News Corp.'s Fox, Time Warner Cable strike deal to keep signals on

Media giant News Corp. struck a new deal that will keep its Fox-owned television stations -- including KTTV Channel 11 and KCOP Channel 13 in Los Angeles -- and several of its cable networks on Time Warner Cable systems.

The agreement was reached late Friday afternoon, less than a day after the current contract between the two companies expired. A series of extensions meant that consumers never lost their Fox programming. (For a complete recap of the first media battle of 2010, see our story in today's Los Angeles Times.)

The high-stakes game of poker between media mogul Rupert Murdoch’s News Corp. and Time Warner Cable Inc., the nation’s second-largest cable operator, reached a peak in the last few days, with lawmakers and regulators pleading with both companies to hammer out a deal or face their wrath. While both companies publicly attacked each other, talks continued around the clock among executives hunkered down on Fox’s Century City lot.

For consumers, the good news is that the new pact means they won’t have to hook up rabbit ears to their televisions or find an alternative TV service to watch Fox’s programming, including college football or the return of “American Idol” in two weeks.

The bad news is their cable bill may go up.

Fox had initially been seeking $1 per subscriber each month for its television stations. Time Warner Cable’s initial response was to offer 25 cents to 30 cents. The terms of the new deal could not be immediately learned, but industry observers and analysts had been predicting that the starting price tag would ultimately be in the range of 50 cents. Typically these deals run for several years and contain annual increases.

For Fox, securing fees for its TV stations from Time Warner Cable is viewed as an important win. Broadcast networks have long argued that, for their financial health, they need a second source of revenue beyond advertising in the form of fees from cable operators.

The cable industry has resisted paying for those signals, noting that consumers -- albeit a dwindling number -- can get broadcast TV over the air for free. Broadcast networks have countered that most consumers would not subscribe to cable if it didn’t include their local TV stations.

In previous years, TV networks and cable operators had reached a detente of sorts. Instead of charging fees for their stations, networks used negotiating leverage to win capacity on cable systems to launch their own cable channels, such as Fox did with FX.

But there is little room left for new channels on most cable systems, so broadcasters now are pressing for cash, a right provided to them under 1992 legislation. 

Time Warner Cable, meanwhile, can claim that it did its part for consumers by holding down the cost of monthly cable TV bills by not caving in to Fox’s demand for $1 per subscriber. Although viewers were spared losing Fox and its cable channels, including FX and sports channels Fox Sports West and Prime Ticket (Fox News has a separate agreement with Time Warner Cable and was not subject to the negotiations), such rifts have been growing more public. They may also be leading to unintended consequences for the cable and broadcast industries down the road.

Both Time Warner Cable and News Corp., for example, were starting to get heat about their stalemate from Washington lawmakers and regulators, who hinted that there could be repercussions if Fox went dark and denied millions of viewers the joys of a New Year’s weekend of football viewing.

Sen. John F. Kerry (D-Mass.), chairman of the Commerce subcommittee on communication, technology and the Internet, was pushing for Fox to let Time Warner Cable continue carrying its stations. Earlier in the week, he said that if the Fox signals did go dark on Time Warner Cable, he’d ask the Federal Communications Commission to intervene. On Thursday, FCC Chairman Julius Genachowski issued a statement urging “Fox and Time Warner Cable to agree to a temporary extension of carriage.”

However, whether the FCC would have tried to force both sides into a temporary agreement is unclear. Traditionally, the regulatory agency stays out of business negotiations, and whether it could have lawfully asserted itself is a matter of debate.

-- Joe Flint

Comments

[Just My Opinion]

I'm for a'la carte cable where each subscriber is given a list of channels to choose from, as well as a list of how much each channel costs and from there each cable tv subscriber can choose for himself which ones he is willing to pay for!

Why Not?

[Lewis Barnavelt]

It is hard to believe that the federal government would intervene because of football, but then again, like the Romans, we have to keep the games rolling in order to distract the public from the things that really matter.

[JimBob]

The sad thing is, the way TWC bundles its channels, I can't opt out of Fox without opting out of things I want. No one has so far mentioned, that I can see, how much better the world would be if Fox just...went away.

[Kristina]

Are you serious? Now that Time Warner Cable and News Corp worked out a deal- neither side is willing to talk about the details. After weeks of squaking back and forth, now silence. Both company's dragged the public into their negotiations---but now refuse to talk about the outcome. Did TWC roll over or get tough? Did Fox receive what they had demanded? We deserve to know the details. However, this will not happen. Informing the public would make a mockery of TWC and News Corps previous statements and the full blitz campaigns they used against each other. Instead they are content to make a mockery out of their customers- who were used as negotiation pawns. PLEASE-- Next time-- and I am speaking to TWC and News Corp, do not use the media and customers to strike a good deal---- Your tactics have been proven to be disingenuine and manipulative.

[Alan]

It is not over yet! Things are changing in this area. Mabe they "really" can not afford Rayan S. $15M dollar contract!

[ct web design]

I hope cable bills do go up. Things like this, like the constant supplemental crawls Fox bought begging viewers to contact TWC to Keep Fox on, it drives people towards Internet TV. And if favoriate programming isn't available, that's good for the little guy. If the US Congress weren't so concerned with maintaining the status of the big corporate players, they realize that upheaval creates opportunity. That's the American dream, and it is consistently squashed every time we bail out or support big corporations.

[rp]

Why can't we all opt out from FOX Noise - oh yea the clicker. It is amazing that people actually watch FOX but the removal of critical thinking from the schools probably explains why they have a following.

[John Evans]

I wish Faux would go away. They are nothing but a propaganda machine for the GOP. They are dangerous to our society with the hatred and venom they put out.

[billfromny]

Same old game Fox and Time Warner have been playing for years. This was one of several of the same song and dance acts we as consumers have been subjected to by these two obnoxious money grabbers. You'd think that by now they'd give it up.

The only one who thinks Time Warner is wonderful is Time Warner. Ditto for Fox. We really could do without both.

[DownriverDem]

How sad. Folks who don't want or can't afford cable tv will be out of luck down the road. Free tv will be a thing of the past just as many are finding it way to expensive to keep paying for cable tv.

[billfromny]

Time Warner Cable and Fox have been pulling this little bit of game playing over and over again, and they think that most of us won't realize it. In reality, the only ones who think Time Warner Cable is a gift from God is Time Warner Cable. Ditto for Fox. They're just obnoxious money grabbers, pandering to stupidity-take a gander at TWC's inane commercials and Fox's simplistic programming. We could do quite well without both of them.

[Kimberly]

All I got to say is"WHAT HAPPEND WHEN 30 YEARS AG.TV WAS FREE"!!!! Now we have to pay for every little channal out their...it's all ridiculas!!!!!

[Michael]

I read some of these comments about the "hatred and venom" on Fox and I haveto laugh. Ever watch Keith 'fake Cornell degree' Obermann or Chris 'thrill up my leg' Mathews? Nope, no hate there. LOL. Or is it just any dissenting view is "aateful".

People watch Fox news because the Mainstream media has a liberal slant. Fox news offers opposing views.

Sorry guys but we don't live in a Soviet Block country. Not yet at least. You still need to be "tolerant " of people who disagree with you.

[yupyup]

Too bad. The country would be better off without News Corp's propaganda and Fox's brain-damaging shows.

[TJ Spkye]

I doubt cable could cost that much more, Time Warner Cable already charges $65 per month (plus taxes) for their BASIC cable package, which is about 70 channels. That is the main reason people are more willing to put up with satellite (which you can get for about $30 a month and get twice as many channels for that $30 as Time Warner provides for $65). Both sides of this problem are being greedy and don't care at all about the consumers.

[RCharles]

Long term, a la carte channel selection will be the solution. But this will take development and deployment of new technology, including more intelligent STBs, which the cable companies don't want to pay for.

In the meantime, internet TV will provide some relief. If I can find an internet source for the bulk of my TV, I plan to cancel cable and increase my internet speed. Netflix downloads will cover much of my TV viewing; there are few, very few, shows I watch on TV any more. And there's little I need to watch n real time if I can wait and buy an entire season on DVD.

RCharles