News Corp.'s Fox Network in Showdown With Affiliates Over Revenue Cut

Fox affiliate board chairman Brian Brady says: "They are prepared to destroy someone's business to make their point."

NEW YORK - Fox and its local TV stations are wrangling over how big a cut the affiliates should give Fox of the retransmission fees they get from cable and satellite TV operators, which carry their signals, the LA Times reported.

Fox gets retransmission consent fees for stations it  owns itself, such as KTTV in Los Angeles. But under the leadership of News Corp. president, COO and deputy chairman Chase Carey, the conglomerate has looked for new revenue streams, including at Fox. The company has argued that stations get viewers in large part due to attractive Fox network shows.

The Times said the network wants a four-year deal that would see stations in the top 125 markets pay fees starting at 25 cents per subscriber per month and rising to 50 cents at the end of the contract. Smaller market stations would have to make payments starting at 15 cents per subscriber per month, with an increase to 25 cents over time.

Since many TV stations on average get 20-25 cents per subscriber per month from pay TV distributors, the proposal is seen as aggressive.
Several owners of Fox affiliates balked at the amounts, according to the Times.

"Our proposal may not work for every company" and "if that should be the case, Fox will pursue different distribution channels," the paper cited from a Fox letter to affiliates. "We don't want that to sound like a threat, but it is a fact."

With dozen of station affiliate deals expiring the year, Fox has held talks with other outlets in various markets, according to the Times.

"They appear to have no regard for the value your station brings to the network...They are prepared to destroy someone's business to make their point," wrote Brian Brady, president and CEO of Northwest Broadcasting and chairman of the Fox affiliate board, to other Fox stations, the Times said.