An analyst's take on Fox-Cablevision dispute
Pound for pound, the battle between Cablevision and Fox appears to pit a runt against a heavy-weight fighter, analysts say. So why is Cablevision fighting so hard against News Corp. in its battle over fees paid to retransmit Fox's shows?
To get federal officials to step into what appear to be increasingly contentious negotiations between broadcasters and cable/satellite video distributors, analysts say. Fox's blackout to Cablevision's 3 million subscribers has entered its third day as both sides meet again to try to agree to a new contract.
"Today, retransmission consent disputes pit a government-mandated monopoly broadcaster against a distributor for whom there are readily available substitutes. It was never a fair fight," said Craig Moffett, an analyst at Sanford and Bernstein in a research note to investors. "Regulatory and/or legislative intervention could be the great leveler, and that may be what Cablevision is playing for."
The battles will only intensify, analysts say. In two weeks, Dish Network will renegotiate its retransmission consent agreement with Fox.
Cablevision's willingness to take blackouts, even as Fox has advised subscribers to go to Cablevision's competitors, shows the cable operator was willing to lose the battle "in an effort to win the war," Moffett wrote in a white paper.
The Federal Communications Commission has not indicated if would intervene in such negotiations. Sen. John Kerry (D-Mass.) said he would propose a bill that would prevent broadcasters from pulling their signals from consumers. And the bill would allow the FCC to evaluate the last best offers made by both companies and determine if the negotiations should go into arbitration. Fox has resisted arbitration, saying third-party mediation would give distributors too much leverage.
“Rather, I think we need new rules of the road. We need to change the law that governs this market for the new environment we face," Kerry said in a release over the weekend.
That attention may be Cablevision's goal.
"Regulators' patience is, no doubt, wearing thin. And so is consumer affordability," Moffett said.
| October 18, 2010; 11:30 AM ET
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