FCC Gets an Earful From Fox and Cablevision - TvTechnology

FCC Gets an Earful From Fox and Cablevision

Fox: Commission cannot force arbitration
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WASHINGTON: William Lake opened a can of worms last week when he asked the chieftains of Cablevision and Fox to ’splain their ongoing retransmission stand-off. Fox yanked three of its stations--WNYW-TV, WTXF-TV and WWOR-TV--from Cablevision systems Oct. 15. Lake, head of the Federal Communications Commission’s Media Bureau, asked for evidence or otherwise of “good-faith” negotiations between the two, which remained intransigent on the eve of the World Series.

Michael Hopkins of Fox delivered an eight-page letter to Lake, detailing negotiations between the two since September of 2009. Hopkins said Cablevision has been getting the TV station signals for free, and Fox started angling for compensation last year. He said Cablevision execs asked that a market value be established, so Fox did a deal with Time Warner Cable and returned to Cablevision with those terms. A bevy of counter-proposals ensued--none of them to the satisfaction of both parties.

“Based on established rates for cable programming services that do not approach the performance of the Fox Stations, such as the reported $3.40 Cablevision charged other [multichannel video providers] for MSG and MSG Plus in 2009, it would be reasonable for us to seek a rate between $5 and $6,” Hopkins said, referring to a monthly, per-subscriber fee. He then said Fox low-balled that, but Cablevision said no dice.

Cablevision in turn said that as long as it was picking up the station signals via fiber feed, it would consider that authorization to carry them. Fox then said no dice.

Cablevision’s Mac Budill shot Lake a 17-pager, saying Fox hadn’t negotiated in good faith because it brought a “take it or leave it” offer based on the Time Warner “most favored nation” rate. An MFN clause would mean Fox would have to drop Time Warner’s rate if Cablevision landed a lower one. Budill said the MFN was a violation of the good-faith rules.

Budill also said Fox deliberately timed the black out to coincide with the World Series. The first game of the series, carried on the Fox broadcast network, commences tomorrow night with the Texas Rangers taking on the San Francisco Giants. He further charged Fox with abusing its broadcast licenses with “one of its kind” FCC waivers allowing ownership of multiple TV stations in a single market.

“News Corp. is attempting to leverage its unprecedented government-enabled media consolidation to force Cablevision to accept unreasonable fee demands,” Budill said.

The upshot of Budill’s letter was, Cablevision good, Fox bad, FCC must intervene by compelling binding arbitration. Fox's Hopkins countered with a second letter saying the FCC had had no authority to do so. Cablevision’s Budill came back with an offer to “engage immediately in FCC-supervised arbitration, or whatever means of outside intervention the commission believes would be most productive.”

Dirt between the two continued to fly in the media over a taped conversation between a Cablevision rep and a subscriber who happened to be a Fox employee. The New York Daily News reported that the rep described how to find the World Series online at Web sites that don’t have the rights to rebroadcast the games. The Fox employee recorded the phone call.
-- Deborah D. McAdams