Fox Gives No Ground On Retrans Sharing

The Fox affiliate meeting held at the NAB convention on Tuesday apparently turned into an adversarial afternoon between the network and its affiliates, who are arguing over Fox’s demand that stations pay what their owners feel is an excessive amount of their retransmission consent fee revenue back to Fox.

Several sources said that during the three-hour meeting Jon Hookstratten, the network’s EVP for national distribution, and Mike Hopkins, the president of affiliate sales and marketing, told the affiliates, “We hear you” in an attempt to stem their concerns.

But station executives buttonholed after the meeting weren’t filled with warm thoughts about the afternoon, which ended with a stream of affiliates walking out quickly, most of them not lingering to chat with each other or Fox executives. Nor did all of them believe they were being heard.

“It’s not like it used to be,” one GM said. “It’s not a partnership anymore between the network and affiliates. They admitted that during the meeting.”

This manager said Fox repeated that it would no longer try to negotiate with the affiliate board, and reiterated that individual stations would have to agree to Fox’s price tag or risk losing their affiliation.

“There were a few of us in that room that didn’t just fall off the turnip truck,” that source said. “It sounded like a threat to me. All they kept saying was, ‘We hear you, we hear you.’ “

According to two other station executives, Hookstratten and Hopkins got into a tense question and answer volley with Brian Brady, the sometimes voluble Fox affiliate president. These sources said the compensation issue took up about a third of the meeting.

Sharing money from cable retransmission consent fees is prominent in the business plans of networks and broadcast groups. Networks argue they deserve a large cut because without network programming, the station wouldn’t have many viewers.

Stations say it’s their local roots, community outreach, promotion and local news that attract viewers for the network.

This Fox squabble has gotten attention in part because of the stinging words each side has hurled, but all of the networks are having similar negotiations with their affiliates.

“From our perspective, the [negotiating] committee has been largely non-responsive to our views and unwilling to negotiate in good faith,” Hopkins said in a letter he sent in February, stopping a nine-month negotiation attempt by the board to come up with a master agreement for Fox affiliates. “Rather than continue to waste time on fruitless arguments, we feel it is time to move on and negotiate an equitable and practical [retrans sharing] agreement with each of you.”

Hopkins sent that letter after Fox affiliates president Brian Brady sent his own letter to affiliates, spelling out the wide disagreement Fox over the fees, and declaring: “We can either stand and fight together or we may die apart.”

Once source earlier told TVNewsCheck that Fox wants 25 cents per subscriber from what affiliates receive in retransmission consent fees from cable operators, going up to 50 cents in the fourth year, a steep rise, particularly for stations in smaller markets.

Affiliates also complained to Fox about the network’s arrangement with Time Warner cable systems in which Fox would provide its signal to the cable company in markets where Time Warner and a Fox affiliate couldn’t agree on a carriage deal.

Fox had planned to avoid discussing the retransmission consent flap altogether at the meeting Tuesday after the rift developed between the network and the affiliate board. But one of the station sources called it “the 800-pound gorilla in the room all day long.”

In the Hopkins letter he told affiliates: “We realize our proposal may not work for every company. If that should be the case, Fox will have to pursue different distribution channels to receive fair value for our programs. We don’t want that to sound like a threat but it is a fact.”

A spokesman said Fox has successfully concluded negotiations with several stations since then, but said it would not allow Hopkins or others to talk to the press about the dispute or those deals.

After the affiliates meeting, Fox and the Fox affiliate chairman provided these statements:

“Meeting with our local affiliates once again reaffirmed just how valuable our partnership is to Fox and to each of their local communities,” said Mike Hopkins, president, Fox Networks Affiliate Sales and Marketing. “Every day, viewers across the country start and end their days with their local news and entertainment programming, and that’s an incredibly powerful connection that only local stations provide.”

And Brian Brady, chairman of the Fox Affiliates Board, said: “We appreciate the opportunity that Fox gave us to voice our questions and concerns today, and we’re grateful for their ongoing dedication to quality. We are aligned in our goals to create a material dual revenue-stream business for both the stations and the network, and we know that together, our partnership combines on a local and national level to deliver the most compelling and engaging programming to viewers.”