Contract talks extended, no cable TV interruption

[January 01, 2011]  NEW YORK (AP) -- Sinclair Broadcast Group and two cable TV companies announced an agreement late Friday to extend a midnight deadline for a new contract until Jan. 14, averting for now an interruption of some programming to millions of cable customers.

Sinclair and the two companies -- Time Warner Cable and Bright House Networks -- issued news releases late Friday saying contract talks would continue.

"We have an extension" for two weeks, said Karen J. Morena, a Time Warner spokeswoman. "It will mean no interruption in programming for our customers."

Steve Miron, CEO of Bright House Networks, said in a statement: "We will continue to work toward a fair deal for our customers."

Hunt Valley, Md.-based Sinclair said the extension means Time Warner and Bright House will continue to carry programs from 33 of its television stations.

"We are pleased Time Warner and Bright House recognized the importance of providing their subscribers with access to the valuable and popular programming" provided on Sinclair stations, said Barry Faber, executive vice president and general counsel of Sinclair. "We intend to continue our good faith negotiations during this period with the intent of finalizing a longer-term agreement at pricing that reflects the higher cost of programming we are faced with today."

The parties have been bogged down in negotiations over how much the cable companies should pay to carry Sinclair TV stations in markets around the country. Local Sinclair stations -- including affiliates of NBC, ABC, CBS and Fox -- would have been dropped from channel lineups for roughly 4 million Time Warner customers and an unknown number of Bright House customers after midnight Friday without the extension.

Earlier Friday, Time Warner had vowed to provide its cable customers with network TV stations from other cities if it lost the rights to carry local stations owned by Sinclair.

Viewers likely would have gotten access to major network programming -- including Saturday's Outback Bowl game on ABC between the Florida Gators and the Penn State Nittany Lions -- had Sinclair pulled its signals once the deadline passed. Viewers would have lost local programs, such as the news. Syndicated shows such as "Seinfeld" could have been moved to a different time.

The tactic threatens to undercut local broadcast companies in these types of negotiations in the future.

Time Warner spokeswoman Maureen Huff said earlier Friday that even if the dispute with Sinclair were to drag on, Time Warner customers in Sinclair cities would still see all NFL playoff games and the Super Bowl and "most if not all" would see the full assortment of college football bowls. Time Warner had not said which stations it would borrow signals from.

Time Warner has been doing that in upstate New York because of a similar dispute with Smith Media. Viewers get the network evening shows but see out-of-market local newscasts and syndicated fare.

Bright House had said it, too, would carry feeds from other cities if the dispute with Sinclair remained unresolved.

The cable TV companies' threatened end-run around Sinclair represents the latest twist in a long-running struggle between TV broadcasters and the cable and satellite operators that carry their signals into customers' homes.

Bound by existing contract terms with Sinclair, Time Warner can only replace Sinclair stations with broadcast signals from other cities until late February. A separate deal with Fox owner News Corp. would allow Time Warner to carry that network for longer.

But it would be a major risk for Sinclair to pull its signals for that long. TV stations promise local advertisers that their commercials will reach a certain size audience, and that audience would be diminished without Time Warner and Bright House customers. In the meantime, Sinclair's only bargaining chip would be access to locally produced news and other programming.

Before the contract extension was announced, Sinclair's Faber said Time Warner's approach would "simply give their customers ample time" to find a different pay TV provider, such as satellite.

Disputes between broadcasters and the cable and satellite operators are cropping up more often.

Broadcast companies used to let cable providers carry their channels for free while making their money selling advertising time. But the recession caused some advertisers to cut spending, and the broadcasters are trying to charge cable operators higher fees to carry their programming.

In some cases, cable companies have resisted the broadcasters' demands, leaving TV viewers in the dark. One of the longest blackouts occurred in 2005, when about 75,000 cable customers in Texas, Missouri and Louisiana went without local NBC and ABC affiliate programming for nearly the entire year because of an impasse between the stations' owner, Nexstar Broadcasting Group Inc., and cable systems.

Broadcasters had long been believed to hold the upper hand in negotiating fees with cable and satellite providers because blacked-out customers usually called the cable company to complain. The cable and satellite operators have appealed for help from federal regulators.

In October, Cablevision Systems Corp. asked the Federal Communications Commission to force Fox stations to keep providing programming while Cablevision sought arbitration to settle a dispute over fees. The FCC declined to get involved, and Cablevision wound up swallowing Fox's terms, after its customers lost Fox programs for two weeks, including two World Series games.

But Time Warner's most recent tactics could give cable providers more clout and even the upper hand.

For broadcasters such as Sinclair, the stakes are big. More advertising dollars are shifting to the Web and the growing number of cable networks means increasing competition for the money that is still going into TV. So local stations see fees from Time Warner and other pay TV providers as a crucial second source of income.

Sinclair owns 33 stations carried by Time Warner around the country, and others in the South -- though not many network affiliates -- carried on Bright House.

Bright House spokeswoman Kimberly Maki said before Friday night's announcement that the company had arranged to provide the feed from another ABC station to customers in the Florida Panhandle so they wouldn't miss Saturday's Outback Bowl.

"We've got it covered," she said at the time. Most of the Sinclair stations carried on Bright House systems are on minor networks. Maki said then she was holding out hope the company could get an extension from Sinclair for those stations while negotiations continued.

Before Time Warner and Bright House said they would turn to signals from other cities, some Florida football fans were making backup plans in case they couldn't watch their favorite team at home. In Cantonment, Fla., Jennifer Stokes adorned her SUV with a Florida Gators front license plate. The Bright House subscriber said she and her family and friends refused to miss the Outback Bowl.

"We will just go somewhere else and watch it," she said. "It's a big deal."

Time Warner shares fell 8 cents to close Friday at $66.03, while Sinclair shares added 5 cents to $8.18.

[Associated Press; By DAVID KOENIG and ANDREW VANACORE]

AP writer Melissa Nelson in Cantonment, Fla., contributed to this report.

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