Rupert Murdoch's News Corp. says it will do the deed at the end of the week unless Time Warner Cable agrees to pay Fox's 27-owned stations (including L.A.'s Channel 11) sizable fees of about $1 per subscriber. The prospect of no NFL games, no "American Idol," - in short, no nothing - could finally be getting to Time Warner. Dow Jones, quoting sources, reports that the cable giant is willing to fork over some sort of subscriber fee. But it sounds like they're still quite a ways apart: the DJ story says Time Warner is offering about 20 cents per subscriber.
The two sides are likely to sit down for face-to-face negotiations in coming days, with the possibility of Time Warner Cable negotiators flying to Los Angeles to hunker down with their News Corp. counterparts, according to people familiar with the matter. "Negotiations are ongoing, but Fox's current demands are unreasonable and excessive, especially in this economic climate," said Maureen Huff, a spokeswoman with Time Warner Cable.
Some backstory: Up until recently the networks basically gave away their programming to cable companies, satisfied with a prime spot on the cable systems. But with network revenues in the toilet, Fox, CBS and the others consider cable systems to be a potentially important revenue source. CBS is already collecting, though not nearly as much as what News Corp. is asking for. From the NYT:
The negotiations pit Glenn A. Britt, the chief executive of Time Warner Cable, against Chase Carey, the new president and chief operating officer of the News Corporation. Mr. Carey has experience on the other end of the table: he ran DirecTV, the satellite distributor, until last June. He has said publicly that Fox is worth $5 a month, given its sports programming and prime-time hits. That would make Fox even more valuable than ESPN, the most expensive cable channel, which earns about $4 for each subscriber. "We realize this is going to be a tough challenge," Rupert Murdoch, the chairman of the News Corporation, told investors two months ago, "but we're determined to take a leadership position in creating an economic template for the future."
Time Warner, which essentially controls the L.A. market, has been running ads to prepare viewers for the loss of football, "American Idol" and all the other programming. But the uproar is likely to be huge. Sports nuts, in particular, will go crazy because the NFL playoffs are just around the corner. All of which would seem to favor News Corp., though keep in mind how determined Time Warner has been in blocking the NFL channel from its cable lineup. If Fox receives a fee, it will no doubt lead the way for the other networks - and that, in turn, will no doubt lead the way for higher cable fees. So in the end, we'll end up paying the bill anyway.