Fox, Time Warner in transmission standoff
Negotiations could result in feed getting cut off Jan. 1Update: Time Warner Cable agrees to arbitration
The No. 1 television network is locked into a fierce fight with Time Warner Cable over retransmission consent for its own and operated stations, a battle that threatens to deprive millions of viewers of the top series on television.
The ongoing tense negotiations between ratings leader Fox and TWC that could result in some 5.5 million TWC subscribers getting their Fox feed cut off Jan. 1, 12 days before the season premiere of "American Idol," bear eerie similarities to the standoff between TWC and ABC 10 years ago.
Back then, ABC too was the top network. After several contract extensions, at midnight on April 30, 2000, TWC dropped ABC in 3.5 million homes and with it, the biggest show on TV, "Who Wants to be a Millionaire."
In another parallel, both battles follow the announcement of a mega media merger that might have influenced them.
The TWC/Disney standoff happened shortly after the AOL/Time Warner deal was announced and Disney's tough stance reflected in part concerns about the impact of the combined AOL/Time Warner on rival TV networks, including possibly limiting their access to high-speed Internet.
This time around, Fox and TWC are squabbling weeks after the announcement of the Comcast/NBC Universal merger that would have the biggest U.S. cable provider owning a Big Four broadcast net and its stations, changing the dynamics of future retransmission consent fights.
And there will be more of them.
"Retransmission consent will be the next big battleground," a top TV studio executive said the week of the Comcast/NBC Uni announcement.
With profit margins at the broadcast networks shrinking along with the ratings, they look more and more beyond the ad-supported model to the cable nets which use a dual revenue stream from advertisement as well as fees from cable and satellite providers.
By law cablers and satcasters need the big broadcast TV stations' written consent to retransmit their signal. That was once a formality as stations gave the permission away for free, happy with the extra distribution as they were awash in the windfall of ad money.
But now that ads for stations have become scarce, the networks would be using their signature on the retransmission consent as a bargaining chip to get money from the cable and satellite companies, just like their cable brethren do.
Since Fox is the current ratings leader in the key 18-49 demographic, it is only appropriate that the network would lead the fight for sizable retransmission fees.
But the very public face-off, complete with Web sites (KeepFoxOn.com and RollOverOrGetTough.com) and attack TV ads, also underscores the strategic differences in pursuing retransmission money.
CBS, which has been a pioneer in the arena, has done its negotiations quietly, targeting smaller gains. CBS Corp. CEO Les Moonves has said that he expects the network to take in retrans fees of about 50 cents per subscriber per month.
In contrast, Fox is asking for $1 per subscriber, on par with what leading cable network TNT commands, and has been vocal about sticking with its asking price.
The other broadcast networks are certainly watching to see if Fox will get what it wants or will settle for the 50 cent-60 cent figure recently predicted by Pali Research media analyst Richard Greenfield.
The outcome will determine which way the rest of the broadcast pack will take. Comcast-owned NBC, for example, may carve out is own path as the network is expected to have leverage in negotiating with other cablers and satcasters.
Of course, it doesn't help that Fox is up against TWC, which has been particularly tough in its renegotiations. In addition to the battle with Disney, which led to a 39-hour blackout of ABC, the cable provider was about to pull Viacom's nets off the air on New Year's Eve last year before a last-minute pact was reached.
And while the two sides continue to negotiate, with two days to go before the Dec. 31 midnight deadline, similar dramatic down-to-the-wire scenario for Fox and TWC appears more and more likely.
And that could make for a sour Sugar Bowl for millions of football fans who tune in to Fox on New Year's Day to possibly find a message similar to the one that greeted ABC viewers on TWC systems 10 years ago, "Disney has taken ABC away from you."