Carey To Senate: Leave Retrans Alone

Cable operators that carry Fox O&Os are getting a bargain, according to a draft of the testimony News Corp. President and COO Chase Carey is expected to give tomorrow before the Senate Communications Subcommittee.

“The amount of compensation that Fox is seeking for its broadcast stations is well below what they are worth when compared to cable channels that command as much as $4 and $5 per subscriber per month,” the draft says.

“This includes any comparison based on the quality and quantity of unique programming offered, the amount invested in programming, or the ratings of that programming.

“Fox has, on average, eight million viewers in primetime, more than the top three cable channels combined. Our programming lineup includes the top sporting events on television such as the World Series and the Super Bowl, and the top primetime entertainment shows such as American Idol, Glee, House and The Simpsons.

“And, of course, we offer the local programming that makes broadcasting unique: the local news, sports, weather and traffic that viewers rely on every day.”

At the hearing, the subcommittee, chaired by John Kerry (D-Mass.), will be considering the need for legislative reforms to prevent the loss of TV signals on cable systems after a breakdown in retrans negotiations.

Late last month, in the most contentious and public dispute yet, Fox pulled its signals from Cablevision systems in New York and Philadelphia for two weeks after the cable operator balked at Fox’s retrans demands.

Cablevision and other cable operators have been urging “reforms” that would send retrans disputes to binding arbitration and have won the support of Kerry.

Broadcasters, now led by Fox, argue against government meddling in the retrans process, saying that is has so far produced fair agreements and that broadcast blackouts resulting for negotiation impasses have been few and far between.

“Our stations came off of Cablevision for more than two weeks, causing pain primarily to viewers, but also to both companies,” the draft of Carey’s testimony says.

“In the end, a deal with Cablevision was reached after it became clear that the government was not going to step in to ‘rescue’ Cablevision from a free market negotiation with Fox. Once Cablevision came back to the bargaining table, we were able to negotiate a deal quickly.

“Had the government modified the retransmission consent law, Cablevision would not have come back to the bargaining table, and we likely would still not have a contract in place.

“So-called reforms, if adopted, would clearly tip the balance of negotiations toward distributors. If broadcasters aren’t able to negotiate on a level playing field for a fair carriage rate then we would be relegated to second class status, and our future viability would be threatened.”