Fox Cuts off Hulu: Good and Bad for Cable Subscribers

The fight over how much Cablevision (s cvc) would pay Fox (s nws) in retransmission fees escalated to a new level this morning, as news outlets confirmed that Fox had denied Cablevision’s broadband customers access to Hulu and With the move, Fox entered a new low in the war between content providers and pay television companies as they negotiate the fees that programmers charge pay TV providers, and may have created a new wrinkle for regulatory politics. However, it may also show how online television has gained in importance for large content companies, enough so that it too can become a pawn in these retransmission fights.

Fox is seeking more money from Cablevision, about $80 million more a year, in order to keep the cable company’s 3 million customers watching episodes of The Simpsons and Monday Night Football NFC football games. Retransmission fights have been getting more contentious lately, and this one is no exception, with Fox threatening on Friday to cut off Cablevision’s subscribers if a deal wasn’t reached by midnight.

Apparently, Fox decided to go one further and brought its web properties into play. A Hulu spokeswoman told All Things D:

Unfortunately, we were put in a position of needing to block Fox content on Hulu in order to remain neutral during contract negotiations between Fox and Cablevision. This only includes Fox content. All other Hulu content is accessible to Cablevision [I]nternet subscribers. We regret the impact on Cablevision customers and look forward to returning Fox content to those users as soon as possible.

Although Fox’s online television content is now restored, the action may have further repercussions, especially as the Federal Communications Commission debates the merger of Comcast (s csmcsa) — the nation’s largest cable provider — and NBC Universal (s ge), a contributor to Hulu and also a huge provider of content. Opponents of the deal are concerned it could limit the voices available in media, but there are also fears that Comcast would become much too powerful. A statement from the Free Press Public Knowledge explains this point of view:

“This case shows the dangers of unchecked media consolidation and of a retransmission consent regime badly in need of reform. Consumers should not have their access to Web content threatened because a giant media company has a dispute over cable programming carriage. The anti-competitive aspects, particularly when it comes to online video programming, are glaringly obvious.

“The migration of a programming dispute to the online world should also raise red flags for the merger of Comcast and NBCU. If the combined Comcast were to attempt such a maneuver, millions of consumers all over the country would be hurt. Those government agencies evaluating the merger should be alert to the possibility as they decide whether the merger should be approved and, if so, with what conditions.

Photo courtesy of Flickr user comedy_nose.

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