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TagsBY LINDA MOSS
NEWJERSEYNEWSROOM.COM
Cablevision Monday asked federal regulators to restore three News Corp. TV stations to its lineup to avoid a blackout of the World Series in the tri-state area this week, and requested that both sides be ordered to submit to binding arbitration to resolve the dispute.
In turn, Rupert Murdoch's News Corp. told the Federal Communications Commission that it must be paid for carriage of its stations in order to have the money to acquire major sports events, provide popular entertainment programming such "Glee" and "House," and produce local news.
In their letters to the FCC, both Cablevision and News Corp. accused each other of failing to conduct their so-called retransmission-consent negotiations "in good faith," as required by federal law. The FCC's Media Bureau had ordered the cable operator and broadcaster to identify examples of "bad faith" on the part of their adversary by day's end Monday.
Some 3 million Cablevision customers, including more than 900,000 in New Jersey, have been without their News Corp. stations for more than a week, which is when the broadcaster yanked WNYW and WWOR in New York and WTXF in Philadelphia, as well as Fox Deportes, Nat Geo Wild and the Fox Business Channel. The dispute is over how much the cable company should pay to carry the stations.In its FCC letter, Cablevision maintained that News Corp. demanded a take-it-or-leave it rate for WNYW, claiming "it cannot show any flexibility in its demands for Fox 5 because it is bound by ‘Most Favored Nation' (MFN) clause based on a rate it claims Time Warner Cable agreed to pay in a much broader, national agreement."
Under Time Warner's MFN, if News Corp. charged Cablevision less that Time Warner for carrying WNYW, Time Warner would then be entitled to get that lower rate.
Cablevision also told the FCC that News Corp. deliberately timed the deadline to black out its three local stations to ensure that Cablevision customers would be denied access to major national sporting events including Major League Baseball playoffs and the World Series unless Cablevision accepted its "take it or leave it" demands.
Finally, Cablevision charged that News Corp. has abused the power it has achieved through special "one of its kind" FCC waivers that allow it to own multiple government broadcast licenses and newspapers in the New York market - namely WNYW, WWOR and the New York Post.
News Corp. is attempting to leverage its unprecedented government-enabled media consolidation to force Cablevision to accept unreasonable fee demands, the cable company charged.
"The FCC filing clearly demonstrates that News Corp. has acted in bad faith and outlines the FCC's authority to order binding arbitration and immediately end the Fox blackout of Cablevision customers," said Charles Schueler, Cablevision's executive vice president of communications.
Broadcasters under the law have the right to seek cash compensation for carriage of their TV stations, but most had not demanded payment until recently, with the downturn in advertising.
The media scene has changed, president of affiliate sales and marketing for Fox Networks Michael Hopkins said in his letter to the FCC.
"Today, the broadcast business is facing new challenges" and needs to crate a second revenue stream, according to Hopkins, namely money from companies like Cablevision.
Hopkins then outlined the many times that News Corp. had sent key executives from California to meet with Cablevision officials in New York. That included a trip last week by News Corp. president Chase Carey to personally meet with Cablevision CEO James Dolan to try to resolve their differences.
News Corp. also noted that Cablevision pays to carry cable networks with far less popular programming than stations such as WNYW.
"By any objective measure, the Fox stations provide more value to Cablevision's lineup than any cable network it distributes," Hopkins wrote. "The Fox network spends more on its entertainment and sports programming than virtually any cable network that Cablevision distributes. In fact, the Fox broadcast network will lose money this year on programming while the Fox television stations will make sharply reduced profits."
Hopkins pointed out that Cablevision charged cable companies $3.40 a month, per subscriber to carry two of the regional sports networks that it owns, MSG and MSG Plus. In theory, then, it would be reasonable to seek between $5 and $6 per subscriber for stations such as WNYW, according to Hopkins.
Binding arbitration is not a viable way to end the current stalemate, Hopkins told the FCC.
"An arbitrated result is not required to determine the fair market value of retransmission consent," Hopkins wrote. "An arbitrator will not have the knowledge of our business that would allow him or her to establish a price that would permit us to continue to provide the high quality, and very expensive, sports and entertainment content that we currently provide."
Cablevision said it Monday that it already pays News Corp. more than $70 million a year for its channels, and that News Corp. is demanding more than $150 million a year for the same exact programming.
News Corp. and Fox Monday issued a statement denying those claims.
"From the genesis of our talks with Cablevision, Fox has negotiated in good faith," the statement said. "We have never made any ‘take it or leave it' demands, nor are we asking for $150 million in fees. For Cablevision to still be making those claims is yet another example of their ploy to secure an advantage through government intervention. Fox once again calls on Cablevision to stop punishing their subscribers in service of a cynical political strategy and resume constructive negotiations."
