January 4, 2000

Spat knocks Fox off Cox cable, causing fans to miss key games

By DAVID KOENIG
AP Business Writer

DALLAS (AP) -- With the NFL playoffs looming, about 400,000 cable subscribers have lost their connection to Fox channels because of disputes between two media giants.

The conflict has already caused sports fans in Texas to miss the Cotton Bowl and a Dallas Cowboys game and was likely to frustrate "Ally McBeal" followers Monday night in that region as well as in Northern Virginia and Cleveland.

Fox refused to let several Cox Communications systems retransmit its programming after Cox declined to add two other Fox networks as it upgrades to digital systems that carry more channels. Without Fox's permission to carry the stations, Cox had to drop them by midnight Friday.

Similar deadlines could soon knock Fox off Cox systems in Phoenix and Orange County, Calif., a Cox spokeswoman said.

Each company claims to be looking out for its customers' interest. But the cable company could suffer more, especially now that customers can switch to satellite-dish TV reception without losing local channels, analysts said.

"This is an invitation for (satellite companies) to come in and advertise in those markets," said Jessica Reif-Cohen, an analyst with Merrill Lynch. "Obviously, one of them will have to back down."

"This speaks to control -- the cable operators don't want to be told what to do. But cable is vulnerable to satellite in channel capacity," said Tom Eaton, an analyst with Paine Webber. "The real winners here are the satellite TV providers."

That's the attitude of some consumers.

"I don't know who's right, and I don't care," said Chuck Hipp of Yorktown, Va. "I'm getting ready to drop Cox cable and get a satellite dish."

Cable companies do not pay to retransmit the signals of TV-network stations, analysts say. But the networks have pressured cable operators to run their cable channels, such as ABC's ESPN and NBC's MSNBC, in exchange for retransmitting the signals of network stations.

In the current flap, Fox asked Cox to carry FXM, a Fox movie channel, and Fox Sports World on all of its digital networks in exchange for carrying the local Fox affiliates.

"We see digital TV giving customers the power of choice," said Fox spokesman Tom Tyrer. "Cox disagrees, and they've cut their customers off from these popular local stations in order to prove it."

Cox rejected the Fox demand to carry the two Fox stations on among its digital offerings, saying such decisions should be left to local programming managers.

"We can't be held hostage by Fox Corporation's greed," Cox spokeswoman Ellen East said.

Most of the affected Cox subscribers, about 260,000, are in Northern Virginia, while nearly 90,000 are spread across Texas and about 72,000 are in Cleveland's western suburbs.

Cox replaced the Fox channels with movies. The company's subscribers would have to disconnect their cable or hook up a signal-splitter to continue receiving the Fox channels.

Meanwhile, Fox could be counting on the popularity of its NFL playoff coverage to make Cox relent -- both the Washington Redskins and Cowboys are in the playoffs and in affected areas.

Fox will show the Cowboys playoff game at Minnesota on Sunday. The Redskins first-round game is on ABC.

Cox asked for a 90-day extension on its right to retransmit Fox signals -- putting off a showdown until after football season -- but Fox said no.

"They wanted to put us in this tough spot," said East, who conceded that the cable-company has heard from irate subscribers. "I think it shows very little regard for their viewers."

Meanwhile, separate Fox-Cox disputes have led the cable company to drop Fox affiliates in Memphis, Tenn., and Portsmouth, Va., where Hipp, the 35-year-old Virginia man who is thinking about buying a satellite dish, used to watch WVBT. The station wanted a lower number than its current 43 on the cable lineup, but Cox said no.

New York-based Fox Entertainment Group, 82 percent owned by Rupert Murdoch's News Corp., produces TV shows and movies and owns the Fox network and 22 TV stations.

Atlanta-based Cox is one of the nation's largest cable companies, with 6 million subscribers. It also owns nearly 25 percent of Discovery Communications and about 10 percent of the E! Entertainment Network.