FCC Demands News Corp., Cablevision Show Signs Of ‘Good Faith’

Pushed to some kind of brink by a week of less movement than jello, the Federal Communications Commission wants answers from News Corp (NSDQ: NWS). and Cablevision (NYSE: CVC) — namely, are you now or have you ever been dealing in good faith with each other? Media Bureau Chief William Lake’s Friday afternoon letter (included below) to News Corp. COO Chase Carey and Cablevision CEO James Dolan demands a response by Monday close of business, reminding the two of the millions of subscribers left in the lurch by their inability to come to terms over retransmission rights for Fox.

I say some kind of brink because it’s unclear what the letter is actually meant to do beyond applying more public pressure for the two to have meaningful negotiations and get Fox back on the air for viewers of its stations in New York, Philadelphia and New Jersey. But the language and a reference to a 2000 FCC reading of the role of “good faith” in deciding whether or not the commission can get directly involved in a dispute, suggests the letter is laying the ground for an intervention.

Earlier this week, FCC Chairman Julius Genachowski expressed his frustration at the almost-lackadaisical approach the two have shown to negotiations since the stations went dark on Cablevision at midnight Oct. 15, coupled with their consistent public invective. But the FCC is limited in what it can do unless it show the sides are not negotiating in good faith. Lake’s letter asks for proof of what each has been doing in that area — and “any conduct by the other side that you believe violates the good faith requirement” with supporting evidence.

Update: What do the companies have to say?

Cablevision spokesman Charles Schueler: “We welcome the FCC’s intervention. Whether through FCC action, binding arbitration or any other means, the time has come for News Corp to end the Fox blackout of 3 million Cablevision households.”

Fox says it will respond directly to the FCC. Earlier in the day, the network issued a statement urging affected subs to switch providers if they want to see the World Series. A statement sent out after the FCC letter went public described a Cablevision rebate offer for customers who call to complain and said the cable operator should issue the same rebate to every household. The credit described in the statement is $20 a month for two years.

More as warranted.

Dear Messrs. Carey and Dolan:

We are deeply concerned about the impact of your current retransmission consent dispute on consumers in Cablevision’s service area. As Chairman Genachowski has stressed, both parties share responsibility for consumer disruption caused by your unwillingness to reach a deal. We are troubled, as the Chairman said, “that Cablevision and Fox are spending more time attacking each other through ads and lobbyists than sitting down at the negotiating table.” I know that you are aware that both broadcasters and multichannel video programming distributors (MVPDs) have a statutory duty to engage in “good faith” negotiations.

The Commission has stated its belief that “by imposing the good faith obligation, Congress intended that . . . broadcasters and MVPDs meet to negotiate retransmission consent and that such negotiations are conducted in an atmosphere of honesty, purpose and clarity of process.” We ask each of you to describe to us how your company is satisfying this important statutory obligation in the context of your retransmission consent negotiations. In particular, we request that you describe with specificity what has transpired since you initially began your negotiations, and detail the efforts your company is making to end the current impasse. If you are aware of any conduct by the other side that you believe violates the good faith requirement, please so indicate and provide supporting evidence. Please submit this information to me by the close of business Monday, October 25, 2010.

As you know, your contract dispute extends beyond just Fox and Cablevision. Indeed, it affects millions of innocent consumers who expect to watch their preferred broadcast programming without interruption. We urge you to place the interests of these consumers first and conclude your negotiations promptly.

Please call me as soon as possible if you have any questions about this letter.


William T. Lake
Chief, Media Bureau