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Sore Loser Cablevision Settles With Fox

UPDATED: The pressure of subscribers missing out on the World Series may have finally gotten to Cablevision. (s CVC) The cable provider this afternoon announced the return of Fox (s NWS) programming to its customers, right before the first pitch of Giants vs. Rangers Game 3 was thrown.

The Cablevision-Fox dispute has been a prime source of drama over the last few weeks, as both sides traded strong language and cease and desist orders. Cablevision’s statement on the resolution of this conflict… oh, just read it:

In the absence of any meaningful action from the FCC, Cablevision has agreed to pay Fox an unfair price for multiple channels of its programming including many in which our customers have little or no interest. Cablevision conceded because it does not think its customers should any longer be denied the Fox programs they wish to see.

Cablevision thanks its customers for understanding the reasons for the dispute and for staying with us. We are also grateful to the 175 government leaders who raised their voices to urge government intervention and binding arbitration to prevent this blackout. It is clear the retransmission consent system is badly broken and needs to be fixed.

In the end, our customers will pay more than they should for Fox programming, but less than they would have if we had accepted the unprecedented rates News Corp. was demanding when they pulled their channels off Cablevision.

The statement directly implies that Cablevision will be passing the increase in retrans fees onto consumers, while also shucking no shortage of blame at the FCC, which attempted to intervene in the dispute before deciding that they didn’t want to take on the issue.

Cablevision’s decision to settle, though, may be more inspired by the $450 million class-action lawsuit just filed by Cablevision subscribers against the company. UPDATE: Cablevision’s statement on the class-action lawsuit is as follows: “These lawsuits appear to [be] concocted by lawyers with ties to News Corp. Maybe News Corp. should be sued for blacking out Fox programming and the World Series in three million New York-area homes.”

However, even though this might seem like a win for Team Fox, playing games with retrans fees may be a dangerous strategy for networks in the long run. As Ryan Lawler wrote earlier this month:

The problem is that all of this is happening at the same time that broadcasters are seeing their audiences slowly disappear. The number of multichannel video subscribers declined by 216,000 last quarter, marking the first time that overall pay TV subscribers have ever fallen. In other words, programmers are charging cable companies more for content that fewer subscribers are watching, and their dwindling audiences are getting the bill passed on to them.

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5 Responses to “Sore Loser Cablevision Settles With Fox”

  1. Where will it end. If Cablevision and others buckle under to outrageous price demands by companies like NewsCorp the cable bill will become so expensive that people may consider going back to using antenna’s to recieve local channels so they don’t have to pay for them.

  2. If Cablevision could have held out until after the world series, they would have had a lot more leverage at that point, but apparently the pain they were experiencing from subscriber loss was more than the increase in fees to Fox. This little experiment will only embolden the broadcasters to ask for even more in the future. Assuming that cablevision subscribers were paying $60 a month for television. All it would take is 350,000 defections and cablevision would be losing out on $250 million per year in revenue.

    If we assume that the difference in agreement was over $100 million in fees than all it takes is 140,000 customers leaving before Fox wins in the standoff. For cablevision this would be about 5% of their customer base leaving. If 5% of Comcast’s customer base left it would cost them $1.7 billion in revenue, so this gives quite a bit of power to the studios in future negotiations. Given the huge advantage that the broadcasters get from being able to use the public airwaves to reach mass audiences, it’s a little bit scary that they now have so much power over the pay tv consumer.