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When Negotiations Go Sour: The Conflict between Fox and Cablevision and its Impact on the Consumer and Online Piracy

Published onNov 25, 2010
When Negotiations Go Sour: The Conflict between Fox and Cablevision and its Impact on the Consumer and Online Piracy

A wise man once said, “with great power comes great responsibility.”  The impact that the internet has had on our society is undoubtedly powerful.  However, with all of the incredible benefits that the internet has provided, it has also created a convenient and efficient forum for piracy in a variety of areas.  One of those areas is the showing of sporting events such as the World Cup, the World Series, and NFL football on unauthorized websites.  The proliferation of pirated video feeds in the past couple years has led to a whirlwind of efforts on the part of sports leagues to eliminate this trend.  For example, Dan Masonson, a spokesman for the NFL, stated that the league removed more than 2,800 unauthorized streams last year.  The unauthorized streaming of sporting events was a significant issue in the recent dispute between Fox and Cablevision regarding broadcast fees.

Cablevision is a cable television operator that serves more than five million households in the New York market.  The center of the dispute between Cablevision and Fox focuses on the fees to be paid by Cablevision in a new contract in return for Fox’s television programming.  After negotiations came to a standstill, a blackout began which lasted for 16 long days and finally ended on Halloween.  The big loser in this situation?  The consumer.  Due to the 16 day blackout period, over three million Cablevision subscribers were unable to watch several of their favorite sporting events such as New York Giants football and the first two games of the World Series.  Throughout the blackout period, the bad blood between Cablevision and Fox amplified as the days progressed.  After receiving an explosion of customer complaints, Cablevision employees allegedly directed subscribers to websites where they could watch unauthorized broadcasts of Fox programming.  After becoming aware of this information, Fox’s legal counsel immediately sent a cease and desist letter to Cablevision stating that Cablevision’s actions in “inducing and materially contributing to the infringing activities of these illegal websites” constituted copyright infringement.

Even though an agreement was reached on October 31, the relations between Cablevision and Fox can hardly be described as amicable.  In a public statement, Cablevision stated that in the absence of any aid from the FCC, Cablevision has consented to pay Fox an “unfair price” for programming, much of which is of little interest to their customers.  Cablevision further declared that Fox was initially seeking an additional $80 million a year which would more than double the yearly rate that Cablevision had paid to Fox under its previous agreement.  Fox retaliated in describing Cablevision’s actions as “yet another in a long line of publicity stunts.” The standoff between the parties is by no means an isolated event.  In fact, the Cablevision vs. Fox battle is the fifth instance this year in which consumers have experienced blackouts as a result of disputes between cable providers and programming companies.  The year 2010 has featured the most disputes of this sort since 2000.  This alarming trend has sparked the attention of members of Congress across the United States.

Shortly after the Cablevision/Fox aftermath, Senator John Kerry promised to propose a bill that would change the current system and guarantee that consumers do not lose access to their favorite television shows and sporting events when cable providers and programming companies reach a stalemate.  Senator Frank Lautenberg, sharing similar sentiments, acknowledged that New York consumers do not deserve “to be treated as pawns.” Even Julius Genachowski, the chairman of the FCC, was disappointed with the actions of Cablevision and Fox as he believes that both corporations have a duty to protect consumer interests.

Earlier this year, a dispute between Cablevision and Walt Disney led to a blackout in the hours leading up to the Oscars.  In a similar dispute, the Food Network and HGTV experienced blackouts for three weeks.  A dispute between Time Warner Cable and Fox threatened to black out new episodes of The Simpsons and college football bowl games.  If these disputes continue to occur at the current rate, and if Congress does not take action to address the problem, piracy efforts on the internet will only continue to increase as consumers will take matters into their own hands, illegal or not.

*Vlad Vidaeff is a second-year law student at Wake Forest University School of Law and is Vice President of the International Law Society.  He holds a Bachelor of Arts in Sport Management and a minor in French from the University of Michigan.  Upon graduation in May 2012, Mr. Vidaeff intends to either practice intellectual property law, international law, or sports and entertainment law.

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