Cox Settles With Mission, Nexstar

Oct 24, 2005  •  Post A Comment

A settlement reached last week between Cox Communications and a pair of television station groups will embolden other broadcasters to begin demanding compensation from cable operators to carry their signals, experts predicted.

Cox reached an agreement last Thursday with Nexstar Broadcasting and Mission Broadcasting to pay the two station groups a retransmission fee to carry the broadcasters’ signals on Cox’s cable systems. The agreement ends a nearly yearlong stalemate that resulted in Cox removing the station groups’ signals from cable systems in San Angelo and Mount Pleasant, Texas; Bossier City and Minden, La.; and Magnolia, Ark.

Nexstar is also locked in a similar fight with Cable One that has yet to be resolved.

Financial terms of the pact were not disclosed, though Nex-star Chairman and CEO Perry Sook said Nexstar and Cox “reached an economic agreement that is acceptable to both parties.” Last December, when the battle between Cox and Nexstar began, Nexstar was demanding to be paid 25 cents to 30 cents per subscriber per month.

The carriage agreement with Cox covers the analog and digital signals of 12 Nexstar stations and nine Mission stations in 13 designated market areas in Texas, Arkansas, Missouri and Kansas.

The agreement comes at a time when broadcasters are increasingly demanding compensation from cable operators for their signal.

Viacom co-Chief Operating Officer Leslie Moonves for months has made clear that during the next several years he will begin demanding that cable operators compensate his company for broadcast signals from CBS and UPN. Some analysts said other station groups are holding similar talks with cable operators, though those conversations are taking place privately rather than out in the open, the way the Cox fight took place.

Mark Fratrik, VP of broadcasting financial services firm BIA Financial Network in Chantilly, Va., said it is just a matter of time before cable operators begin paying stations to carry their signals.

Network owned-and-operated television stations have long enjoyed compensation from cable operators in the form of agreements by cable to carry up-and-coming cable networks. Some larger station groups have benefited from these arrangements in circumstances when a station group is owned by a corporate parent that also owns cable programming assets.

More recently, Mr. Fratrik pointed out that some stations already are being compensated by satellite operators DirecTV and EchoStar Communications. What’s more, several broadcasters are currently holding compensation talks with telephone companies such as Verizon Communications and SBC Communications, both of which are preparing to offer video products that will compete with cable.

For their part, smaller station groups like the idea of getting compensated for their signal because most of that money goes directly to their bottom line, Mr. Fratrik pointed out.

“This is good for the TV business because it’s another revenue stream,” he said, adding that it also could spur broadcasters to produce more local content and thus boost their bargaining leverage for future negotiations with cable and satellite operators, which are keen on local content.