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Fox: Cablevision Needs to Negotiate With Broadcaster, Not Government

"Cablevision's assertions that Fox has been operating in
violation of the FCC's good faith rule should be dismissed," Fox told
the FCC Tuesday. "Once Cablevision realizes that it has to negotiate
with Fox, rather than the government, they will
hopefully come back to the table and begin negotiating again in

Fox was responding to Cablevision's letter to the FCC
Monday in which it alleged Fox was not bargaining in good faith. Both
Cablevision and Fox were asked to defend their bargaining or criticize
the others. While Fox chose not to accuse Cablevision
of not bargaining in good faith Monday, it defended itself against
Cablevision's allegations and characterizations.

Fox said that there was no basis
for Cablevision's assertions that it sweetened its deal while Fox
refused to make concessions.

Fox also warned that if the FCC weighed in against
most-favored-nation clauses, which are essentially minimum price
guarantees, it would destabilize the industry. "Fox, like other
programmers, has the right to use its business judgment in determining
an acceptable price for its programming, taking into account all
factors, including MFNs," said the company. Fox points out the Federal
Trade Commission has even made MNF provisions conditions in mergers to
insure nondiscriminatory terms to competitors.

Fox told the FCC that its negotiator's three word
sentence, "this is it," if he in fact said that, does not constitute a
single, unilateraly proposal, but must be seen in context of what
happened before and after. It said good faith does not
mean requiring a broadcaster to reduce the amount it is asking, though
it does require broadcasters to be open to more than one form of
consideration. Fox says it made "multiple, serious attempts" at such
good faith negotiation.

Fox says that there is nothing that would prevent it from timing its agreements to expire coincident with must-see programming.

Cablevision argued that because Fox has waivers to own
multiple media properties in New York it has unfair leverage in the
market and should be subject to different standards. Fox countered that
the FCC's public interest requirements "have never
been extended to require broadcasters to reach deals with al MVPDs for
retranmission consent, regardless of the price we are offered."

As to leverage, Fox suggested it was the pot calling out
the kettle. "If the FCC feels a need to look at the relative negotiating
leverage of the two parties in this context, it should also look at the
properties owned by Cablevision in the New
York metropolitan area" said Fox. That includes local newspaper,
Newsday; a free daily newspaper, weekly shopper, regional sports nets
MSG and MSG+, News 12, and Rainbow Media Holdings (AMC, IFC, Sundance,, Wedding Channel, and VOOM HD Networks). Fox
also pointed to its bundled high-speed Internet and voice service.

Fox says the FCC does not have the authority to order
arbitration, and that if it tried to compel carriage, it would be a
violation of the First Amendment and the takings clause of the Fifth
Amendment. "The Commission cannot mandate carriage
of a broadcaster's signal without its consent," Fox said.

Cable operators are quite familiar with the argument.
They themselves have made it in arguing for getting rid of the
must-carry requirement in which the government mandates carriage of a
broadcasters' signal whether cable operators consent or