NEW YORK (Reuters) - Cablevision Systems Corp said on Monday it has provided U.S. regulators with “clear evidence” that Fox Networks’ parent News Corp had negotiated in bad faith, leaving more than 3 million homes blacked out to some of their favorite Fox shows and sports.
But Fox Networks hit back in an eight-page letter to the Federal Communications Commission, saying it has negotiated with Cablevision in “good faith” for over a year laying out dates, names of executives and numerous meetings.
It also said the cable operator is punishing subscribers in a “cynical political strategy.” Fox declined to describe any conduct by Cablevision as bad faith and pressed for Cablevision to return to talks.
The FCC had asked both companies to provide evidence that the negotiations are being conducted in “good faith” even as Fox stations remained off the cable systems of the New York company for the tenth day. The two companies have not been in negotiating talks since Thursday, according to people close to the companies.
If the FCC believes there is evidence of bad faith negotiations it could be forced to intervene.
In its response, Cablevision urged the FCC in a 17-page document to assert its authority to immediately restore the broadcast stations and order the companies to agree to binding arbitration.
“News Corp never engaged in real negotiations; they only made a “take it or leave it” proposal for Fox 5, and they timed the Fox blackout to leverage major national sporting events to force Cablevision to accept unreasonable demands,” said Cablevision spokesman Charles Schueler in a statement.
Cablevision, which is controlled by the Dolan family, is fighting against programing fee increases as well as new fees from program makers. It says Fox is seeking around $150 million a year for its channels, up from about $70 million now.
It claimed in its letter to the FCC that Fox had refused to lower its demands because Fox had previously agreed a “most favored nation” deal with larger cable operator Time Warner Cable Inc in January to carry Fox 5. This would mean if Cablevision agreed a deal lower than Time Warner Cable, under the January agreement Fox would be forced to charge Time Warner Cable less for carriage.
Fox described Cablevision’s call for arbitration as a ploy to secure an advantage through government intervention.
“Fox has negotiated in good faith,” said Fox spokesman Scott Grogin. “We have never made any ‘take it or leave it’ demands, nor are we asking for $150 million in fees.”
In particular Cablevision and other pay-TV operators have been reluctant to pay what they believe are high fees for the right to carry free-to-air broadcast signals of local stations such as Fox, ABC, NBC and CBS.
Fox, encouraged by its owner News Corp, is pushing very hard to get paid top dollar for its network which features very popular shows such as “American Idol,” “Glee,” “House” and key sports programs like the NFL and Major League Baseball’s World Series championship.
It is a battle which is likely to test the loyalty of Cablevision subscribers who have been unable to watch some of their favorite shows for 10 days, with no return in sight. Fox has advised these subscribers to switch to rivals like DirecTV Group and Verizon Communications.
Even if these customers switched there is no guarantee the same issue would not arise with these other pay-TV companies later down the road. For example, Fox is also in a dispute with Dish Network Corp over programing fees. Dish customers could very well lose Fox on November 1, just a month after they lost Fox’s regional sports networks.
Reporting by Yinka Adegoke; Editing by Richard Chang, Bernard Orr