Sinclair warns of long clash

Thousands affected by cable-fee dispute

January 10, 2007|By Hanah Cho | Hanah Cho,Sun reporter

Sinclair Broadcast Group Inc. warned thousands of cable customers in the Midwest and South yesterday that it expects to keep blocking network affiliates such as Fox and ABC for a "long time" because of a dispute over how much local programming is worth.

Hunt Valley-based Sinclair yanked 22 stations from cable systems in 13 states over the weekend after negotiations failed with a New York-based company on a price to carry the local network affiliates.

The clash left some of the 700,000 subscribers of cable provider Mediacom Communications Corp. without major programming, such as the NFL playoffs, in markets such as Des Moines, Iowa.

FOR THE RECORD - U.S. Cellular Coliseum is in Bloomington, Ill. An article yesterday about a television dispute between Sinclair Broadcast Group and Mediacom Communications Corp. contained an incorrect location.

Viewers also could lose popular Fox shows, such as American Idol and 24, whose new seasons start next week.

Barry Faber, Sinclair's vice president and general counsel, said in a conference call yesterday that the two parties "don't appear to be moving close to getting a deal done." In fact, Faber said, the two sides have not talked in recent days.

"We would be remiss if we didn't make clear to the public of the real risk that the stations would not be back on Mediacom's system for a long time," Faber said.

The dispute is the latest in a growing battle between broadcasters and cable providers over the costs of airing local programming. But when Sinclair - one of the largest owners of independent television stations in the country - pulled its programming last weekend, it caught the attention of both sides of the industry because of its scope and its potential effect on cable rates.

Mediacom says Sinclair is asking for retransmission fees that are too high, while Sinclair argues it is asking for less than what cable companies pay other networks, such as Disney.

In recent years, broadcasters have lost advertising revenue to alternative media such as the Internet. To make up for those losses, broadcasters have pushed to charge for local content that they say cable systems collect a premium for from customers. It's something that cable companies have paid little or nothing for in the past to air the local affiliates of ABC, NBC and Fox.

Cable operators argue that these networks are available free over the airwaves and that paying for them would raise cable bills for customers. In contrast, satellite companies, such as DirecTV and Dish Network, pay local station owners to retransmit their signals.

Mediacom officials have accused Sinclair of using the cable provider as an example to set the stage on how retransmission fees are negotiated throughout the industry - an assertion Sinclair denies.

"This isn't some groundbreaking event," Faber said yesterday. "We and other broadcasters have been paid by the satellite guys for years."

Besides Mediacom, Sinclair is negotiating retransmission fees with Time Warner Cable, whose rights expire Friday, and Comcast Corp. If an agreement is not reached with Comcast, 3 million customers, including those in Baltimore, could see Fox and other local networks pulled from their cable systems in March.

The pullout in the Midwest and South was Sinclair's largest so far. In a similar dispute with another cable operator, Sinclair pulled a Fox and ABC affiliate in the Charleston, W.Va., market for a few days in the summer, Faber said.

Mediacom said it has offered several proposals to Sinclair, including binding arbitration, to resolve the matter but to no avail.

"The major issue is not that we're not willing to pay," Mediacom Chairman and Chief Executive Officer Rocco B. Commisso said yesterday. "Why should my customer pay significantly more than everyone else?"

Faber said yesterday that Sinclair is considering a request by the Federal Communications Commission's media bureau that the two parties enter binding arbitration. But Faber said he wasn't optimistic both sides could agree on the parameters of the arbitration.

The FCC panel rejected last week Mediacom's complaint that Sinclair did not negotiate in good faith. Mediacom filed an appeal Monday.

Yesterday, the American Cable Association, a trade group in which Mediacom is a member, called on Congress to reform retransmission-consent laws and to ask Sinclair to reinstate signals in Mediacom's markets.

Beginning Saturday, Mediacom customers were denied access to Sinclair-owned stations in various markets, including Des Moines, Ames and Cedar Rapids, Iowa; Bloomington, Ind.; Lexington, Ky.; Madison, Wis.; Nashville, Tenn.; and Minneapolis. About 500,000 of those subscribers are served by mostly Fox and ABC as well as a few CBS and NBC affiliates. The rest of the subscribers are served by CW and MyNetworkTV.

In recent days, Mediacom handed out thousands of free antenna kits in Des Moines and Cedar Rapids. The Associated Press reported that thousands more customers in Iowa stood in line yesterday to obtain rabbit-ear units for picking up the networks over the air.

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