Fox, DirecTV risk government intervention in retransmission dispute

Tens of millions of Americans who just want to watch football games on Fox or shows such as Sons of Anarchy on FX are getting another lesson in the arcane issue of retransmission consent, as DirecTV (Nasdaq: DTV) and Fox have gone public with a dispute over retransmission-consent fees.

Last year, about 3 million Cablevision (NYSE: CVC) subscribers missed the opening game of the World Series, after the cable MSO refused to demands from Fox parent News Corp. (Nasdaq: NWSA) that it pay increased fees to carry programming from Fox stations. The debate on the merits of retransmission consent, and how much a pay TV distributor should pay for programming that is available for free to anyone with an antenna, gets a much bigger stage with the DirecTV-Fox dispute. More than 19 million DirecTV subscribers could lose programming from Fox stations and cable networks FX, National Geographic Channel, and national and regional sports networks unless the companies reach a deal by Nov. 1.

Fox set up KeepMyNets.com to broadcast its position on the DirecTV dispute.

DirecTV disclosed recently that it was teaming up with rival distributor Time Warner Cable (NYSE: TWC) to push the FCC to reform retransmission rules. The potential Fox blackout could give pay TV distributors more leverage to push for rules that could block a programmer like Fox from tying retransmission agreements for local TV stations with licensing deals for cable networks like FX.

Both DirecTV and Fox also risk losing pay TV customers, who have no shortage of video entertainment options from online video products from Netflix (Nasdaq: NFLX) and over-the-top video providers. Public bickering between pay TV distributors and programmers over retransmission consent is another issue that could drive consumers to cut the cord on subscription TV.

Fox and DirecTV, not surprisingly, are blaming each other for the dispute. "DirecTV sent us a proposal on Tuesday afternoon. They have given us no chance to respond before taking an unnecessarily aggressive posture and going public. It is disappointing that they have chosen bad faith tactics over meaningful negotiation," Fox said in a prepared statement. The network also launched a website to communicate its position on the dispute at KeepMyNets.com. 

In a statement posted on a site it created for the dispute--OurPromiseToYou.com, DirecTV president Mike White said, "News Corp. has demanded that DirecTV customers pay nearly 40 percent more for the same networks they already receive. If a new deal is not reached, we will be forced to suspend the channels as early as Nov. 1. We respectfully ask for your patience as we work to achieve a fair agreement as quickly as possible. "

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