Fox-Time Warner War Heads to Inevitable, Customer-Gouging Conclusion

Categories: Featured, Media
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You may have seen ads in the papers and on TV -- one in the form of a ransom note -- warning you that Fox TV may go off the air, and that it's either Fox's fault or carrier Time Warner's, depending on who is paying for the advertising.

Fox wants the cable company to pay a "retransmission consent fee" -- about $1 a subscriber, twice what other nets get -- to carry its programming. Time Warner has been balking, though there are signs of movement, says the Wall Street Journal (which, we suppose we should add, is owned by News Corp, which also owns Fox).

If they don't strike a deal by New Year's, WSJ says, Fox goes dark to TW customers, "depriving the company's cable-TV subscribers of college and NFL playoff games, as well as popular shows like 'The Simpsons.'"

This isn't just a local matter. This "game of chicken," says the Fort Worth Star-Telegram, "could end with many North Texans unable to watch some upcoming big events on television, including the Cotton Bowl, the last Cowboys game of the regular season and the premiere of American Idol." See, everyone's got a stake in this!

At a "Roll Over or Get Tough" web site devoted to the purpose, Time Warner portrays its resistance as a response to the will of the People. "You told us to get tough," it claims. "We listened... More than 500,000 unique visitors have had a chance to speak out. And the overwhelming response has been 'Get Tough.' So that's exactly what we're going to do."

This claim is based on the fact that if Time Warner pays more for programming, it will be forced to pass the cost on to subscribers. Fox's counterclaim, as made by News Corp head Rupert Murdoch, is that "Good programing is expensive... It can no longer be supported solely by advertising revenues."

Thus, per a Fox ad: "No Simpsons? (D'oh!) No 24? (This is over) No Fox? No Way. TV with no Fox, thanks a bundle Time Warner." While revenue from Fox's own cable operations is up, revenue from broadcast -- which in our new, all-digital, free-market era requires carriers like Time Warner -- is down.

Someone must make up the shortfall. And that someone is the carrier -- then, by increased billing, you, dear reader. Fox and Time Warner will cut some kind of deal, and you will pay more to hear Jack Bauer bark and Homer Simpson D'oh. In the business world, this is known as "everybody wins."


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