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Sep 30th

Time Warner executive: Price gouging at heart of Fox Sports gambit

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On Jan. 1, Time Warner Cable began broadcasting ESPN News on channel 28 (in addition to ESPN) because Fox Sports Net (FSN), which aired on that channel, yanked its programming after the contact between the companies expired. On Jan. 1, Time Warner Cable began broadcasting ESPN News on channel 28 (in addition to ESPN) because Fox Sports Net (FSN), which aired on that channel, yanked its programming after the contact between the companies expired.

FSN, which charges about $1.50 a month for each of TWC’s 208,000 subscribers, is insisting on a rate increase of 45 percent. As leverage for its position, FSN has run advertising in the Twin Cities media which can readily be construed by consumers that TWC has elected to discontinue its schedule of Fox Sports offerings. An ad in the Star Tribune states, “Time Warner Cable no longer carries Fox Sports Net and your favorite Minnesota teams.” Asked whether this is a strong-arm tactic, Eric Brown, division president, Time Warner Cable - Minnesota, says, “Absolutely. [FSN]...focuses on providing local teams that folks here would like to see, like the Timberwolves, the Wild and Golden Gopher Sports. It is not unusual to have a situation where a network’s contract with a cable operator expires. But, generally, as long as the parties are negotiating in good faith, it’s understood that you don’t disrupt service for customers.”

The standard practice is to continue broadcasting for the existing fee and, once an agreement is reached, the new rate is made retroactive to the date that the original agreement expired. “Fox is unique,” Brown says, “in that they take these hardball tactics and use them as a threat. If you don’t give them the rate they’re demanding, they’ll go to your customers and try to position you as the bad guy. They’re lobbying the public to allow Fox to charge higher rates that then will get passed on to customers.”
 

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