FOX NEWS DEMANDS BUCK A SUB FROM CABLE OPS

NEW YORK (AP)—A financial struggle is looming between Fox News Channel and the cable and satellite providers who carry the network, with the risk of Bill O’Reilly, Shepard Smith and Sean Hannity being yanked from TV screens if talks go sour.

One of the first battlegrounds is in the suburban ring around New York, the nation’s largest and most influential media market.

With Fox’s 10th anniversary next week, a series of 10-year contracts with providers will begin expiring. Fox says the systems pay roughly 25 cents per subscriber each month to carry its programming. Given the network’s success in the ratings, Fox is asking that these fees jump to $1.

Fox claims its rival CNN frequently gets around 50 cents per subscriber, and that Fox’s fee is a bargain since Fox’s ratings have eclipsed CNN’s for five years.

”It seems like we’re probably worth at least twice as much as they are,” Fox News chief Roger Ailes told The Associated Press. ”In the real world, everything is a negotiation and we’re not being dogmatic about it. But we are being dogmatic about the fact that we’re worth a hell of a lot more than we were 10 years ago when we took very low rates just to get coverage. They had pretty much a free ride for the last five years.”

The deal between Fox News Channel, which is owned by News Corp., and Cablevision Systems Corp. expires Oct. 7, or 10 years to the day Fox began operation. Cablevision has more than three million subscribers in New York, New Jersey and Connecticut in the New York City metro area.

Fox ran legal notices in several suburban New York newspapers on Sept. 16 warning that the network’s programming ”may be interrupted or terminated” soon due to the contract expiration.

Cablevision claims that because Fox gave it money for marketing considerations at the beginning of its contract, its effective monthly payment has been 16 cents—making Fox’s proposed increase even more onerous than it appears.

”We are currently in negotiations with Fox News Channel and are hopeful of reaching an agreement,” said Charles Schueler, Cablevision spokesman.

Both Cablevision and Fox have the technical ability to block the Fox News Channel signal from Cablevision customer homes if the talks become particularly contentious. It would seem Cablevision would have little incentive to do that, however, if it is not paying for the signal after Oct. 7.

Ailes said he hopes it doesn’t come to that, with Cablevision or other companies.

”It will all be out there in the next two years, we’ll know where we stand,” he said. ”But our viewers have let us know that they don’t want us taken off.”

Cablevision is known for playing tough in negotiations. Its customers went a full season without New York Yankees games because of a dispute with the YES network.

The negotiations come during the midst of Fox News Channel’s first ratings slump. Through the end of August, the 1.46 million viewers Fox averages during prime time (including weekends) is down 13 percent from 2005, according to Nielsen Media Research. Second-place CNN averages 745,000 viewers.

In a recent analysis of News Corp.’s financial prospects, Merrill Lynch analyst Jessica Reif Cohen said she has not assumed that Fox would get much more than 50 cents per month per subscriber.

”If Fox is going to stick to its $1, then it’s definitely going to get contentious,” said John Mansell, senior analyst for Kagan & Associates. ”But I suspect that’s just the opening position and there’s a certain amount of posturing going on. In the vast majority of these cases, things get settled.”