Fox News commentator Bill O'ReillyJeff Christensen/The Associated Press
For some baseball fans in Philadelphia, it has been a very long week. Not only were they forced to watch as their team's chances at making the World Series dwindled, but Phillies hopefuls who get their TV service through Cablevision Systems Corp. were actually forced not to watch.
Thanks to a dispute between Cablevision and News Corp., which owns the Fox network, roughly three million subscribers to the cable service in the New York area, New Jersey, Connecticut and some in Philadelphia saw their Fox signal go dark just after midnight Saturday morning.
That's when an agreement about how much Cablevision should pay for the channel's TV signal expired. Such retransmission agreements have been the source of a number of disputes in the U.S. between cable and satellite companies and the networks that feed them content.
The argument generally goes like this: Broadcast networks - the kind that used to be free to watch with a pair of rabbit ears - have argued that cable and satellite companies should have to pay to re-transmit those signals to their subscribers, since it makes their pricey TV packages more attractive. Distributors already pay fees to cable channels such as CNN or ESPN. In the U.S., networks have also had the right to demand fees since 1992. But those distributors say broadcasters are asking too high a price and holding viewers hostage by threatening to pull their signals altogether.
"They don't want to pay what we're asking," said a Fox source who spoke on condition of anonymity. "We believe they're refusing to negotiate in good faith … Any amount that we are asking is in multiples of zero. At this point it's zero."
The debate is similar to the one that has raged in the Canadian TV industry in the past few years, known as fee for carriage or value for signal. Last March, the Canadian Radio-Television and Telecommunications Commission ruled that broadcasters could choose to negotiate to be paid for their signals, and put the matter before the Federal Court of Appeal to make sure it had the jurisdiction to call for those negotiations. A decision is expected within the next month.
But the question remains in Canada whether this will continue to be a problem, as the largest cable and satellite providers have recently moved to acquire broadcasters, such as Shaw Communications Inc. in its deal to buy the Global network and other specialty channels. In the U.S., where Comcast Corp. is awaiting approval to buy NBC Universal, such marriages between broadcasters and distributors are not yet so widespread. Cablevision owns some cable channels, such as AMC and Sundance Channel, which do collect fees from cable and satellite companies for distribution. But it has fought against higher fees for network signals. In March, Cablevision's spat with Walt Disney Co. resulted in that company pulling ABC from the service, resulting in blackouts during the Academy Awards broadcast.
"[Cablevision is]part of a quote-unquote reform group that wants to change the entire retransmission consent regime," said Dennis Wharton, executive vice-president of communications for the National Association of Broadcasters in Washington, D.C. "… I think it's clear that they are using their viewers as a pawn to try to get legislators to try to step in and change the law."
Cablevision did not respond to requests for an interview.
However, the president of the American Cable Association, Matthew Polka, said that networks' threats to pull their signals amount to holding viewers hostage.
"The broadcaster as a result of these federal rules has complete leverage to say 'either you pay my price, or I drop my signal.' … If you're a cable operator, for the most part, you don't have any choice," he said.
What's more, the conflict this week escalated to the Internet: Cablevision customers also could not view video on Fox's website or Fox programs on Hulu.com. News Corp. reversed that decision, but it raised questions about how such conflicts could spill over into the new media space.