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FX Bullish on Distribution

FX has an upbeat distribution story to tell this year. Launched by News Corp. as a retransmission-consent channel in 1994, FX most recently has enjoyed the benefit of being packaged with Fox's regional sports networks. At the end of this year, it expects to be in 53 million homes, up from 35 million two years ago. The network, with its monthly license fee of 28 cents per subscriber, said it has contractual commitments for 55 million homes.

"There is no doubt cable operators are recognizing the value of FX," president Peter Liguori said. "It gives us rejuvenated confidence."

Late last year, FX closed a carriage deal with holdout Time Warner Cable. The network will get launched in 80 percent of the MSO's homes by the end of 2002, with a rollout in New York expected by the end of next year.

FX officials pointed out that their programming has a lot of New York appeal, with offerings such as local-disc-jockey-gone-national Howard Stern's Son of the Beach. Stern has talked up the series, which he produces, on his radio show.

Time Warner senior vice president of programming Fred Dressler is abreast of FX's programming plans, according to Lindsay Gardner, executive vice president of affiliate sales and distribution for Fox Channels Group.

"Fred is keenly aware of some of the things Peter is working on," Gardner said. "Part of why Time Warner stepped up to such an extra-ordinary commitment is not only did they see what we had done to date, but a year ago. Fred said, I have a feeling you guys are going to get it right. You have the resources, Fox behind you. You've got a good team in place. He was prescient."

Despite the fact that Fox Broadcasting Co. was embroiled in a huge retransmission-consent battle with Cox Communications Inc. earlier this year, Cox will roll out FX in suburban Washington, D.C., to 250,000 subscribers June 2, according to Gardner. He added that cable operators are now specifically requesting FX.

"We used to package FX with the sports deals," he said. "But FX is in such demand now that we have a couple of instances where we're using the strength of FX to get deals done for other nascent channels, smaller channels. We're packaging FX with things like Fox Sports World.People come to us and say, We want FX. What other stuff can you sell us at the same time?'"

AT & T Broadband executive vice president of programming Matt Bond sees change for the better in FX. "It's improved, obviously, from the first day it launched," Bond said. "It's doing better. Generally speaking, good, original product is better than reruns."

Paul Kagan Associates Inc. is projecting that FX will take in $196.2 million in license fees this year, compared with $162.3 million last year. In terms of net ad revenue, FX garnered $75 million last year, according to Kagan, and it is expected to generate $85 million this year.