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The Federal Communications Commission demanded answers from Cablevision (NYSE: CVC) and News Corp (NSDQ: NWS) about the retransmission-fee standoff keeping Fox off the air for 3 million cable subs by the close of business Monday afternoon and the two delivered. What they delivered is more about quicksand than common ground. About the only thing the two agree on is that the other is to blame for not reaching an agreement.
Fox, which would like to avoid government intervention, tried to show how it has been acting in good faith through more than a year of interactions and negotiations. Cablevision, which wants the FCC and/or Congress to get involved and change the retrans dynamic, is heavily into providing examples of Fox’s bad faith.
Embedded below: the full text of the letters from Michael Hopkins, president of affiliate sales & marketing for Fox, and James Dolan, CEO of Cablevision. They were responding to a letter sent Friday by FCC Media Bureau Chief William Lake to Dolan and News Corp. COO Chase Carey. Some parts that stood out as I read through:
— Fox says Cablevision called its New Jersey station WWOR “worthless” but suggested in a call that it might be willing to buy the station.
— Fox details the process that led to the one-year contract that expired Oct. 15. That contract didn’t include fees for retrans but did put two Fox cable nets (Fox Business and National Geographic Wild) on Cablevision. Both are off now. Fox said its lowest cash offers for retrans are based on including carriage for some cable nets in the package.
— Fox’s version includes multiple offers at different price levels, several trips to New York from LA to negotiate and repeated efforts to work with Cablevision.
— Cablevision asks for FCC intervention to force binding arbitration and make Fox put the stations on the air immediately. Dolan promises to “engage under FCC auspices” in DC to resolve the dispute effective Tuesday and submit to binding arbitration.
— In a lengthy supporting document for Dolan’s brief letter, Cablevision claims News Corp. deliberately timed the blackout deadline to use the NFL and the baseball playoffs as leverage. (MSG, also controlled by the Dolans, is in a dispute with Dish Network (NSDQ: DISH) keeping hockey and basketball off the air for the satellite operator’s subs.) Cablevision wants “popular” national events treated the same as sweeps months, when cable operators are barred from dropping broadcast nets. It also says it was forced into the timing last year when News Corp sent a cancellation notice as the Yankees headed into the playoffs.
— CablevIsion tosses in the federal version of the kitchen sink, arguing that News Corp is abusing waivers that allowed dual ownership to force it to accept “unreasonable” fees. (Never mind that without the waivers, the programming would be on only one station and a blackout would still have the same effects.)
— Cablevision also argues that being offered the same fee for WNYW as larger, national Time Warner Cable (NYSE: TWC) is unfair. (News Corp. says Cablevision wanted it to get market rates before it would agree to any cash payment.)
— At the same time, Cablefvision argues it’s unfair to compare the fees it pays and charges for the MSG networks because broadcast channels have advantages over small regional nets.
And on and on from both. Next up: the FCC has to decide how far it will go to force a resolution.