News

Retransmission Dissent In the Air

9/27/2010 12:35 AM Eastern

After a brief respite from
retransmission-consent rhetoric,
cable operators and programmers
are preparing for another
round of private contract
talks and public posturing.

Last week saw the opening
website salvos between Cablevision
Systems Corp. and Fox over
some broadcast and cable stations,
and between Time Warner
Cable and Belo over broadcast affiliates. Also, some network chiefs
gave their views on the new retransmission
dynamics at the
Goldman Sachs Communacopia
conference. Here’s what happened:

FOX HITS WEB
VS. CABLEVISION

Fox Broadcasting lobbed
the first grenade in its negotiations
with Cablevision
Systems, relaunching
its “KeepFoxOn” (keepfoxon.com) website during
the weekend of Sept. 18
and 19.

The Cablevision-Fox
dispute includes three
Fox broadcasting stations
(WNYW and WWOR-TV
in New York and WTXF in
Philadelphia) and a handful
of Fox Cable networks —
Fox Business Network, Fox
Sports en Español, and Nat
Geo Wild.

Fox’s site notes agreements
with Verizon Communicat
ions’ FiOS TV
and with satellite provider
DirecTV. Missing is
Dish Network, whose Fox deal
expires in November.

Fox used similar tactics in an
earlier retransmission dispute
with Time Warner Cable that was
settled in January without a disruption
in service.

Fox’s carriage agreement with
Cablevision originally expired
last year, but the parties worked
out a one-year extension as the
New York Yankees advanced
through the Major League Baseball
playoffs, eventually winning
the 2009 World Series. The Yankees
will be in the playoffs again
this season, which could put added
pressure on the negotiations.

CABLEVISION STAYS
MUM ON DISPUTE

On keepfoxon.com, Fox warned
viewers that it could miss top Fox
broadcast shows like House and
Glee, as well as National Football
League and Major League Baseball
games. Fox is scheduled to
begin broadcasting the National
League Championship Series on
Oct. 16. The World Series begins
Oct. 27.

Cablevision declined comment
has in the past shown a
willingness to battle. In January,
it tussled with Scripps Networks
Interactive over what the operator
called exorbitant fees, reaching a
deal about three weeks after the
programmer pulled its networks.
A March dispute Cablevision had
the Walt Disney Co.-owned ABC
station in New York City also involved
a service disruption. ABC
pulled the network for several
hours prior to the Oscars broadcast,
reinstating it about 10 minutes
into the broadcast.

Fox said in a statement that it
is “in active negotiations with Cablevision
and are hopeful both
sides can come to an agreement
soon.”

TIME WARNER
CABLE DUELS BELO

Time Warner Cable and Belo
Corp. have also gotten into the
act, with the former relaunching
its “Roll Over
or Get Tough” website
(rolloverorgettough.com)
in anticipation of the
expiration of its retransmission
agreement with
10 Belo Corp. stations in
nine markets. They have
a mix of affiliations: four
are ABC stations and
three are CBS outlets.

Belo stations in Austin,
Texas (KVUE-TV);
Charlotte, N.C. (WCNCTV);
Dallas (WFAA-TV);
Houston (KHOU-TV);
Louisville/Lexington, Ky.
(WHAS-TV); Norfolk, Va.
(WVEC-TV); Phoenix (KTVK-TV);
San Antonio, Texas (KENS-TV);
and Spokane, Wash., (KREM-TV
and KSKN-TV) all have the same
message on their websites: if a
deal with Time Warner Cable
isn’t reached by Sept. 25, cable
subscriber risk losing access to
the channels.

BRITT: DEALS
HAVE SOME
FLEXIBILITY

While he did not address his
negotiations with Belo directly,
Time Warner Cable
chairman and CEO Glenn
Britt said at Communacopia
that programming costs have
risen about 6% per year over
the past few years.

On a per-subscriber basis,
it’s risen even more, as the operator
has lost video customers. “The per-subscriber costs
are about 200 basis points more.
What you have is a change in mix
and we’ve had the loss of pay TV
subs over that time. We continue
to think the per-subscriber costs
will continue to trend up.”

Britt said carriage deals will
continue to include different elements
outside of cash to make
the agreements more palatable
to operators. He pointed to Time
Warner Cable’s recent retrans
and carriage pact with Disney,
reached on Sept. 2.

“The world tends to focus on
the money part, but these negotiations
have gotten a lot more
complicated,” Britt said. “With
Disney, I think we bought a lot
more flexibility.”

Britt pointed to its ESPN deal,
which allows Time Warner Cable
to offer ESPN3 to subscribers of its
video package and the ability to
offer two sports-highlights properties
— Goal Line, for college
football and Buzzer, for college
basketball — on its sports tier.

NETWORKS SEE
‘RIGHT’ TO CUT
OF DOLLARS

Distributors aren’t the only ones
under pressure to keep costs
down and revenue up. Increasingly,
broadcasters are under
the gun to pony up a portion of
their retrans take to their respective
networks.

All four major
networks have
asked for so-called
“reverse retrans”
fees from affiliates.

“We do expect to
see a portion of retransmission
consent
fees that cable
operators and satellite
providers will
pay to our affiliates,”
Robert Iger,
the CEO of ABC
parent Disney, said
at Communacopia
last week. “The
good news is, we’ve
struck some deals
already with affiliates
to gain access
to those fees, and
we’re in negotiations
with other affiliates to continue
that strategy.”

“It ’s not only
within our rights,
we will get retrans
revenue from these outlets,” Iger
said.

NBC Universal CEO Jeff Zucker,
also at Goldman, on Sept. 22,
said affiliates derive value from
the network and should pay for it.
Asked later if NBCU was receiving
pushback from affiliates, Zucker
said: “It’s a negotiation.”

SNI’S LOWE: NOW
‘TV EVERYWHERE’
GETS INTO ACT

Also at Goldman, Scripps Networks
Interactive chairman Ken
Lowe, fresh off the January dispute
with Cablevision, said that
in the end, networks that have
compelling content will be able
to negotiate favorable carriage
deals with distributors. Programmers
like Scripps, which
owns no television stations,
have to deal with the new dynamics
of retransmission consent,
though.

“Power brands will endure,”
Lowe said. “The difficulty of
negotiations will increase because
we’re going to have additional
language down the road
with authentication and TV Everywhere.
Expect to see generally
what’s going on right now
with the Fox negotiations, contentious
negotiations that hopefully
will result in successful
outcomes. It’s just going to be
harder and harder to negotiate
because it’s more complicated,
there are more deal points that
have to be sought and the deals
[have] been expanded through
retransmission consent.”

September