Fox, NCTC Hit Snags in Carriage Talks

Fox Corp. and the National Cable Television Cooperative, a consortium of more than 700 small and medium-sized cable operators across the country, are headed for a showdown in the New Year, as carriage agreements for a handful of networks, including Fox News Channel and Fox Sports are set to expire Dec. 31.

In addition to FNC, cable networks FS1, Fox Deportes, Fox Business Network, FS2 and Fox Soccer Plus are all up for renewal. At the heart of the impasse are rate increases that the NCTC claims in some cases are in excess of 200%, or more than ten times the current rate of inflation.

Carriage negotiations on the whole are rarely smooth sailing, especially in the past few years. But as viewing habits have changed and more networks are streamed over the internet directly to consumers, viewers have more options to access programming.

NCTC president Rich Fickle said his members are aware of the viewing alternatives, but still want to reach a deal.

“We’re not done negotiating,” Fickle said in an interview. “There is a good chance to get this done.”

Several Fox owned and operated television stations are also coming up for renewal at the end of he year for NCTC members, but the programmer is not allowing the co-op to negotiate on their behalf, something the organization has done for its members in other retrans deals on many occasions. For the Fox stations, the operators will have to negotiate on their own.  

According to people familiar with the situation, Fox’s terms are in line with what other distributors and cooperatives pay. They claim the NCTC is asking for terms that the programmer is simply unable to provide.

Fox News has pushed through big increases in the past — NCTC estimates that increases have averaged about 20% per year since 2004 — but this time is different.

Fickle claims that the new rates Fox News is proposing significantly widens the gap between what rural operators and distributors in larger areas pay for the network.

“The gap is three times larger than what [NCTC members] normally pay,” Fickle said.

He added that Fox may be trying to regain some of the leverage it lost earlier this year when it sold the bulk of its cable channels to The Walt Disney Co., by tying FNC carriage to its sports channels FS1 and FS2.

“This is not something we are instigating,” Fickle said. “They [Fox] are trying to get as much leverage as they can.”

Fickle likened on the tough tactics Fox is using to muscle in big increases to distributors in the heartland, the areas that helped build Fox News into the ratings power it is today, to “kicking a wasp nest.”

“These are small, rural companies,” Fickle said of the NCTC membership, which represent about 3 million subscribers. “It’s not like they are going after large entities. We want to carry these channels.”

In a statement on its website Fox said it is only trying to reach a fair agreement.

“We are disappointed that the NCTC appears to be putting its own business objectives ahead of the needs of its members and their respective customers,” Fox said. “Our priority is to reach a fair agreement with our valued partners without carriage disruption, which is why we offered each participating NCTC cable company at risk of losing FOX networks a short-term direct agreement to carry our networks without interruption. However, the NCTC has directed its members not to talk with Fox in a misguided attempt to fabricate an avoidable crisis.”