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Viewers caught in cable struggle

The Baltimore Sun

On the eve of the NFL playoffs, 500,000 cable subscribers in several states, including those in the Midwest and South, were poised at midnight yesterday to lose major network affiliates owned or programmed by Hunt Valley-based Sinclair Broadcast Group Inc.

Sinclair has been fighting with cable company Mediacom Communications Corp. over how much Mediacom should pay to air local stations in part of a growing battle among broadcasters nationwide over transmission fees.

Mediacom executives said late last night that Sinclair had directed the Middletown, N.Y.-based company to stop carrying 22 network affiliates, mostly Fox and ABC stations, in 13 states as of midnight.

Mediacom posted on its Web site yesterday a letter to customers explaining the blackout of the stations. The letter was dated today.

"We are doing what we can to bring the stations back quickly without giving in to unreasonable demands," the letter said. "If we give in, the other broadcasters we carry would then also expect similar payments which would impact our cable rates dramatically."

The Sinclair stations were to be pulled in a variety of Mediacom's markets, including Des Moines, Ames and Cedar Rapids, Iowa; Bloomington, Ind.; Lexington, Ky.; Madison, Wis.; Nashville, Tenn.; Minneapolis; Peoria, Springfield, Champaign and Decatur, Ill.; St. Louis; Tallahassee, Fla.; Birmingham, Ala.; Norfolk, Va.; and Milwaukee.

The pullout affects 700,000 subscribers - of whom 500,000 are served by Fox, ABC, CBS and NBC affiliates. The rest of the subscribers are served by CW and MyNetworkTV.

NFL playoffs featuring wild card games begin today and will be aired on NBC, CBS and Fox; and the BCS Bowl championship game between Ohio State and University of Florida airs Monday on Fox. These networks also carry popular television programs, such as American Idol on Fox.

Mediacom has been proposing binding arbitration to resolve a dispute that has turned nasty at times. On Thursday, the Federal Communications Commission's media bureau "strongly encouraged" the parties to enter binding arbitration. But the FCC rejected Mediacom's complaint that Sinclair did not negotiate in good faith.

The panel noted that if both sides agree to arbitration by the media bureau, it would require Sinclair to continue to make its signals available to Mediacom.

Mediacom said it plans to file an appeal to the full commission.

Barry Faber, vice president and general counsel of Sinclair, told the Associated Press yesterday that Sinclair requested additional information on the binding arbitration.

It "is a much more complicated decision than I think Mediacom would lead people to believe, because there are an awful lot of parameters that would need to be established," Faber said. "It is not going to happen today," he added.

Traditionally, cable companies have paid nothing or very little to air the local affiliates of ABC, NBC and Fox, arguing that these networks are available for free over the airwaves, so cable companies shouldn't have to pay premium prices for them.

Sinclair, one of the largest independent owners of television stations nationwide, and other broadcasters have been fighting back, arguing that cable companies have been essentially reselling their programming to cable subscribers.

In a dispute with Comcast Corp. in 2005, Sinclair sought to charge the cable provider to carry its digital signal. The dispute almost prevented Baltimore-area cable subscribers from watching the Super Bowl on high-definition televisions they bought exclusively for that day. Two days before the Super Bowl, the sides reached an agreement.

In the Mediacom fray, Sinclair has extended the contract in the past. The company was expected to pull its stations in December from Mediacom cable systems but agreed to yesterday's deadline to conduct more negotiations.

Mediacom Chairman and Chief Executive Officer Rocco B. Commisso said in a conference call yesterday that Sinclair had been making "outrageously escalating demands" during negotiations. Commisso said Sinclair is asking for rates that are 100 percent to 500 percent higher than it is getting from Comcast and satellite services.

Faber has said Sinclair is asking for less than what Disney, TNT and ESPN get from cable companies. Those companies pay between 79 cents and $2.91 per subscriber, he has said.

Besides Mediacom, Sinclair is negotiating transmission fees with other cable operators, including Time Warner Cable.

Analysts said both sides could lose if Sinclair pulled its stations. Sinclair has acknowledged that it could lose some advertising and viewers, but said the impact would be minimal. Sinclair has said it believes viewers would find a way to watch popular shows that its stations broadcast.

"Sinclair is making the assumption that enough people will watch their stations in those markets - that it would not hurt advertising revenue," said Steve Effros, a Washington-based cable industry analyst and consultant.

Television viewers can access the company's stations with an antenna or switch to satellite television. But that can be difficult for some consumers who have gotten used to receiving their favorite television stations via cable systems.

"This is a very bad one-way street for the consumer from the guys who like to call themselves free TV," Effros said.

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