More On Mediacom Vs. Sinclair

Please See 12/01 Update With More Info

I may have been a little harsh on Mediacom in my last post on this subject. But, that’s what Mediacom deserves when they bring unwarranted lawsuits against other companies and tell their customers they’ll no longer be able to get a channel they’ve lived with for years. Mediacom could have handled the situation more professionally. Instead of suing Sinclair and telling customers they’ll no longer be able to watch Fox 17, they could have simply said negotiations will continue until a suitable deal can be struck, but they didn’t. The way Mediacom handled this angered many, many customers. I spoke with at least six Mediacom cable television customers this weekend that were pretty upset at the situation. Two of them sided with Mediacom, saying they were just trying to keep prices low. I wouldn’t mind one more price increase this year if it means we get to keep KDSM Fox 17. We’ve already seen two or three price increases this year.

Mediacom has been running commercials here in central Iowa explaining the situation and letting customers know that they’re still in negotiations with Sinclair. Their commercial makes it sound like they really are trying to keep Fox 17 around for their central Iowa customers. And I believe Mediacom is trying their hardest to keep KDSM Fox 17 in their customers line-up.

Bottom line is this, Sinclair is asking Mediacom for too much money to carry KDSM Fox 17. Mediacom wasn’t happy with Sinclair’s price so after getting nowhere in negotiations, they sue. It’s hard to say whether those of us in central Iowa will be able to watch Fox 17 on Mediacom after December 1st. If we can, good. If we can’t, Mediacom will probably end up losing a great deal of subscribers in this area.

Sorry for coming down on you so hard Mediacom, but you rarely give me anything to be happy about. It’s almost always bad news when Mediacom is involved.

UPDATE: KDSM Fox 17 has updated their website with a statement from their gerenal manager. The man makes some very good points, some of the very same points I’ve made. In addition to that statement from GM Mike Wilson, there’s also a FAQ on the dispute. Please see below for the full text from the GM statement and the FAQ.

First, we have the statement from the Fox 17 General Manger, Mike Wilson.

Dear Viewer,

As you may be aware Mediacom’s right to carry FOX 17 on its cable systems is scheduled to terminate on December 1, 2006. Unless our agreement with Mediacom is extended prior to December 1st, if you are a Mediacom subscriber, after this date you will no longer be able to watch our great programming (such as NFL football, NCAA college football bowl games, Iowa Basketball, “American Idol,” “House” and “24”) on Mediacom cable.

Please be aware, however, that the termination of our relationship with Mediacom need not limit your ability to continue to watch us. First of all, you will continue to be able to watch us completely for free over-the-air. In addition, you may choose to subscribe to either DirecTV or to the Dish Network, both of which will continue to carry FOX 17. We particularly encourage you to call DirecTV at 800-376-4388 because if you sign up with them prior to December 1, 2006 and comply with certain requirements, FOX 17 WILL PAY YOU $150 (which will be applied as a rebate against your DirecTV bill, which will be applied as a fifteen $10 rebates against each of your first 15 monthly DirecTV bills)! For complete details on this offer, call DirecTV.

Although Mediacom wants you to believe this is the fault of FOX 17, you should know that we have been attempting to negotiate with Mediacom for many months to avoid this. Our parent company, Sinclair has successfully reached agreement for the carriage of its signals of its television stations, with many cable and other multi-channel video providers, including the largest such companies, Comcast, DirecTV and Echostar. We have also reached agreement with AT&T and Verizon, both of which are starting to launch video programming in certain of their markets. In fact, virtually the only cable systems on which Sinclair stations will not be carried are those owned by Mediacom.

You are paying Mediacom quite a bit of money every month in order to receive programming. Mediacom takes that money and uses it to pay the cable channels, such as Animal Planet, MTV and HGTV. We believe, and the ratings certainly support the view, that the programming broadcast by FOX 17, is much more important to you.

If that is the case, we suggest that you contact Mediacom to let them know that they should allocate some of the money you pay them to receive the programming that matters to you. This station may be free over-the-air, but Mediacom wants to sell it to you and we think they should have to pay to acquire an asset before they sell it. You are paying Mediacom in order to receive programming including this station; shouldn’t they use your money to buy the programming that is most important to you? In order to contact Mediacom, please call them at 1-866-755-2225 or to send them an e-mail, click here.

It is unfortunate that our viewers are stuck in the middle of this negotiation. It is also unfortunate that Mediacom doesn’t want to pay for an asset – our station’s signal – which they want to use in order to sell their services to you. To solve this problem,Mediacom needs to hear from you. Let them know that you would rather they use some of your cable fees to pay for programming you want, rather than for cable channels you likely never watch. Vote with your feet by switching to DirecTV (which you can do by calling 800-376-4388) or Echostar. Plus, don’t forget that FOX 17 will pay you $150 (by means of a rebate) if you switch to DirecTV and comply with certain requirements.

We apologize for any inconvenience caused by the dispute with Mediacom and thank you for your past and future support.

Sincerely yours,

Mike Wilson
General Manager, FOX 17

Second, we have the FAQ covering the Mediacom/Sinclair (Fox 17) dispute.

Mediacom Frequently Asked Questions

1. What is the dispute between FOX 17 and Mediacom over?

The dispute relates to how much compensation Mediacom will pay FOX 17 for the right to carry FOX 17 on Mediacom’s cable systems.

2. Why should Mediacom pay anything to carry FOX 17?

Mediacom sells its service to the public and like any retailer should pay to acquire the assets that it wants to sell. Although FOX 17 is free to over-the-air viewers, Mediacom attracts and retains its paying subscribers by packaging together an attractive combination of programming choices including broadcast stations. Without broadcast stations like FOX 17 the package of channels that Mediacom has to sell would be less desirable and therefore less valuable. Mediacom makes more money by being able to include broadcast stations in its offering and like any business should pay to acquire such assets.

3. Doesn’t the Federal government think broadcasters should give their stations to the cable companies for free?

To the contrary, Federal laws and the rules of Federal Communications Commission specifically contemplate television station like FOX 17, being paid by the cable companies for the right to carry the signals of over-the-air stations.

4. Does Mediacom pay to acquire other channels?

Based on publicly available information, we believe that Mediacom, like all cable companies, routinely pays the owners of the vast majority of the channels it carries for that right. We believe such fees range as high as $2.00 per subscriber per month for ESPN and public reports note that The FOX News Channel is currently seeking $1.00 per subscriber per month. We believe that even channels with a narrow audience appeal, such as Animal Planet and HGTV generally receive monthly per subscriber fees.

5. Do the cable companies also pay fees for over-the-air broadcast stations?

We believe that cable companies generally pay for the signals of many broadcast stations, although such payments are often disguised as consideration provided to other channels which are often owned by vertically integrated companies which own not only broadcast stations, but also cable channels. For example, Disney currently owns not only numerous broadcast stations affiliated with ABC, but also such channels as ESPN and ABC Family. News Corp. owns not only a number of broadcast stations affiliated with the FOX network, but also such channels as F/X and Fox News. Cable companies typically prefer to pay for the cable channels and not to pay for the broadcast channels in order to try and avoid having to pay for broadcast stations owned by companies like Sinclair whose holdings in this area are limited to broadcast stations. We also know that many cable companies pay consideration to stand-alone broadcast station owners.

6. Is Sinclair asking for the kind of money being paid to channels like ESPN and FOX News?

Although Sinclair prefers to negotiate this matter privately, we can say that we have not historically asked to be paid fees as high as amounts paid to some of the cable-only channels. This is true even though the ratings of FOX 17, generally dwarf the ratings of cable-only channels. FOX 17 broadcasts some of the most popular programming on television – such as NFL Football, Iowa Basketball, “American Idol,” “House,” “24” Major League Baseball and College Football Bowl Games.

7. Won’t rates to subscribers go up if Mediacom has to pay Sinclair for its stations?

Whether rates will go up depends on decisions made by Mediacom. Mediacom is already charging you to receive FOX 17 as part of your monthly cable bill; they are just keeping that portion of your payment as profit rather than paying FOX 17. As a result, Mediacom could simply reduce its profits rather than raising rates. Alternatively, Mediacom could simply re-allocate the money its subscribers already pay among the channels that the public really wants to watch. Mediacom could simply pay less or refuse to carry channels that its customers don’t value nearly as highly as they value FOX 17.

8. Why have other stations in Mediacom markets been able to reach agreement with Mediacom?

Although we are not able to comment definitively on why other stations may have been able to reach agreement with Mediacom, we believe that in certain cases compensation is being paid but is just being disguised in some manner. In cases where little or no consideration is being paid, we believe that such broadcasters have typically reacted to the fear of the repercussions that might arise if their station were no longer carried on the cable systems. We also believe this result simply reflects the carryover of an historical practice which was based on the near monopoly power of cable companies prior to local stations being carried on DirecTV and Dish Network.

9. Has Sinclair entered into agreements with other cable companies to be paid for the right to carry its stations?

Although confidentiality obligations prevent Sinclair from disclosing the terms of any agreements with other cable companies, Sinclair has recently been able to reach agreements with a large number of cable providers, including such major system owners as Comcast, Insight and Suddenlink. In addition, Sinclair has recently signed long-term retransmission consent agreements with satellite providers, DirecTV and Echostar (Dish), as well as with telecommunication companies AT&T and Verizon, who are in the process of entering the video distribution business. Without going into the specifics of any Sinclair deals, it should be noted that (a) Sinclair has in general not violated its publicly stated position that it only grants retransmission consent or its digital signals where it has received adequate consideration and (b) public reports have indicated that satellite and telecommunications companies routinely pay broadcasters for the right to carry their signals.

10. Why doesn’t FOX 17 allow Mediacom to continue to carry FOX 17 while negotiations continue?

FOX 17 has followed precisely this course of action for quite a long time, but has concluded that Mediacom is no longer negotiating. As a result, even though FOX 17 regrets the impact this action may have on its viewers, allowing Mediacom to continue to carry our stations without consideration no longer makes sense. It would simply allow Mediacom to continue to receive all of the benefits it wants – carrying the station’s signal – without incurring the cost of doing so.

11. Will viewers still be able to watch FOX 17 after it is no longer available on Mediacom?

Yes, most viewers will be able to watch the stations completely for free over-the-air. In addition, viewers can terminate their Mediacom contracts and sign up with either DirecTV or the Dish Network in order to continue to receive most, if not all, of the programming available to Mediacom subscribers. In fact FOX 17 will pay viewers up to $150 (as a rebate) if they switch to DirecTV prior to December 1, 2006 and comply with certain requirements. For complete details on this offer, please call 1-800-376-4388.

12. Is there anything the public can do to help make sure that FOX 17 remains on Mediacom cable systems?

The best way to influence this controversy is for the public to call Mediacom and let them know how important it is for them to continue to carry the stations. It is important that Mediacom’s subscribers let Mediacom know that they intend to cancel their cable service and move to DirecTV or the Dish Network if Mediacom doesn’t carry some of the most popular programming on television. If Mediacom believes enough of its subscribers intend to “vote with their feet,” Mediacom will be more likely to take the steps necessary to continue to provide what its customers want. Viewers can send an e-mail to Mediacom expressing their displeasure at the risk of losing the station by clicking here.