* Time Warner Cable, Fox deadlocked on retransmission fees
* Top Fox shows likely to go off at midnight
* Terms could set precedent for other broadcasters
By Yinka Adegoke
NEW YORK, Dec 31 About 13 million Time Warner
Cable Inc TWC.N subscribers will lose Fox programming at
midnight unless the cable service provider reaches a
last-minute deal to pay News Corp (NWSA.O) fees to broadcast
the network's shows.
Talks continued on Thursday, having heated up as the
deadline approached, but the two sides were deadlocked on some
key points, according to a person familiar with the
negotiations who spoke on condition of anonymity.
News Corp wants Time Warner Cable to pay $1 per subscriber
per month for the right to carry Fox Networks' free-to-air
broadcast shows such as "American Idol," "The Simpsons" and
"House," as well as sports programming like college and NFL
But Time Warner Cable has balked at the so-called
retransmission fee. Its executives privately point to deals
with smaller affiliate TV broadcasters at around 20-25 cents a
While $1 per subscriber does not sound like much, Time
Warner Cable is wary of setting a precedent. Besides Fox, the
other three major U.S. broadcast networks -- CBS Corp's (CBS.N)
CBS, Walt Disney Co's (DIS.N) ABC and General Electric Co's
(GE.N) NBC -- will all be pushing to be paid cash per
subscriber as their advertising-reliant business suffers.
CBS, the No. 1 U.S. broadcast network, has talked about
getting paid around 50 cents a subscriber.
If Time Warner Cable and News Corp do not reach a deal,
around 13 million cable subscribers could lose Fox programming
in cities like New York, Los Angeles, Dallas and Orlando.
The prospect of sports fans losing access to college
football games during the Bowl Championship Series prompted
U.S. Sen. John Kerry to intervene last week with a suggestion
of arbitration by U.S. regulators.
But News Corp turned down the proposal on Wednesday, saying
a deal needs to be hammered out at a bargaining table and not
in the hands of a third party. [ID:nN30231924]
News Corp Chief Operating Officer Chase Carey told staff on
Wednesday afternoon that it looked likely that Fox's channels
would go off the air on Time Warner Cable systems.
Broadcast TV networks have struggled with falling ratings
as viewers spend more time watching cable networks, or catching
shows on the Internet at sites like Hulu.com. Broadcasters also
say they are grappling with rising programming costs,
particularly with sports.
The broadcasters now want to rework their business model
to mimic that of cable networks, which earn revenue from both
advertising and affiliate fees paid by cable and satellite
Fox Networks Chief Executive Tony Vinciquerra told Reuters
on Tuesday that $1 a subscriber would be a "reasonable step" in
the right direction and predicted other broadcasters might
follow suit. [ID:nN29201947]
Fox's current dispute with Time Warner Cable also includes
negotiations over higher affiliate fees for several
entertainment and sports cable networks: FX, Speed, Fuel and
Fox Soccer Channel among them. The discussions do not include
Fox News and Fox Business.
Time Warner Cable, which split off from parent Time Warner
Inc (TWX.N) earlier this year, is also negotiating on behalf of
Bright House Networks.
(Reporting by Yinka Adegoke, editing by Tiffany Wu and Matthew