Time Warner Cable (TWC) customers reading metro New York newspapers this week may have received a shock when they saw a full-page ad from Fox Television warning: "Attention! Starting January 1st, Time Warner Cable may stop carrying Fox 5..." That would mean no NFL football, no American Idol, no 24, and in the cruelest threat, no Simpsons.The ads are part of an escalating battle between Time Warner Cable and Fox over cable fees, and if the dispute isn't resolved soon, Time Warner Cable subscribers could be looking at a massive lump of coal in their stocking this holiday season. The stakes have gotten so high that former presidential candidate John Kerry this week sent a letter to the two companies urging them to reach a deal before the end of the year.
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Time Warner Cable is the nation's second largest cable company after Comcast, and serves 14.6 million customers (including this writer) in 28 states.
Kerry Weighs In
"Fox and Time Warner need to strike a deal – millions of football fans are depending on it," wrote Kerry, the Democratic Senator from Massachusetts. "Having screens go dark because two parties couldn't come together in time is no solution. New Year's Day and football are synonymous in households across the nation. Private industry negotiations cannot disrupt a fundamental American tradition."
For nearly a year, the two companies have been battling over cable fees. In short, Fox wants more money from Time Warner Cable to carry its channels. Time Warner has resisted, leading to the current showdown. Now both companies have taken the fight directly to Time Warner Cable customers.
In a statement last Friday, Fox, along with its parent company News Corp. (NWS), defended its demands.
"For the past nine months, Fox has attempted to negotiate in good faith with Time Warner Cable," Fox and News Corp. said. "Our position in these negotiations is entirely reasonable -- we are simply asking for fair compensation for the impressive value our Fox programming offers."
In response, Time Warner Cable sent a letter to its subscribers saying that Fox's demand would entail a 300% increase in the fees that Time Warner Cable pays Fox for the right to broadcast its channels. "We know prices keep going up. We've had to announce a few price increases of our own and we know no one's ever happy about that. But up to 300%? That's going too far," Time Warner Cable wrote.
As the battle has escalated, both sides have taken to the Web, launching dueling websites advancing their respective positions. Time Warner's site is called "Roll Over or Get Tough," and features the following headline: "You Can't Get a 300% Raise. Why Should a TV Network?"
In response, Fox has launched its own website, "Keep Fox On," which features an ominous clock counting down the "days to save your programming." (The counter stood at nine on Wednesday.)
"The compensation being sought for the Fox stations is entirely reasonable," Fox says on the site. "According to SNL Kagan, the equitable rate Fox is proposing for all its networks is in the same ballpark as what Time Warner pays for ONE cable network, ESPN. . . . The bottom line is that the Fox stations feature some of the nation's most-watched programming with shows such as "24," "American Idol," "House," "Glee," and "The Simpsons," as well as the most compelling sports on television with the National Football League, Major League Baseball, and NASCAR."
"Going forward, we will continue actively negotiating with Time Warner Cable in hopes of reaching a fair agreement and will attempt to keep our viewers informed of the situation every step of the way," Fox concluded.
Time Warner Cable customers had better hope the two companies come to an agreement before New Year's Eve, or else the companies cable subscribers better get ready for a lot less football in January.
Why do investors make the decisions that they do?View Course »