Fox plans ad blitz on rival TV stations if there's no deal with Time Warner Cable
Here's another sign that News Corp. is anticipating not having a deal to keep its Fox-owned TV stations and several of its cable networks on Time Warner Cable systems when the old one expires at midnight tonight. The company has been quietly buying commercial time on rival local TV stations in Time Warner Cable markets to advertise its case against the cable giant and to promote rival distribution services that have Fox and the other channels.
This is both a defensive and offensive measure on Fox's part. Once its channels are off Time Warner Cable systems, it will lose its main vehicle for reaching viewers. Time Warner Cable will likely slap on some sort of notice to viewers about the dispute. When Time Warner Cable took the ABC signals off its systems back in 2000, it put a notice on the screen that said "Disney has taken ABC away from you," much to the consternation of ABC and Disney brass. A Time Warner Cable representative said the company would probably decide what it would put on its screen in place of the Fox channels later today.
With only hours left to reach an accord, the rhetoric between the two has been soaring. News Corp. Chief Operating Officer Chase Carey issued a memo to his staff saying Time Warner Cable would "claim they cannot afford the rates we are requesting and try to blame us for rate increases to their customers." A Time Warner Cable spokesman accused Carey & Co. of an "extortion attempt necessitated by a poor advertising market and an innate desire to fatten his wallet at our customers' expense."
The two sides are haggling over a price tag for Fox-owned TV stations including KTTV Los Angeles and WNYW New York. Fox has been pressing for $1 per subscriber, per month while Time Warner Cable has countered with an offer between 25 and 30 cents. Besides the Fox stations, other channels that are part of the negotiations include FX and Fuel and Fox Sports West. Fox News is not part of this dispute. Other markets where Time Warner Cable has systems and Fox has stations include Tampa and Dallas. Overall, some 4 million Time Warner Cable subscribers would be effected by the feud.
Though both sides make the situation seem bleak, a last-minute deal is not a stretch. Often these disputes go right down to the wire, and then an accord is reached. One of the challenges for Time Warner Cable is that it knows whatever deal it cements with Fox could set a precedent for other broadcasters. Time Warner Cable already has a deal with CBS for its stations, and some people familiar with that pact say it contains a most-favored-nations clause that would mean CBS is entitled to the same deal Fox gets if it is a better deal. On Wednesday, ABC issued a statement in support of Fox's efforts as well. Its deal with Time Warner Cable is up next year.
Time Warner Cable Chairman Glenn Britt has been pushing for an extension or arbitration. In a letter in today's Los Angeles Times he wrote, "There's no reason for Fox to punish Time Warner Cable customers by pulling its programming while we work out an agreement that's fair for all consumers."Washington is watching this one closely. Sen. John Kerry (D-Mass.), the chairman of the Senate Commerce Subcommittee on Communication, Technology and the Internet, keeps jumping into the fray. On Wednesday, he said if Fox pulled the signals from Time Warner Cable, he would "ask the FCC to intervene and mandate continued carriage."
The Federal Communications Commission so far has stayed out of this brawl. A spokeswoman for Chairman Julius Genachowski declined to comment on Kerry's statement.
-- Joe Flint
Photo: Time Warner Cable Chairman Glenn Britt. Credit: Time Warner Cable