UPDATE 2-Fox, Time Warner Cable reach deal to avoid blackout

Fri Jan 1, 2010 8:34pm EST

* Fox, Time Warner Cable ink "comprehensive" deal

* News Corp says deal recognizes value of programming

* Time Warner Cable CEO calls it a "reasonable deal"

* Cablevision says Scripps pulls Food Network, HGTV

(Recasts, updates throughout with agreement, CEO comments)

By Yinka Adegoke

NEW YORK, Jan 1 (Reuters) - Time Warner Cable (TWC.N) on Friday reached a deal to keep carrying Fox Networks programming after the companies negotiated through New Year's Day to avoid a blackout of TV shows like "The Simpsons" and college and NFL football games in 13 million U.S. homes.

The No. 2 U.S. cable carrier and Fox, a News Corp (NWSA.O) unit, announced the deal after an 11th-hour contract extension following months of negotiations that failed to produce a deal ahead of a midnight deadline.

Terms were not disclosed in a joint statement announcing the deal, and neither side would share details.

The dispute had focused on how much Time Warner Cable should pay for the right to deliver the Fox network, which is broadcast for free over public airwaves, to its cable subscribers in big cities like New York and Los Angeles.

News Corp, controlled by media mogul Rupert Murdoch, had been targeting around $1 a month per subscriber, a sum Time Warner Cable had called "unreasonable". Time Warner Cable did not say what it had offered, but privately, executives had pointed to deals with smaller broadcasters for around 20-25 cents a subscriber.

In a short joint statement News Corp deputy chairman Chase Carey described the new agreement as "fair" and said it "recognizes the value of our programming".

Time Warner Cable Chief Executive Glenn Britt described the new contract as a "reasonable deal".

Time Warner Cable was also negotiating on behalf of privately held cable company Bright House Networks, which is covered by the deal.

Both companies had waged aggressive marketing campaigns seeking support from the affected subscribers, but neither side was well-positioned for a long standoff.

Time Warner Cable faces stiff competition for video customers from satellite providers and phone companies, and would have been reluctant to lose popular shows like "American Idol" which returns to Fox on Jan 12.

But Fox risked a loss in advertising revenue if more than 13 million homes were not able to see its shows.

Meanwhile, the prospect of sports fans being unable to watch college and NFL football games on Fox's free-to-air broadcast has attracted attention from the U.S. Federal Communications Commission Chairman Julian Genachowski and members of the U.S. Congress.

OTHER CABLE DISPUTES

Earlier on Friday, Time Warner Cable agreed to a short extension of its existing contract with Scripps Networks Interactive's (SNI.N) Food Network.

But another cable operator, Cablevision Systems Corp (CVC.N), with 3 million subscribers in the New York area, said it had been unable to reach a new carriage agreement with Scripps and dropped both Food Network and HGTV, the home and garden programmer.

Cablevision said in a statement it had "no expectations" of carrying Scripps programming again.

The last-minute negotiations over how much cable operators pay networks to distribute their programming are often contentious. In 2008, Time Warner Cable went to the wire with Viacom Inc VIAb.N on New Year's eve in a similar dispute.

In the last 12 months talks between cable operators and program providers have become even more tense. Programmers have been seeking better affiliate fees as they have seen advertising revenue hurt by the U.S. economic downturn and remain uncertain about the future of TV advertising as more marketers turn to the Web.

(Reporting by Yinka Adegoke; Editing by David Gregorio)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.