN, as important a channel as exists out there," he said. "Clearly a lot of customers [would] move if it weren't there."

ESPN is the highest priced national cable channel at about $4 per subscriber per month. After its launch deals began expiring in 2006, Fox News, which has grown into the top-rated cable news channel, was able to increase its rate to about $1. Now some of those deals are expiring, opening the door to a new round of negotiations.

Carey said that other News Corp. cable channels also have opportunities to increase their sub fees, especially when compared to their more established competitors.

"Our channels are pretty new compared to a lot of their peers," he said, comparing National Geographic Channel to Discovery and FX to TNT and USA  "If we make every channel a leader in its category, we've got a lot of room to grow."

News Corp. has also been seeking increased fees for retransmission of its Fox broadcast channel. Those efforts have largely been successful so far, Carey said.

Carey declined to disclose the terms of deals closed recently with Cablevision Systems and Time Warner Cable, which became very public as deadlines came and went. But he did say "we were looking to what we thought was fair and we stuck to our guns. It takes two to make a deal... we achieved what we set out to achieve."

Unlike CBS, which recently struck a long-term deal with Comcast, Carey said News Corp. prefers shorter deals with distributors.

"We're still not getting anything close to competitive values," he said, comparing Fox with the fees reaped by some cable channels.

But the money Fox is getting from retrans payments has changed its financial picture.

"It's our most important network" in terms of content development, he said. "We need a healthy business as a foundation to do that" and retrans "put us on that track."

He added that Fox "should be our most important channel. It should be our most profitable channel. That's what we're looking to achieve."

Carey said that Fox believes it has pumped new life into its most important program, American Idol.

"It's a dominant franchise. We can take advantage of a new, fresh and different panel [of judges]" he said.

That panel won't include Simon Cowell, but Cowell will be bringing his new show, X Factor, to Fox next season.

"We will have year-round franchises with Idol and X Factor in the fall with Simon," he said.