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TV Issues Persist After 2-week Fox-Cablevision Blackout


Cablevision headquarters in Bethpage

With the two-week-long October blackouts of Fox 5 and My 9 soundly in the past, Cablevision subscribers may have mothballed their television antennae, but some were not so quick to tune out unanswered questions left in the wake of this clash of the TV titans.


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Fox’s parent company, News Corp., says it struggles with why the negotiations—the terms of which were not released—were so much more difficult here than they have been with other pay-TV companies. Bethpage-based Cablevision Systems Corp., the nation’s fifth-largest cable company, wonders what could have been if there were federal intervention, as they repeatedly had called for. Local elected officials and advocates are curious what can be done to prevent another blackout—Cablevision’s 3 million subscribers have suffered through three this year. And some viewers demand to know if they’re going to be repaid for the programming they missed, or if legal channels will be required for them to be made whole.

“Once again, Long Island consumers got caught in the middle of a battle between media giants with no one to represent [their] interests,” Suffolk County Legis. William Lindsay (D-Holbrook) wrote last month in a letter urging LI’s congressional delegation to take action. “Who paid the price? Nobody but the consumer.”

At the center of the debate is the Federal Communications Commission, which gave little more than a stern finger wagging to Cablevision and News Corp. execs. Amid the blackout—which deprived John Q. Viewer of part of the World Series, the Major League Baseball playoffs and other programming—the agency demanded documentation from both sides proving they were negotiating in good faith, but no action was taken.

The blackout included the broadcast network Fox 29 in Philadelphia, as well as cable networks Fox Business Network, National Geographic Wild and Fox Deportes. Cablevision conceded Oct. 30, the day after Dish Network, another holdout, cut a deal with News Corp.

Financial analysts said News Corp. had the upper hand from the start. “Fox is too large, Cablevision is too small, and Fox’s sports programming is too indispensable,” Craig Moffett of Sanford C. Bernstein, a Wall Street investment research firm, told Adweek. “Once Dish had settled with Fox…the probability of regulatory intervention dropped dramatically, and Cablevision was out of options.”

Execs for News Corp., Cablevision and other media companies later pleaded their cases before a Nov. 17 Senate Commerce Committee hearing called by U.S. Sen. John Kerry (D-Mass.), who is drafting legislation expected to be introduced early next year that would give the FCC more authority to stave off TV blackouts during negotiations for so-called retransmission consent, in which cable operators pay broadcast networks for the rights to carry their station.

Kerry, chairman of the Commerce Subcommittee on Communications, Technology, and the Internet, plans to propose a bill intended to prevent broadcasters from pulling a signal until the parties have gone through a process with the FCC to ensure good faith negotiation and consider arbitration as an option.

“It’s not our job to take sides, but it is our responsibility to help find a better way forward,” he said.

The Cablevision-Fox feud is being characterized as the nation’s highest-profile  dispute since broadcasters began asking cable companies for compensation to make up for historic advertising revenue losses. Kerry acknowledged that it is difficult for the law to keep up with the ever-changing industry, but reminded the panel that “there is a public interest at the table.”

Broadcast TV, of course, is extended government benefits such as free use of airwaves—not that anyone uses those rabbit ears except in the case of just such a blackout. 

On the local level, some of LI’s 13 townships have been considering adding consumer protection language into Cablevision franchise agreements. Riverhead Town Supervisor Sean Walters said he favors penalizing Cablevision for blackouts. But a Hempstead town spokeswoman notes that the New York State Public Service Commission, which signs off on cable franchise agreements, advised town officials that townships do not have jurisdiction.

A PSC spokesman confirms that the agency told the town that it is a federal issue. Meanwhile, it will be some time before Congress considers a bill to give the FCC more authority in preventing blackouts and protecting consumers. Those unwilling to wait for politicians to fix the problem are taking Cablevision to court in an attempt to extract refunds from the company.

Two Long Island men who claim they were denied refunds during the blackout are plaintiffs in a class-action lawsuit filed in October in New York State Supreme Court in Mineola, while three residents from across the Tri-State area made similar claims in a class-action lawsuit seeking $1.4 billion in federal court in Brooklyn.

“Cablevision billed for a service that they didn’t deliver,” Manhattan-based attorney Michael Rakower tells the Press. He represents William Canfield of East Setauket and Salvatore Galdolfo of Oyster Bay, who are representative of more than 3 million subscribers in the state suit. “Our clients paid for a service that they didn’t receive.”

Both Rakower and Chappaqua-based attorney Todd J. Krouner, who represents the three plaintiffs in the federal lawsuit, continue to press forward even though the blackouts are over because they say their clients are still owed refunds.

Cablevision had yet to make its response to either suit as of press time. The company also denied Krouner’s allegation that it offered $20 monthly rebates for up to 24 months to subscribers who threatened to cancel their service, but the attorney says he has documentation to prove it.

The feud’s financial impact on both Fox and Cablevision remains to be seen.

Chase Carey, chief operating officer and deputy chairman of News Corp., said during the Senate committee hearing that the company will have to reimburse advertisers for TV time lost during the dispute, but a Fox spokesman declined to talk numbers.

In Cablevision’s third-quarter report, which ended prior to the blackout, the company did not get into the details of the dispute. Media analysts estimated the company lost about 8,000 subscribers during the blackout—500 per day.

“We’ve been through a lot of programming issues through the years, and our margins have been solid,” Tom Rutledge, chief operating officer of Cablevision, said during a conference call last month. The company reported a 5-percent increase in revenue this year, for a total of $1.8 billion, but it passed on a nearly 3-percent rate hike to subscribers it attributed to the new Fox fee.

“At the end of the day, I can’t feel bad for Fox or Cablevision, it’s the ones inside the house that deserve the attention here,” says Jaci Clement, executive director of the Bethpage-based Fair Media Council, LI’s media watchdog, who also has been urging lawmakers to take action. “Just because people got their cable channels back doesn’t mean the problem has been solved.”

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