Time Warner Cable, Fox resolve dispute

News Corp.`s Fox network and Time Warner Cable Inc. resolved a fee dispute that threatened to keep football bowl games and dramas such as "24" off the air in the cable operator`s two largest markets.

The two companies said in a statement that they agreed in principle on a distribution deal, without disclosing the terms. Fox had said it would pull programs if the two parties failed to reach an agreement by a Dec. 31 deadline, which was extended so talks could continue.

The accord allows the cable operator to keep broadcasting college and National Football League games, as well as programs such as "American Idol," the most-watched U.S. TV series. A blackout would have affected 3.9 million Time Warner Cable customers, including viewers in New York City and Los Angeles, which account for almost one-third of its subscribers.

"The media landscape is being reshaped by this deal," James Goss, an analyst at Barrington Research Associates in Chicago, said in an interview before the announcement. "All broadcasters will now try to get paid for their free over-the- air content." He had predicted a payment of at least 50 cents per subscriber per month with some concessions by Fox.



News Corp. originally asked Time Warner Cable to pay as much as $1 a month per subscriber for rights to Fox, home of "The Simpsons," two people with knowledge of the matter had said. Time Warner Cable favored about 20 cents, said one of the people, who had declined to be identified because the talks were private.



Reasonable deal



Time Warner Cable also was negotiating on behalf of Bright House Networks, the seventh-largest U.S. cable operator. The closely held company, with headquarters in Orlando and in Syracuse, New York, has more than 2 million subscribers, according to its website.

"We`re happy to have reached a reasonable deal with no disruption in programming for our customers," Time Warner Cable Chief Executive Officer Glenn Britt said in the statement. News Corp. Chief Operating Officer Chase Carey said the agreement was fair and "recognizes the value of our programming."

Time Warner Cable dropped 44 cents, or 1.1 percent, to $41.39 on Dec. 31 in New York Stock Exchange composite trading. New York-based News Corp., controlled by Rupert Murdoch, fell 22 cents to $13.69 on the Nasdaq Stock Market.

For about two decades, the owners of networks gave away retransmission rights for their stations, relying on higher programming fees for their cable networks or better channel positioning to help drive sales.



Controlling costs



Time Warner Cable has tried to stem costs by resisting retransmission demands. In national campaigns, Britt had asked subscribers to pressure programmers to keep costs low. Britt argued that higher fees ultimately are billed to the customer and that network programming is free on the Internet and over the air.

"I applaud the parties for putting consumer interests first by reaching a new carriage contract, and for staying at the table until a deal was cut," Massachusetts Senator John Kerry said in an e-mailed statement. Kerry had threatened to ask the Federal Communications Commission to intervene if the two failed to reach an agreement. FCC Chairman Julius Genachowski, who had urged the companies to strike a deal, also congratulated them on resolving their dispute.

New York-based Time Warner Cable, the second-largest cable operator, has about 13 million video subscribers. Comcast Corp. is the largest cable company.



Going black



Programming cost disputes aren`t new to Time Warner Cable. A similar battle in 2008 with Viacom Inc. was resolved before channels like MTV Network went black. In 2000, the cable operator pulled ABC-owned stations briefly from its lineup during a dispute with Walt Disney Co. over carriage of its cable networks.

Cablevision Systems Corp., a New York-area cable provider, said Jan. 1 it`s no longer carrying The Food Channel and HGTV, two channels operated by Scripps Networks Interactive Inc. The two failed to forge a new fee agreement to extend carriage after their contract expired on Dec. 31.

Retransmission costs will continue to climb, according to research firm SNL Kagan. Total retransmission fees will increase to $1.3 billion by 2012, compared with $739 million in 2009, according to the Charlottesville, Virginia-based researcher. (Bloomberg)