News Corp.'s Chase Carey is getting ready for battle with cable, satellite operators
News Corp. Chief Operating Officer Chase Carey is gearing up for an ugly fight with some of the nation's biggest cable and satellite broadcasters.
At issue is News Corp.'s push to get distributors such as Time Warner Cable to pay cash to carry Fox-owned television stations. Known in the industry as retransmission consent (don't fall asleep, this is important), it is a federal regulation that allows broadcasters such as Fox and CBS the right to try to get cable and satellite operators to pay cash to carry their local signals. If a deal can't be reached, then the signals can be pulled.
Of course, since those signals are also available for free to consumers over-the-air, the cable and satellite folks are usually reluctant to pay cash. Instead they usually agree to buy a certain amount of commercial inventory or even carry new channels instead. For example, FX, ESPN2 and MSNBC were all born out of retransmission consent. This time around, broadcasters want cash.
"This distinction between broadcast and cable is a looking-backwards definition," Carey said at the UBS media conference in New York, adding that "business model that recognizes that reality" is needed.
While Carey said he did not want to negotiate with cable and satellite operators publicly, he did a little of that anyway. Noting that ESPN gets almost $4 per subscriber per month from distributors and that Fox has the World Series and a Super Bowl every few years, he said Fox could "probably justify $5 per subscriber."
That's a lot more than the $1-per-subscriber asking price for Fox that has been floating around the industry. Any good negotiator starts high and works down, and that is probably what Carey is doing here. Time Warner Cable, the nation's second-largest cable operator with over 10 million subscribers, has already launched an aggressive consumer campaign taking aim at programmers looking to raise costs.
Carey also said the advertising environment is getting better compared with a year ago. However, a soft spot is sports. While ratings for sports on Fox -- particularly football -- are strong this fall, some of the big sports advertisers, such as the auto industry, are still not spending the amounts seen in past years.
With regards to the Olympics, Carey said News Corp. would look at bidding on the 2014 and 2016 games but isn't looking to blow a ton of money on the events.
"Sports franchises come with a real burden to them," Carey said, in what may have been the understatement of the century.
-- Joe Flint
Photo: Chase Carey: Credit: Fred Prouser / Reuters