FCC Holds Off Acting on Carriage Disputes as Talks Go On

Mediacom and Sinclair seemed closer to settling their impasse than Fox and Time Warner Cable. Mediacom and Sinclair executives said they're both open to striking a short-term interim deal to avert a cutoff to 700,000 subscribers in 15 markets of cable access to 24 of the broadcaster’s TV stations (CD Dec 30 p1). Fox seemed to be preparing to block carriage of stations in New York, Los Angeles and other markets where Time Warner Cable has several million subscribers unless the two sides can compromise on cash for carriage, broadcast lawyers said.

Sen. John Kerry, D-Mass., late Wednesday asked the FCC to intervene by mandating continued carriage and arbitration if Fox decides to withdraw programming from 4 million Time Warner Cable subscribers. Chase Carey, president of Fox parent News Corp., on Wednesday told Kerry that he didn’t want to enter arbitration, something Time Warner CEO Glenn Britt has said he’s open to. A Fox spokesman declined to comment on Kerry’s letter. Time Warner Cable hopes “Fox will keep their programming on while we continue to negotiate,” a spokeswoman for the cable company said. No member of Congress appeared to have taken the level of interest of Kerry in the Fox-Time Warner Cable dispute, FCC officials said.

With no complaint before the agency in that matter, it would be harder for the regulator to act to order carriage starting on New Year’s Day, commission officials said. If Genachowski decided to act, he'd likely ask the Media Bureau to promulgate an emergency interim carriage order, they said. The same holds true for the Mediacom-Sinclair dispute, which had a ready vehicle for the regulator to act because the cable operator filed a complaint against the broadcaster, they said. A bureau spokeswoman had no comment by our deadline.

Genachowski’s office and the bureau continued to keep tabs on carriage talks between the two sets of companies and to inform others at the commission, FCC officials said. With FCC members out of the office, it would be logistically easier for Genachowski to resolve any carriage dispute if he decided to act by bureau action, they said. Both Kerry and Sen. Charles Grassley, R-Iowa, have taken an interest in the Mediacom-Sinclair dispute, FCC officials said.

“I fear that the looming deadline and the potential lack of progress” in that dispute “might be harmful to consumers,” Kerry wrote Mediacom CEO Rocco Commisso and Sinclair CEO David Smith late Wednesday. “If an agreement is not reached, I suggest that Sinclair allow Mediacom the ability to continue transmitting into the New Year either under the current terms and conditions or under terms and conditions that will retroactively be applied once an agreement is reached.”

Sinclair General Counsel Barry Faber said the company offered an eight-day extension of carriage to Mediacom. The broadcaster was “awaiting their response,” he told us. Mediacom is “certainly open to an extension,” Legal and Public Affairs Vice President Thomas Larsen said. “Obviously, that would give us more time to get a deal done.” Sinclair’s offer late Wednesday night was “the first tentative indication that they might consider a very short- term extension of our agreement,” Commisso wrote Kerry on Thursday.

At least one News Corp.-owned Fox affiliate is buying airtime on nearby stations in the Time Warner Cable market to run ads if carriage is cut off, a broadcast lawyer said. That would let the Fox station tell viewers in the market about why carriage was cut off, the lawyer said. Such a move may have been a prelude to an actual carriage cutoff, said several industry lawyers not involved in the contract talks.

“Fox probably takes some heat politically, but most consumers blame” the cable operator in such cases, said a lawyer who represents TV clients. “For News Corp. this is about restoring the health of a unique type of asset -- the broadcast network-station model -- in a distribution world that is increasingly commoditized.” That’s part of News Corp. Chairman Rupert Murdoch’s response to the same business factors behind Comcast’s deal to buy a controlling stake in NBC Universal, the lawyer added. “If he can put some juice back in the broadcast platform, well, there are only four of them with scale and his is No. 1.”

News Corp. and Sinclair’s reluctance to sign a new carriage deal on terms that don’t appeal to them in the face of pressure from the FCC and Congress to do so highlights the broadcast industry’s desire to be more highly paid by subscription-video providers for their signals, four TV industry lawyers said. “All my broadcast clients are interested in maximizing the value of their retransmission rights,” said lawyer Robert Rini of Rini Coran. “It’s an uphill battle to recapture the true value associated with their programming. And to the extent to which there are temporary disruptions in providing their signal to cable and others, then consumers can find other ways” to get TV, including over-the-air digital broadcasts, he added.

“I think this offer of arbitration by Time Warner is simply trying to appeal to the politicians at the FCC and in Congress,” said Frank Jazzo of Fletcher Heald. “This is the scheme [Congress] wanted and now they're getting cold feet when viewers may have programming pulled because of the bargaining.” He thinks “Fox is going to hold tight.” Peter Tannenwald of the same law firm said legislators “seemed happy when not much money was changing hands, because the cable operators had the upper bargaining hand.” Now that that has changed, he added, “everyone is howling. The system seems to be working exactly as Congress specified in the statute.”