Kerry On Time Warner Cable-Fox Dispute: Denying 4 Million Consumers Programming is No Negotiation Tactic

Press Release

Senator John Kerry (D-Mass.), Chairman of the Commerce Subcommittee on Communications, Technology, and the Internet, released the following statement this evening responding to a letter from Chase Carey, President and Chief Operating Officer of News Corporation, rejecting binding arbitration as a possible solution to the Time Warner Cable-Fox dispute before programming is shut off for millions of consumers on New Year's Day.

"This letter is a rejection of arbitration as a solution, but it is silent on alternative mechanisms for keeping the signal on the air post contract expiration," said Senator Kerry. "That is my primary goal. If FOX can find an alternative way to achieve that end or reach agreement with TWC before the contract expires, then there is no need for us to act. If FOX believes that withdrawing programming from 4 million households is its best negotiating tactic, then I would ask the FCC to intervene and mandate continued carriage and arbitration as Senators Inouye and Stevens urged the FCC to do in a similar dispute in 2007."

The full text of Chase Carey's letter is below. Senator Kerry's letter to Carey and Time Warner Cable's Chairman and CEO Glenn Britt follows Carey's letter.

December 30, 2009

The Honorable John F. Kerry
United States Senate
218 Russell Senate Office Building
Washington, D.C. 20510

Dear Senator Kerry:

Thank you for your letter of December 22. I, too, am concerned that we have been unable to reach a fair agreement with Time Warner Cable after negotiating for the past several months in good faith. You have my assurance that we will continue to work through the next day in the hope of reaching a deal prior to the expiration of our current contract on December 31st at midnight.

We strongly believe this is an issue that needs to be settled at the bargaining table and that binding arbitration all too often looks to the past, not the future. This past has helped get the business where it is today, with an extremely powerful and profitable cable industry and a broadcast industry that is struggling to stay afloat. When Congress enacted the 1992 Cable Act, it established a clear mechanism for programmers and distributors to reach market-based agreements on the basis of direct negotiations. We respectfully believe these discussions do not belong in the hands of a third party.

We are extremely proud of the programming we produce and, because of our considerable investment, we bring American viewers the best in news, entertainment and sports. We bring this programming free to millions of households that cannot afford or choose not to subscribe to pay television. However, to compete in the mainstream marketplace, we need to begin to level the playing field. We have approached these negotiations reasonably and our requested compensation is comparable to what Time Warner Cable pays TNT, a network with a fraction of the ratings and original programming of FOX.

The truth is that the cable industry has benefitted enormously from its ability to carry this valuable broadcast programming without paying carriage fees; this can no longer continue. We are simply seeking fair compensation for content that has helped fuel the ever increasing profit margins of the cable industry. Our goal is to maintain a healthy and vibrant broadcast industry for all Americans.

We understand the justifiable concern felt by Time Warner Cable households in the face of a possible service disruption. However, we believe the appropriate solution is for Time Warner Cable and Fox to negotiate a fair and mutually beneficial deal.

We will keep you informed as this process develops and appreciate your ongoing leadership in forging a competitive media marketplace that serves the best interests of viewers across the nation.

Sincerely,

Chase Carey

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Senator Kerry's letter:

Mr. Chase Carey
President and Chief Operating Officer
News Corporation
1211 Avenue of Americas
New York, New York 10036

Mr. Glenn Britt
Chairman and CEO
Time Warner Cable
60 Columbus Circle
NY, NY 10023

Dear Sirs:

I am aware that FOX and Time Warner Cable have been involved for some time in negotiations regarding the terms of carriage for FOX-owned broadcast television stations, as well as FOX-owned cable channels.

These are private negotiations, and I hope that the parties reach a mutually acceptable resolution before the existing agreement expires on December 31. If you fail to do so, I suggest that FOX allow Time Warner Cable to continue transmitting programming through the College Bowl season either under current terms and conditions or under terms and conditions that will be retroactively applied once an agreement is reached, or under some third option. I also suggest that both parties strongly consider entering arbitration rather than having consumers lose access to programming.

If I understand correctly, at midnight on December 31, 2009, FOX content may be removed from cable systems Time Warner Cable owns. This means that, in January, millions of Time Warner Cable customers around the country could lose access to the Sugar Bowl, Cotton Bowl, Fiesta Bowl and Orange Bowl, as well as NFL playoff games. Prior to the digital transition, many consumers were able to put up rabbit ear antennas to receive programming. However, digital receivers are more expensive and complex to use. We do not want consumers waking up on the first day of the New Year wanting to watch football and instead finding that they have to take a trip to the electronics store to purchase a digital receiver in the hope that they receive a clear over the air signal.

As the Chairman of the Senate Commerce Subcommittee on Communication, Technology, and the Internet, I have sought to place the interests of consumers at the center of our work. If both parties conclude that the best alternative to a negotiated agreement is to have screens go dark for consumers, then they will have neglected the core interests of the millions of households that subscribe to Time Warner Cable in affected markets. As leaders of major companies that are FCC licensees and are obligated to serve the public interest, I hope and expect that you will resolve this matter consistent with those obligations.

Sincerely,

John Kerry

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