Fox-Cablevision Standoff Continues

NEW YORK ( TheStreet) -- The war between News Corporation's ( NWSA) Fox network and Cablevision ( CVC) continues, and the companies don't seem close to an agreement.

When Fox and Cablevision's agreement expired on October 15, Fox pulled its programming. Fox did the same several weeks earlier, removing its channels from the Dish Network ( DISH) after their agreement expired on Oct. 1.

>>Fox Removes Channels From Dish

This left more than 3 million frustrated Cablevision customers in New York without Fox Sunday, therefore without the New York Giants football games as well as the National League Championship Series.

"In an effort to avoid this very situation, we started this process in May and made numerous reasonable proposals to Cablevision," Fox networks affiliate sales and marketing president Mike Hopkins said in an October 16 press release. "However, we remain far apart and Cablevision has made it clear that they do not share our view regarding the value of Fox's networks."

Hopkins said that the two companies have been attempting to negotiate a deal but formally stopped trying, and officially declared an "impasse."

"We remain willing to negotiate and hope that future talks ultimately will be productive, but as of now Cablevision has declined to counter our most recent proposal," Hopkins said. "Regrettably, their efforts were focused more on calls for government intervention than constructive negotiations."

Federal Communications Committee chairman Julius Genachowski released a statement on Tuesday in which he expressed his disappointment in both companies.

"I am deeply troubled that Cablevision and Fox are spending more time attacking each other through ads and lobbyists than sitting down at the negotiating table," Genachowski said. "The time for petty gamesmanship is over."

With pressure mounting, many feel that it's time for the FCC to step in and take action.

"The FCC's role has been limited," FCC Commissioner Michael Copps said on Wednesday. "But the FCC is a consumer protection agency and, if the Fox-Cablevision dispute proves anything, it is that consumers are clearly not being protected. I believe the Commission should take a very serious look at whether 'good faith' negotiations are indeed occurring. What, indeed, does 'good faith' mean in the dog- eat-dog world of big media? If such talks are not taking place, we should move promptly to protect consumers."

It's not clear what the impact will be on either party. "Retransmission consent battles will pose headline risk for cable and satellite companies, but quantifying the impact to the bottom line is not so straightforward," Bernstein analyst Craig Moffett said in May when the issue surfaced.

He explained that smaller regional distributors, such as Cablevision, will most likely have a hard time negotiating with larger, more geographically diversified broadcasters such as Comcast and Time Warner Cable.

He projects that broadcast networks will be able to charge affiliates a fee of 70 cents per subscriber which according to Moffett, would boost broadcasters' earnings in the medium term.

"In the end, the providers will most likely pass on the incremental fees to their subscribers," Moffett said. "So margins will look pressured, but gross profit per subscriber should remain mostly unaffected."

Analysts believe a resolution to the standoff may be forced by the approachign World Series kickoff.

"Federal law allows the two sides to negotiate as long as both sides show good faith," analsyt Jake Newman, said in Credit Sight's recent analysis of the ordeal. "The FCC is reluctant to get involved because there are dozens of commercial negotiations between cable operators and programmers every year ... If the dispute isn't resolved before the start of the World Series, the FCC could seek a means to bring both sides in and require that they show they are bargaining in good faith, we suspect."

-- Written by Theresa McCabe in Boston.

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