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Fox News: Fair, Balanced and Pricey

Fox News Channel, by its own account, is fair and balanced — and now it may become much more expensive. The home of Bill O'Reilly and his “No Spin Zone” is about to quadruple the fee it charges cable and satellite distributors when it begins negotiating new carriage deals next year, according to News Corp. officials.

The top-rated news channel will seek payment of $1 a month per subscriber from cable and satellite operators that want to carry it, according to a News Corp. executive on the condition of anonymity. That compares with the 25 cents a subscriber fee Fox News currently receives from most distributors.

If its negotiations succeed, Fox News very likely would also become the most costly news channel to distribute: Its chief rival, Time Warner Inc.'s Cable News Network, charges 60 cents a subscriber for carriage.

But News Corp. chairman Rupert Murdoch might even view $1 a sub as cheap, compared to CNN's rate. In an August meeting with Wall Street analysts, he noted that Fox News “now has more than doubled the audience of CNN.''

In the quarter that ended Sept. 25, Fox News Channel averaged a 2.0 household rating in primetime, according to Nielsen Media Research. That was double CNN's 1.0 rating and second among basic-cable networks only to Turner Network Television, which averaged a 2.3 rating.

Fox is not the only channel that is getting aggressive on rates. USA Network last week wrung 80 cents a subscriber out of a new deal struck with Time Warner Cable through its parent, NBC Universal. That compared to 50 cents, a 60% increase from its old rate, according an NBC Universal Cable executive, who discussed the fees on condition of not being personally identified.

Fox News would not be the most costly basic network, however. The new rate would put the personality-driven network — home to such outsized characters as O'Reilly, Sean Hannity and Shepard Smith — still well behind ESPN, which gets $2.60 a subscriber. Fox News clearly believes it's worth the dollar — especially compared to ESPN.

“[Fox] views [itself] more on the line of an ESPN, so [it's] going to shoot for the sky,” said the News Corp. executive. “If you look at the fair value of the network, that's a fair licensing fee.”

Cable operators, already losing subscribers to satellite operators such as DirecTV Inc. and EchoStar Communications Corp. and facing potential losses long-term to new entrants from the telecommunications business, including phone giants Verizon Communications Inc. and SBC Communications Inc., are likely not to want to drop Fox News, even at four times its current price.

“In this environment it would be real damaging for an operator to drop Fox News because clearly, they bring a certain constituency to the remote,” said veteran journalist and independent producer Tom Jacobs. “The bottom line is putting people in front of the box and Fox News does that.”

Fox News executives declined comment, as did executives at such cable operators as Charter Communications Inc., Comcast Corp., Time Warner Cable, Bresnan Communications, Cox Communications Inc. and Insight Communications Co.

Last spring, Fox News set the stage for its proposal, via a presentation dubbed “Fox News Channel: America's Most Valuable Cable Network” that it made to some local systems and regional offices of cable operators. It cited the channel's rating dominance, its appeal to “influentials,” its growth in local ad sales and how it is now insertable in some 65 million homes.

Fox's push comes on the heels of USA's recent gains. NBC Universal Cable president David Zaslav would not confirm the new rate card, but said the network has improved its value through original content such as series The 4,400 and Monk, as well as its recent reacquisition of World Wrestling Entertainment's Monday Night Raw.

With big rate card run-ups, other networks like Court TV fear they'll face an operator backlash when they come calling.

“We play the game reasonably and we think [cable operators] certainly need to evaluate a network's performance over the previous five-year period,” said Court TV executive vice president of affiliate relations Bob Rose, who would not reveal terms of the net's new rate card. “There has to be sensitivity that we have partners out there and these businesses have to work on both sides.”

R. Thomas Umstead
R. Thomas Umstead

R. Thomas Umstead serves as senior content producer, programming for Multichannel News, Broadcasting + Cable and Next TV. During his more than 30-year career as a print and online journalist, Umstead has written articles on a variety of subjects ranging from TV technology, marketing and sports production to content distribution and development. He has provided expert commentary on television issues and trends for such TV, print, radio and streaming outlets as Fox News, CNBC, the Today show, USA Today, The New York Times and National Public Radio. Umstead has also filmed, produced and edited more than 100 original video interviews, profiles and news reports featuring key cable television executives as well as entertainers and celebrity personalities.