Fox nixes arbitration in retrans spat

FCC may intervene if Fox goes dark on TWC systems

The Fox/Time Warner carriage dispute will not go to a binding arbitration before the FCC.

TWC chairman and CEO Glenn Britt and News Corp. president Chase Carey each sent letters Wednesday to Sen. John Kerry, chairman of the Senate Commerce Subcommittee on Communication, Technology, and the Internet.

First, Britt agreed to the arbitration suggested by Kerry in his Dec 22 letter to the two media executives that urged them to find a way to keep Fox on TWC beyond Jan.1. But several hours later, Carey sent his own letter to Kerry, declining to participate in arbitration proceedings.

"We strongly believe this is an issue that needs to be settled at the bargaining table and that binding arbitration all too often looks to the past, not the future," he said. "When Congress enacted the 1992 Cable Act, it established a clear mechanism for programers and distributors to reach market-based agreements on the basis of direct negotiations. We respectfully believe these discussions do not belong in the hands of a third party."

In the letter, Carey also broadened the issue, stressing the importance of the establishing retransmission consent fees from cable providers for the survival of the broadcast networks, which so far have relied only on ad revenue.

"The truth is that the cable industry has benefited enormously from its ability to carry this valuable broadcast programming without paying carriage fees; this can no longer continue," he wrote. "We are simply seeking fair compensation for content that has helped fuel the ever-increasing profit margins of the cable industry. Our goal is to maintain a healthy and vibrant broadcast industry for all Americans."

Kerry responded to Carey Wednesday night, voicing disapproval that Carey's arbitration rejection letter didn't offer "alternative mechanisms for keeping the (Fox) signal on the air post contract expiration."

"If Fox believes that withdrawing programming from 4 million households is its best negotiating tactic, then I would ask the FCC to intervene and mandate continued carriage and arbitration," Kerry wrote.

A move by the FCC also ended TWC's 39-hour blackout of ABC in 2000.

Carey addressed the issue of keeping Fox on without a deal earlier Wednesday in a memo to News Corp. employees, in which he struck down Britt's proposal for an extension to the companies existing agreement beyond the Dec. 31 deadline.

Despite the verbal salvos, the two sides continue to negotiate in Los Angeles, with TWC's team led by exec vp and chief programming officer Melinda Witmer and News Corp.'s group headed by Mike Hopkins, president of affiliate sales and marketing for Fox Cable Networks.

However, the companies remain far apart as News Corp. is said to be holding firm to its demand for $1 per subscriber per month fee, while TWC's counter offers are believed to be under 50 cents.
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