By Yinka Adegoke Yinka Adegoke – 1 hr 40 mins ago
NEW YORK (Reuters) – About 13 million Time Warner Cable Inc subscribers will lose Fox programing at midnight unless the cable service provider reaches a last-minute deal to pay News Corp fees to broadcast the network's shows.
Talks continued on Thursday, having heated up as the deadline approached, but the two sides were deadlocked on some key points, according to a person familiar with the negotiations who spoke on condition of anonymity.
News Corp wants Time Warner Cable to pay $1 per subscriber per month for the right to carry Fox Networks' free-to-air broadcast shows such as "American Idol," "The Simpsons" and "House," as well as sports programing like college and NFL football games.
But Time Warner Cable has balked at the so-called retransmission fee. Its executives privately point to deals with smaller affiliate TV broadcasters at around 20-25 cents a subscriber.
While $1 per subscriber does not sound like much, Time Warner Cable is wary of setting a precedent. Besides Fox, the other three major U.S. broadcast networks -- CBS Corp's CBS, Walt Disney Co's ABC and General Electric Co's NBC -- will all be pushing to be paid cash per subscriber as their advertising-reliant business suffers.
CBS, the No. 1 U.S. broadcast network, has talked about getting paid around 50 cents a subscriber.
If Time Warner Cable and News Corp do not reach a deal, around 13 million cable subscribers could lose Fox programing in cities like New York, Los Angeles, Dallas and Orlando.
The prospect of sports fans losing access to college football games during the Bowl Championship Series prompted U.S. Sen. John Kerry to intervene last week with a suggestion of arbitration by U.S. regulators.
But News Corp turned down the proposal on Wednesday, saying a deal needs to be hammered out at a bargaining table and not in the hands of a third party.
News Corp Chief Operating Officer Chase Carey told staff on Wednesday afternoon that it looked likely that Fox's channels would go off the air on Time Warner Cable systems.
Broadcast TV networks have struggled with falling ratings as viewers spend more time watching cable networks, or catching shows on the Internet at sites like Hulu.com. Broadcasters also say they are grappling with rising programing costs, particularly with sports.
The broadcasters now want to rework their business model to mimic that of cable networks, which earn revenue from both advertising and affiliate fees paid by cable and satellite service providers.
Fox Networks Chief Executive Tony Vinciquerra told Reuters on Tuesday that $1 a subscriber would be a "reasonable step" in the right direction and predicted other broadcasters might follow suit.
Fox's current dispute with Time Warner Cable also includes negotiations over higher affiliate fees for several entertainment and sports cable networks: FX, Speed, Fuel and Fox Soccer Channel among them. The discussions do not include Fox News and Fox Business.
Time Warner Cable, which split off from parent Time Warner Inc earlier this year, is also negotiating on behalf of Bright House Networks.
(Reporting by Yinka Adegoke, editing by Tiffany Wu and Matthew Lewis)
