Talks break off in Cablevision-Fox channel blackout dispute

For the third day in a row, talks between Cablevision and News Corp. have broken off without an agreement. Talks are scheduled to resume Tuesday.

The lack of a deal Monday means the continuation of a blackout that began Saturday morning seconds after midnight, when Fox pulled both WNYW/5 and My 9 from Cablevision, affecting some 3 million subscribers. Viewers were unable to see Sunday's Giants-Lions game and two weekend games of the National League Championship Series.

In a statement issued Monday afternoon, Charles Schueler, Cablevision's executive vice president of communications, said: "When broadcasters like News Corp. remove their signals, they hurt viewers in an attempt to gain business leverage. Cablevision agrees to submit to binding arbitration, as called for by more than 50 elected officials from New York, New Jersey and Connecticut as the fastest and fairest way to return Fox programming to Cablevision viewers. We call on News Corp. to do the same."

News Corp. had previously rejected Cablevision's call for binding arbitration. In a statement issued Monday shortly after talks broke off, Fox blamed Cablevision for continuing "to demand preferential treatment" and reject "the same fair terms that have been accepted by other providers in the market."

Separately, Sens. Frank Lautenberg (D-N.J.) and Robert Menendez (D-N.J.) earlier today asked the Federal Communications Commission to "exercise all of its available authority to promptly resolve the Fox and Cablevision dispute . . . We ask that you immediately invite representatives from both parties to meet with you and other FCC officials in order to reenergize and resolve these negotiations."Fox's New York-area television rating for Sunday's Lions-Giants game was significantly lower than usual. The game averaged 7.8 percent of homes in the New York market compared to 14.5 and 11.3 for the first two Giants games on Fox this season. Sunday's Jets-Broncos game on CBS averaged 14 percent of area homes.

The FCC is in the midst of making rules about retransmission disputes such as this, which would presumably address its authority to to act as mediator in such disputes.

This is the longest broadcast station blackout stemming from disputes over retransmission fees in the nation's largest market. As such, both companies have entered uncharted territory. Risks include potential customer dissatisfaction with Cablevision and diminished ratings for some of Fox's marquee entertainment shows, including "House," the Fox network's top-rated drama, which is on Monday night's schedule. It has already experienced a ratings slump this season.

"I think it would hurt the local Fox ratings in New York significantly since their footprint of nearly 3 million homes are there," said Brad Adgate, chief of research for the New York-based ad firm Horizon Media.

A handful of blackouts in smaller markets have lasted longer than three days - in the longest, in 2005, the broadcaster Nexstar had three local broadcast affiliates in Missouri and Texas blacked out on Cable One for nearly a year.

Political pressure also mounted over the weekend. Sen. John Kerry (D-Mass.) and Kevin Law, president of the Long Island Association, the Island's largest business group, separately called for binding arbitration. - Rep. Steve Israel (D-Huntington) and Rep. Peter King (R-Seaford) did the same last week.

On Saturday, Kerry, chairman of the Commerce subcommittee on communications, announced he plans to introduce legislation that would "stave off" termination of carrying of signals when corporate agreements expire.

In a phone interview Sunday, Israel said: "I've been on the phone with the FCC over the weekend, and they continue to say that they want binding arbitration but that one party is refusing. That tells me that if the FCC can't enforce arbitration, then Congress needs to pass legislation giving them the authority to do so."

In recent years, major broadcasters have been seeking fees from cable companies for use of their TV station signals, but Fox has been especially aggressive. "Fox is laser-focused on capturing significant retrans dollars, and we see no reason why they would give in," Rich Greenfield, an analyst at BTIG LLC, said in an October report.

In negotiations with Time Warner last year, News Corp. initially demanded $1 per subscriber, or about 75 cents more than what most cable systems were paying for TV stations. Time Warner initially wanted to pay 20 cents and, according to a report prepared by analyst SNL Kagan of Charlottesville, Va., both companies settled at 50 cents, a figure the report expects to rise to 75 cents. According to sources, Time Warner secured a "most-favored-nation" clause in its deal with Fox, which means that if Cablevision secures a lower rate, Time Warner would be entitled to the same rate.

Sunday afternoon, Fox briefly blocked subscribers of Cablevision's Optimum Online from watching Fox programs on Hulu.com and Fox.com, before reversing itself a short time later.

As the impasse continues, the discontentment of sports fans over the blackout of weekend games appears likely to spread to entertainment fans.

At Changing Times, a Farmingdale sports bar, George Lee, 32, of Huntington, said the blackout is devastating to his mother, who won't be able to watch the exploits of Dr. Gregory House Monday night on her beloved medical drama.

"My mother's elderly, and she can't go out," Lee said. "My mother looks forward to 'House' on Mondays. Now she can't watch it."