TWC-Fox Deal Changes Retrans

Retransmission consent negotiations may never be the same.

A deal struck last January between Time Warner Cable and News Corp. included a precedent-setting condition to allow TWC to carry Fox’s network programming if retransmission negotiations with Fox affiliates break down. Many TV execs likened Fox’s move to throwing its non-owned Fox affiliates under the bus.

Just how much leverage Fox affiliates could lose in retransmission negotiations is getting tested right now as Sinclair Broadcast Group, the largest Fox affiliate group with 20 Fox affiliates, and TWC try and hammer out a deal before the current one expires at the end of the year. In the case of Sinclair, negotiations will center on the value of the local news or syndicated line up. Sinclair is betting that only two hours of network programming a day will give it enough negotiating clout, according to a report in the Columbus Dispatch.

Fox’s position is that it is helping its affiliates, not hindering negotiations. “We are in their corner,” said Scott Grogin, svp of communications for Fox. “The goal is to protect our viewers from service interruptions, allowing Sinclair to get local [advertising] dollars while they negotiate without deadline pressure.”

If the deadline passes without a deal, TWC will pay Fox a fee for network programming.

If more TV networks bypass affiliates and do retransmission deals directly with pay-TV providers, it could add up to a tough situation for TV groups looking to retransmission fees as a viable second revenue stream.

The TWC-News Corp. deal could also have repercussions in Washington, D.C. because it pulls the rug out from under current regulations that ensure local programming is available in local markets. On the other hand, it could be viewed by the Federal Communications Commission and Congressional leaders crying out for retransmission consent reform as a positive, since viewers will be facing viewer interruptions.

No doubt this is one retransmission deal the TV industry will be watching.