Fox clause is focal point of fight between Time Warner Cable and Sinclair Broadcast Group
When News Corp.'s Fox Broadcasting struck a big deal with Time Warner Cable last January for distribution rights to its Fox TV stations, it also included an interesting clause that may give some Fox affiliates headaches.
As part of the agreement that calls for Time Warner Cable to pay cash to carry Fox-owned stations, should a Fox affiliate (affiliate being a TV station that carries Fox programming but is not owned by Fox) pull its signal from the cable operator, Fox will offer its programming for up to one year.
That Fox clause may be put to use soon as Time Warner Cable is in a tense distribution negotiation with Sinclair Broadcast Group, a Baltimore-based TV station owner that operates 20 Fox affiliates as well as 38 affiliates of other networks. Their current deal with Time Warner Cable expires Dec. 31.
According to Cable Fax, an industry publication, Time Warner Cable will begin notifying media in markets this week that would be affected by the spat that it had rights to Fox programs including hits such as "Glee" and "American Idol" as well as the 2011 Super Bowl, which is set to air on the network next February. Among the markets where Time Warner Cable has systems and Sinclair has Fox stations are San Antonio, Buffalo, and Dayton, Ohio.
On the surface, Fox's insurance clause with Time Warner Cable would seem to undercut its own affiliates' ability to negotiate a distribution deal. Barry Faber, the general counsel of Sinclair, said, "it makes it more difficult to negotiate for retransmission consent if your network has provided the cable company an alternative way to receive the feed." Asked if he had communicated that sentiment to Fox, Faber said, "They have a different take."
A Fox spokesman declined to comment on the contract with Time Warner Cable or whether the clause would hurt the network's affiliates. Faber said it was his understanding that if Time Warner Cable exercised that option, it would cost the company more than what Sinclair is seeking. Furthermore, he added, Fox only provides 15 hours of prime-time programming a week as well as sports programming, meaning that Time Warner Cable would still have a lot of holes to fill.
"I don't think this puts TWC in position to say, 'I don't need you anymore,'" Faber said.
A Time Warner Cable spokeswoman countered that it is "inaccurate" to say its deal with Fox would cost more than what Sinclair wants for distribution of its stations, although she would not elaborate on the details.
There are Federal Communication Commission rules that prohibit cable operators from bringing in a signal from another market if it loses the rights to carry a local station. However, in this case, Fox is offering a feed of its network programming and nothing else and that seems to effectively skirts the FCC's non-duplication rules.
The clause may create tensions between Fox and its affiliates as well as other broadcast networks who cut similar deals. The networks want a portion of the money their affiliate stations get from cable and satellite operators in so-called retransmission consent fees. Affiliates might be less willing to play ball on that if their networks are also doing deals that could hamper their efforts to get paid from distributors.
-- Joe Flint