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Fox wins on fees dispute, but Cablevision succeeds in one goal: getting lawmakers to notice


Cablevision and Fox air their battle in advertisements such as the one above


By most measures, Fox won its bitter battle with Cablevision on the fees it charges to retransmit programs. But even though Cablevision isn’t happy with the final terms of its contract, it succeeded in one goal: getting federal lawmakers to notice.

Senator John Kerry (D-Mass.) still thinks there needs to be a legislative fix. The Federal Communications Commission's chairman, Julius Genachowski agrees.

On Sunday, Kerry commended Cablevision and Fox for ending their two-week contract impasse that left 3 million Cablevision subscribers in New York and New Jersey without signals to watch the World Series and other programs on Fox stations.

But he said the long negotiations impasse showed just how bad the increasingly contentious battles between broadcasters and paid television distributors (cable and satellite services) have become. Broadcasters are asking for more money and communications laws, experts say, favor their position. That’s led to a record number of television blackouts this year as a result of contract disputes.

“What I know is that this system is broken, and I think we're all better off if we have a dialogue about systemic reform and modernizing the law rather than just jumping into the fray and getting involved in each conflict in isolation,” Kerry said in a statement.

Of course the passage of legislation reforms may be harder after the Nov. 2 election, if Republicans grab more seats, as expected.

B last Friday, Genachowski emphasized in a letter to Kerry that the agency's hands are tied and that an update to retransmission laws may be needed.

"I agree that it is time for Congress to revisit the current retransmission law and assess whether changes in the marketplace call for new tools to strike the appropriate balance of private negotiations and consumer protection," he wrote. "Such tools might include, for example, mandatory mediation and binding arbitration."

Cablevision and Fox wouldn’t disclose details of their agreement last Saturday, even though Cablevision had earlier said in press releases that Fox was demanding $150 million, more than double its previous contract.

And Cablevision blamed the FCC for staying on the sidelines during its contract negotiations. It said last Saturday that it ended up paying an “unfair price for multiple channels of its programming including many in which our customers have little or no interest,” according to a statement by Cablevision.

Sanford & Bernstein analyst Craig Moffett wrote in a recent report that broadcasters have better bargaining positions in such negotiations and Cablevision knew it going it. Afterall, its viewers won’t be angry with Fox for its blackout, but it may leave Cablevision for competitors. But knowing each negotiation was growing increasingly intense, Cablevision was aiming for regulatory reform and was “taking one for the team.”

Dozens of lawmakers called for reforms to communications laws so that the FCC could intervene directly into negotiations. Kerry introduced a draft bill that would keep broadcast signals operating during disputes and assign the Federal Communications Commission as a referee to determine if talks are fair and honest. Though after the Nov. 2 elections, such a bill could be harder to pass with a stronger makeup in the Senate and House by Republicans.

Aside from criticizing the companies last week, the FCC said that its hands were tied.

"Under the present system, the FCC has very few tools with which to protect consumers' interests," Genachowski said in his letter to Kerry. "Current law does not give the agency the tools necessary to prevent service disruptions."

The FCC suggested ways for Cablevision viewers to get Fox content from competitors.

“Telling consumers to switch providers is no solution with broadcasters using the same extortion tactics over and over again,” the American Television Alliance, a group representing cable companies, independent programmers and consumer groups, said in a statement.

Public advocacy group, Public Knowledge, criticized the FCC for its inaction. It argues that any legal questions about its authority to intervene in retransmission disputes is overshadowed by its role to protect consumers who are losing access to television programming during contract spats.

Public Knowledge spokesman Art Brodsky said that last March the FCC raised the idea reforming rules on its own role in such disputes but hasn’t followed up.

“Consumers shouldn’t have been held hostage while the discussions went on,” Brodsky said. “Kerry sets a timetable for getting things done.”

By Cecilia Kang  | November 1, 2010; 6:00 AM ET
Categories:  FCC  
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Comments

I don't think John Kerry read the constitution. What does the federal government need to get involved in charges for rebroadcasting? Big Brother can't even do a budget now they want to take on things that are none of their business nor do they have experience. Senator Kerry should spend his time in office on getting the government off our backs by lowering the size, scope and cost of their existence. Senator Kerry stop nation building and allow our businesses to manufacture here by not taxing us to death.
PS Two term limit and no retirement benefits - go get a private job

Posted by: dwittman | November 1, 2010 10:22 AM | Report abuse

Dish Network is also involved in a dispute with Fox, and something needs to be done. Money is tight these days and people will start scaling back their services, costing these service providers more revenue, if they are forced to raise their rates. Fox is probably doing this because they can't charge more for commercials and are airing expensive shows on channels like FX. I love shows like Sons of Anarchy, Terriers, etc., but Fox needs to be cool here or they are going to break the system. If other good channels like AMC start doing this rates will go through the roof. Soon consumers will start wanting a la carte channel choices to just get their favorites and nothing else, to save money.

Posted by: dabraat | November 1, 2010 10:36 AM | Report abuse

When are all the parties involved going to stop acting like kids in a sandbox and provide a service that consumers want and are no doubt willing to pay for?

Cable, satellite companies and ISPs need to work with broadcasters to stop force feeding what they THINK consumers want, and instead allow them to choose the channels, programs and media device they want.

This will also serve to reward producers of programs people are willing to pay for, and kill all the garbage we are forced to pay for, but seldom watch. TV "on demand" is the way to go in the future. Consumers need to be able to get more involved and express their wishes with their wallets.

Posted by: panamacanuck | November 1, 2010 10:53 AM | Report abuse

The whole problem could be handled without government interference. The Federal Communications act was written to prevent AM stations from interfering with each other's signals on a limited set of frequencies. That condition no longer exists and companies can settle their differences through the courts--though pistols at dawn would be quicker and more final.

Posted by: JarlWolf | November 1, 2010 11:18 AM | Report abuse

TV is not like electricity or life sustaining utilities - get a book and read. The biggest complainers should have taken the time to spend time with their family. If you want to effect change turn off your cable, or reduce it to the basic broadcast package. The cable companies want the monopoly protection of a Utility but don't provide service like a utility. If you want competition let consumers choose from multiple providers. AT&T learned that lesson and we're better off because of it. It's time for the cable companies to end their monopoly. Consumers DO want the ability to choose channels. Comcast, Cabelvision, et al don't want the consumer to have the choice because they can't sell advertising on channels that no one will subscribe to. Outside of the networks, I block all but 3 channels - why should consumers be paying for channels they don't want. If the FCC want's to get involved let the consumer get a cafeteria plan. Too many politicians and hacks get too much money to care.

Posted by: dutchbelted | November 1, 2010 12:18 PM | Report abuse

dabraat said: "Soon consumers will start wanting a la carte channel choices to just get their favorites and nothing else, to save money"

Yes, that's what I want now. I'd love to eliminate all of the worthless cr*p from my channel lineup. Media content would have to suddenly stand on it's own merit or just perish in the marketplace. Nothing wrong with this idea at all.

Posted by: realneil | November 1, 2010 12:33 PM | Report abuse

Let's take all this a step further. People not only want only the channels that have the content they want, they'd like it all for free. That will require a very different business model, namely, s*c**l*sm. Omigosh, I think I must've said something bad???

Posted by: merrymaisel | November 1, 2010 1:54 PM | Report abuse

This is off subject, but a la carte was one big reason I loved my big old dish in the 1980's. I chose exactly what I wanted to watch and didn't subsidize crap I didn't. That was the perfect business model. Here it is 30 years later, and we have to put up with 200 channels with nothing I want to watch.

Posted by: moonwatcher2001 | November 1, 2010 2:05 PM | Report abuse

A la carte, great idea, sign me up.

Posted by: hodgensr | November 1, 2010 3:01 PM | Report abuse

Someone above stated,"I don't think John Kerry read the constitution. What does the federal government need to get involved in charges for rebroadcasting?"

The government has the responsibility to do just as Kerry is suggesting. The airways are not "free", they belong to all of us so some control needs to be in place. How about if I transmit on your frequency forcing you off the air--not good for you, is it? That's when government comes in. Another is when cable is routed through people's backyards and under their houses or streets---through what's known as the public right-of-way. We pay taxes on our properties where cable, phone lines, etc... are routed. Those services pay the cities and towns a fee for using those right-of-ways to provide us with those services. That fee in turn is passed on to us that receive that service. The key is--those companies agree to provide a service to those of us paying for that service and we give them the right to string those cables and whatever through our backyards or under our streets to provide us with that service. When you have an outfit like Fox pulling the plug on a provider Fox is not providing me what I'm paying for. Therefore the issue needs to be corrected --without harm being done to me by preventing me from watching something I'm paying for to both the cable company and Fox. Of course with the million dollar contributions to the NRG and US Chamber-- looks like Fox already has their protection lined up!!

Posted by: RWall1 | November 1, 2010 7:18 PM | Report abuse

If the FCC would regulate the price MLB and the NFL charge FOX for the right to broadcast their games then it seems reasonable they should limit the price FOX charges Comcast to rebroadcast the games. Seems we use to do this with railroads and trucking under the ICC, it must be "back to the future" is the change we can believe in.

Posted by: droberts57 | November 1, 2010 10:25 PM | Report abuse

The failure of copyright law and patent law is that they have been created without consideration for social responsibility.

Both patent law and copyright law provide the creator with the opportunity to profit from their creative efforts. It has been generally recognized and accepted that patent law and copyright law are good things. The ability to be able to make significant profits from ones creative efforts has inspired and spurred creativity, innovation and general economic advancement. They have resulted in comfortable, progressive, social structures that are typically enjoyed by most citizens.

Recently, I was intrigued by the apparent social need to place legal limitations on the fees check-cashing companies charge their customers. These companies provide a service, and one can argue that they are entitled to make a profit from their service. Why should they not be allowed to charge what ever the market will bare? Why should they not be allowed to absolutely maximize their profit from the service they provide to the customer that willingly walks through their door?

The answer is because the market place is not necessarily a fair and balanced venue. The market place is not necessarily a place where all players have equal opportunity to defend their interests. The answer is that it is not socially responsible to allow an entity with considerable power (be it social power or physical power) to use that power to persistently subjugate a weaker entity. The essence of this situation is bullying. It is not socially responsible, or just, to allow bullies to prevail simply because they have greater power.

Being socially responsible is much like being environmentally responsible. In fact, it may be argued that being environmentally responsible is a specific aspect of social responsibility. In the G-20 countries, I believe there is a general consensus that it is desirable to be environmentally responsible, and although it is not generally a specific item of discussion, I think it would be agreed that it is also desirable to be socially responsible.

As is now appearing in much of the legislation being put forward by G-20 countries, there is a requirement for organizations and citizens to be both environmentally conscious and responsible. I suggest that patent law and copyright law should be redrafted to incorporate considerations for not only what is profitable, but also what is socially responsible; and specifically, what is socially responsible in the context of distribution.

Posted by: IDonO | November 2, 2010 11:23 AM | Report abuse

Since the political wind is blowing against government action of all kinds, here is a way for those who demand access to sporting events to set their sails to it. Wherever no access is provided 200 miles or farther from the event for a price not greater than 5% of the price of the most expensive individual ticket, deny the services of the courts to enforce the property rights of the event owner against any who might provide pirate signals on the Internet. This is legislation, but it subtracts rather than adds government action. It will motivate event owners to require the media with whom they contract to provide the signal as agreed.

Posted by: c-u-r-m-u-d-g-e-o-n | November 4, 2010 7:16 PM | Report abuse

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