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News Corp., Cablevision Negotiations Resume Today After Impasse

News Corp. and Cablevision Systems Corp. ended negotiations over program fees again without reaching an agreement to restore the Fox broadcast signal to Cablevision’s 3 million customers in New York and Philadelphia.

The blackout affects WNYW Channel 5 and WWOR 9 in New York, WTXF 29 in Philadelphia, Fox Business, Nat Geo Wild and Fox Deportes. Cablevision customers were blocked from watching yesterday’s New York Giants-Detroit Lions football game and Philadelphia Phillies-San Francisco Giants baseball playoff game. News Corp. urged Cablevision customers to switch to another pay-TV provider.

“Monday morning the parties talked again briefly. Unfortunately, no significant progress was made,” Scott Grogin, a Fox spokesman, said in an e-mail statement today. Negotiations will resume tomorrow, he said.

Cablevision said in a statement Oct. 16 that Fox failed to negotiate in good faith and called the decision to remove the programming “a black eye for broadcast television in America.”

“The longer this shameful News Corp. blackout of the NFL and Major League Baseball continues, the more obvious it becomes to everyone, including political leaders of both parties, that binding arbitration is the fastest and fairest way” to end the stalemate, Cablevision Executive Vice President Charles Schueler said in a statement yesterday.

Higher Fees

Broadcasters such as Fox are trying to extract fees from pay-TV operators for signals that were once free. Pay-TV operators are resisting the charges, which are typically passed on to customers, arguing the channels are free over the public airwaves and on the Web. The dispute between Cablevision and News Corp. doesn’t affect Fox News, FX and local sports channels.

News Corp. fell 16 cents to $14.02 at 4 p.m. New York time in Nasdaq Stock Market trading. Cablevision rose 1 cent to $26.67 in New York Stock Market composite trading.

“I remain hopeful that these two companies will do what is in the best interest of consumers and find a way quickly to resolve their differences,” U.S. Federal Communications Commission Chairman Julius Genachowski said in a statement.

Cablevision, based in Bethpage, New York, said News Corp. wants more than $150 million a year in so-called retransmission fees for the Fox stations and some cable channels, up from $70 million a year it already pays the media company. Fox said the $150 million figure isn’t accurate and that it wants “fair compensation.”

Laser Focus

“Fox is laser-focused on capturing significant retrans dollars and we see no reason why they would give in,” Rich Greenfield, an analyst at BTIG LLC, said in an Oct. 15 note. The fact that Fox holds the rights to air local sports programming, like the Giants and New York Yankees games, gives them leverage over Cablevision, he said.

This year, squabbles between channel owners and distributors over fees have led to the most TV blackouts in at least a decade.

In March, Cablevision subscribers lost access to Walt Disney Co.’s ABC network and the start of the annual Oscars telecast before a deal was struck. The cable operator also lost the Food Network and HGTV for about two weeks before a deal was made and the channels restored.

Cablevision on Oct. 14 said it would accept binding arbitration with Fox that would continue the negotiations without the threat of a blackout. U.S. Representatives Steve Israel, a New York Democrat, and Peter King, a New York Republican, sought the commitment in a letter to both companies.

Kerry Comments

Senator John Kerry, a Massachusetts Democrat, chairman of a subcommittee overseeing communications, technology and the Internet, said he plans to introduce legislation keeping such disputes from taking channels off the air until the FCC is able to decide on the need for arbitration.

“This is the best way to empower consumers, increase transparency, and preserve the free market,” Kerry said in an e-mailed statement.

Fox rejected that approach, saying arbitration would “reward Cablevision for refusing to negotiate fairly,” and would “ensure that more unnecessary disputes arise in the future.” Fox said direct negotiation was the only way to resolve the issue.

Separately, Dish Network Corp., based in Englewood, Colorado, is battling with News Corp. over costs to carry Fox regional sports networks and two cable channels. Those networks went dark on the satellite operators’ system on Oct. 1 and remain off while the two parties negotiate. The dispute may intensify later this month when Dish’s contract to carry the Fox broadcast network, the home of “The Simpsons,” expires.

Fox Demands

Genachowski said at a news conference on Oct. 14 that the commission continues “to be concerned about the potential effect” these battles have on consumers, and that the FCC wants “greater information and notice to consumers” as these negotiations affect subscribers’ viewing options.

The FCC had urged Fox to extend the deadline to cut their signal through tomorrow and invited both to Washington for arbitration with a third party.

News Corp. was in a similar dispute with Time Warner Cable Inc., the nation’s second-largest cable operator, late last year. News Corp. sought $1 a month per subscriber for its Fox stations, people familiar with the matter said at the time.

The two sides reached a deal without any channels being pulled in a multiyear contract that climbs to 75 cents a subscriber, Greenfield said.

David Joyce, an analyst at Miller Tabak & Co. in New York, estimates News Corp. is seeking $62.6 million a year from Cablevision for its Fox broadcast channels.

The media company is also seeking $18.4 million a year for Fox Business, $14.7 million for Nat Geo Wild, and $2.3 million for Fox Deportes, Joyce wrote in an Oct. 13 report.

To contact the reporter on this story: Kelly Riddell in Washington at kriddell1@bloomberg.net.

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.

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