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News Corp., others seeking cash for what was once free
News Corp.'s decision to keep Fox programs off Cablevision System Corp. shows media companies may be gaining the upper hand in extracting fees from cable and satellite companies for content that used to be free.
News Corp.'s Fox, Walt Disney Co.'s ABC and CBS Corp. are all seeking payment for their over-the-air broadcast signals as existing contracts with pay-TV providers expire. News Corp. has said it considers the Fox broadcast network just as valuable as the most expensive cable programming because of its sports shows and prime-time hits like "American Idol."
Fox's departure from Cablevision caused the longest-lasting blackout of a major broadcast network for a million or more people in at least a decade, affecting 3 million customers in New York and Philadelphia. In March, ABC went dark on Cablevision for almost a day in a similar negotiation.
"By acting as an industry, the broadcasters are not only more able to get the fees they want, but after getting through one of the worst ad recessions of the decade, realized that they need those fees," said Tom Eagan, an analyst at Collins Stewart LLC in New York.
Broadcasters have said they deserve to be compensated for supplying TV's most-watched shows, including "NCIS," "Sunday Night Football" and "Desperate Housewives." In the past, the networks traded those rights to gain distribution for new cable channels like News Corp.'s FX or higher fees for existing cable networks.
Media companies have leverage in the negotiations because there are more pay-TV alternatives, said Eagan. For example, if Fox programming goes dark on Cablevision, customers can switch to competitors like Verizon Communications Inc.'s FiOS-TV service.
News Corp. has set up a website to help Cablevision subscribers find alternative ways to get Fox programming. The site, keepfoxon.com, allows people to search for providers by ZIP code.
Pay-TV providers often bear the brunt of criticism for an outage, said David Joyce, an analyst at Miller, Tabak & Co. in New York.
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