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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.

By Cecilia Kang  | October 18, 2010; 11:30 AM ET
 
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Next: Fox says no deal with Cablevision; analysts look to World Series as next flashpoint

Comments

It might be nice to include a photo of John Kerry from his announcement:

http://bit.ly/9xpn4G

Posted by: TheChileanPresidentIsMuchBetterRespondingToDisastersThanObama | October 18, 2010 12:31 PM | Report abuse

Shouldn't our cable bill be reduced if we are unable to access Fox channels?

Posted by: wernerleon | October 18, 2010 1:17 PM | Report abuse

"Shouldn't our cable bill be reduced if we are unable to access Fox channels?"

------------------

The value of your cable service goes UP if Fox isn't on it.

Posted by: SilverSpring8 | October 18, 2010 5:34 PM | Report abuse

There is one way to help break the impasse that could potentially save consumers money -- a federal mandate for a la carte pricing.

Right now consumers have to at least pay for all channels on their provider’s minimum service level, even if they do not watch them or want them. It allows content producers, like Fox or others, to charge distributors exorbitant fees per person, even if many of those customers do not watch that specific content.

Comcast has gotten into disputes with various sports leagues and regional sports networks (which in some cases are owned by sports teams) over carriage agreements. Comcast wanted to put them on special sports tiers that would cost extra only to those who opted into them, while the sports leagues and networks demanded carriage on Comcast's minimum broadcast tier so that they could demand more money per Comcast viewer.

A la carte programming would allow customers to pick and choose their content; they could still opt for higher-priced bundles, but it would be optional, not required. Content providers would have to compete with other content providers for better pricing on package deals, lest they be shut out by customers, not distributors.

Posted by: braunt | October 18, 2010 5:43 PM | Report abuse

It's "News Corp." -- not "New Corp."

Posted by: mg31 | October 18, 2010 9:26 PM | Report abuse

How about giving the FCC power to penalize Fox and Cablevision for each say service is out? Nothing like a stick to get them to settle this dispute if they are losing money on fines.

Posted by: TheNervousCat | October 21, 2010 9:13 AM | Report abuse

How about giving the FCC power to penalize Fox and Cablevision for each day service is out? Forget the carrot, give 'em the stick to get them to settle this dispute if they are losing money on fines.

Posted by: TheNervousCat | October 21, 2010 9:14 AM | Report abuse

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