Sinclair reaches cable deal

Mediacom to pay for right of retransmission

February 03, 2007|By Hanah Cho | Hanah Cho,Sun reporter

Sinclair Broadcast Group Inc. and a New York cable operator agreed on a price yesterday to carry Sinclair's local broadcast stations.

The agreement ends a nearly four-week stalemate that left 2 million viewers in the Midwest and South without major networks on their cable systems.

The deal, reached two days before the Super Bowl, resolved a bitter standoff between Sinclair, of Hunt Valley, and Mediacom Communications Corp. of Middletown, N.Y.

The dispute caught the attention of the industry because of its potential effects on similar negotiations and cable rates.

Financial terms of the three-year agreement were not disclosed. But Mediacom - which has not paid Sinclair in the past for retransmission rights - said it now will pay to carry Sinclair's stations for the first time.

The contract allows Mediacom to carry analog and digital signals of Sinclair's 24 stations in 16 markets, such as Des Moines, Iowa; Nashville, Tenn.; and Lexington, Ky. Sinclair blocked those stations last month from Mediacom's cable systems after a contract between the two sides expired.

The new agreement was announced by both parties last night.

A Mediacom official said the company's 700,000 affected customers were expected to immediately regain access to network affiliates, such as Fox, ABC and CBS.

Mediacom customers in those markets have been unable to watch popular shows such as 24, American Idol and Desperate Housewives on their cable systems.

Thousands of viewers of a CBS affiliate in Cedar Rapids and Waterloo, Iowa, will be able to watch the Super Bowl tomorrow on their cable system as a result of the agreement.

"We're thrilled for our customers to have the signals restored," said Thomas Larsen, Mediacom's vice president of legal affairs. "Mostly that nobody misses the Super Bowl."

The dispute between Sinclair and Mediacom was the latest in a growing industrywide battle over so-called retransmission consent fees that cable operators pay for a local station's broadcast signals.

Traditionally, cable providers have not paid for a broadcaster's signals, arguing that they are available free over the air.

But broadcasters have been asking for fees in recent years, saying cable companies were essentially reselling local programming.

A similar battle could affect Maryland residents as early as March. Sinclair is negotiating with Comcast Corp., the nation's largest cable provider, over similar fees for 30 stations including Baltimore's Fox and CW Networks. Both sides agreed this week to a contract extension through March 1, giving them another month to continue talks.

Mediacom had resisted Sinclair's financial demands for carrying the stations in the Midwest and South, accusing the broadcaster of holding out for high fees that would be discriminatory to its cable customers - and ultimately drive up cable prices.

Sinclair had denied the allegation, arguing that it only wanted fair compensation for its signals.

The fight prompted national and state lawmakers to push both sides to quickly resolve the matter.

Mediacom had complained to the Federal Communications Commission that Sinclair did not negotiate in good faith, an accusation the agency's media bureau rejected.

Mediacom filed an appeal, but the company will withdraw the application as part of its agreement with Sinclair, said Barry M. Faber, Sinclair's vice president and general counsel. Mediacom also agreed to pay Sinclair's legal bills that resulted from the dispute.

Under the deal, Mediacom also agreed to withdraw its lawsuit against Sinclair that was pending in the U.S. District Court for the Southern District of Iowa, Faber said.

"I think it became more and more evident over the last few days, the avenue of achieving help from the government wasn't going to be realized," Faber said last night. "The Super Bowl was a bit of a driver in Cedar Rapids. My sense is that the subscriber loss was mounting."

Mediacom acknowledged that it lost cable subscribers to satellite television providers, even though it provided thousands of free antenna kits to its customers so they could receive the channels over the airwaves.

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