January 6, 2003

BY STACI D. KRAMER

Time Warner Cable and Fox Cable Networks are ringing in the new year with a public dispute over high double-digit rate increases that has left roughly 2 million subscribers in Florida and Minnesota without access to two Fox regional sports networks.

According to Time Warner spokesman Mark Harrad, Fox wanted to increase the rate for Sunshine at least 40% in the first year from 90 cents per sub to $1.50 and Fox Sports Net North 45% from $1.52 to just over $2. Fox says every other operator in both areas agreed to the increase; Cox Communications and Comcast Cable are among those.

Time Warner countered with several offers, including an a la carte channel controlled by the network similar to the offer Cablevision made to YES instead of carrying the Yankees on expanded basic. Fox, whose revenue model relies on expanded basic, said no. Time Warner carries YES on expanded, and Cablevision is the holdout.

Without referring to a specific situation, Bob Wilson, VP of programming at Cox, suggests keeping in mind that “just because people have signed a deal doesn't mean they're happy with the terms.” The decision to say no or yes can rely on a number of factors.

Lindsay Gardner, EVP of affiliate relations for Fox Cable, admits the increases are high but said they were bringing the rates in line with the group's other RSNs. “They have enjoyed a windfall these past several years, in Florida in particular,” argues Gardner.

Fox deauthorized the signals at midnight Dec. 31. Time Warner offered an immediate 10% hike to keep the networks on the air while negotiations continue, but Gardner says that wouldn't have been fair to other MSOs.

Harrad says he remains optimistic that deals can be reached. In the meantime, Time Warner will deduct the last price paid for each network from bills in those areas.

The only winners so far: ESPNews now showing on expanded basic instead of the two regionals and non-sports fans getting a rebate.