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News Analysis
DIRECTV Vs. Fox: A Simple Solution
By Swanni

Washington, D.C. (October 23, 2011) -- Here we go again. A multi-billion dollar programming company tells a multi-billion dollar TV provider that it will have to pay more to carry its channels.

Of course, the TV provider initially says no way, claiming the fee hike will force its customers to pay more in monthly programming bills. Then the programmer expresses outrage, saying the TV provider doesn't care enough about its subscribers to give them the channels they want.

In this latest case of tit for tat, we have Fox and DIRECTV who are fighting over the satcaster's right to carry roughly 20-25 Fox cable networks. (See:
DIRECTV Could Lose 20 Fox Channels for more details.)

But we have seen this scenario before -- in fact, dozens of times in the last few years. In some battles, the two sides reach a last-minute compromise to ensure that viewers don't lose their favorite channels. But in others, the two sides take weeks, maybe months, to reach a deal, leaving viewers staring at blank screens while two giant corporations battle it out.

It's pathetic; it's phony; and it's preventable.

Yes, preventable.

Rather than DIRECTV and Fox begin spending hundreds of thousands of dollars on slick advertising campaigns designed to influence public opinion on who's wrong in this dispute, the  two sides should embrace a simple, inexpensive and fast way to end this battle without hurting the consumer.

And all future programming battles.

They should ask the FCC to establish a 'baseball-style' arbitration process for program fee disputes.

It's not a novel concept -- I've urged the industry and federal officials to approve it many times in the past -- but in today's bleak economic environment, it's needed more than ever. Programmers should get a fair price for their channels but TV providers shouldn't have to pay at gun point, either, which can lead to higher monthly fees for recession-weary viewers.

Fox and DIRECTV carry so much weight in Washington, I think it could actually get done this time if the two companies would just put down the gloves and jointly ask for arbitration in their case -- and in all future programming disputes.

And here's how it would work:

The FCC would force TV programmers and TV providers to enter arbitration if they can not reach an agreement one week prior to the end of a carriage agreement.  (In the Fox-DIRECTV dispute, that would be now; the two sides have set a Nov. 1 deadline to sign a new deal.) The arbitrator would determine how much the TV provider should pay for the programmer's channel (s) after hearing arguments from both sides. And the channels would stay on the air until the arbitrator's decision is handed down.

Now some programmers in the past have balked at arbitration because they believe it hurts their leverage if they can't take their channels off the air during negotiations. But in this case, Fox has said publicly that it's offered DIRECTV an extension that would allow FX, the Fox Movie Channel and 20 other Fox cable networks to stay on the air while talks continue. (DIRECTV has rejected the extension offer.) So Fox shouldn't have a problem with arbitration, at least on this point.

DIRECTV shouldn't have a problem with it, either, because it says it wants to ensure that Fox doesn't charge it more than the fair market value. An arbitrator could certainly make that happen.

So, DIRECTV and Fox, man up. Ask the FCC for a baseball-style arbitration. It will be good for you -- and good for all of us in the years to come.

What do you think? Offer your comments below!

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