3rd UPDATE: Fox Networks Pulled From Cablevision As Pact Ends

Fox television stations remained pulled from subscribers of Cablevision Systems Corp. (CVC) after the two companies failed to agree on subscription fees and as the dispute grows increasingly contentious.

The two companies spoke throughout the day Saturday and agreed to meet again Sunday, according to spokesmen from both companies. There was no material progress Saturday, a Fox spokesman said. Fox is owned by News Corp. (NWS, NWSA), which also owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.

The blackout leaves more than 3 million New York-area households without their local Fox-owned broadcast stations, Fox Business News, Nat Geo Wild and Fox Deportes cable channels, and it threatens the ability of Cablevision subscribers to watch post-season baseball games, National Football League games and popular prime-time shows like "Glee" and "House."

Fox is demanding increases in payments from Cablevision in return for its programming, and the cable giant is balking. The negotiations follow a pattern found throughout the TV industry, with networks seeking a larger share of revenue generated by monthly pay-TV bills paid by consumers, while cable and satellite companies struggle to control rising programming costs.

The rhetoric and posturing between News Corp. and Cablevision intensified over the past few days, and included government officials and agencies. Both sides have accused the other of not negotiating in good faith.

Cablevision, in a scrolling announcement on the affected Fox-owned stations, said the decision to pull programming was made by News Corp. For its part, News Corp. said Cablevision dropped Fox.

News Corp., meanwhile, said Cablevision declared an impasse at 8 p.m. ET Friday; a Cablevision spokesman said the two sides were negotiating until shortly before midnight. Their contract ended at midnight Friday into Saturday.

Cablevision has said it already pays News Corp. more than $70 million a year for its channels, and that the company is demanding more than $150 million a year for the same programming. Fox has declined to comment on those figures.

On Saturday, Cablevision accused News Corp. of blocking its subscribers from watching Fox shows online at hulu.com and fox.com. By early evening in New York, though, Cablevision subscribers were able to watch Fox shows on hulu.com.

Meanwhile, the Federal Communications Commission on Friday offered to get involved, while several lawmakers--including Rep. Peter King (R, N.Y.)--advocated binding arbitration. Cablevision agreed to arbitration, but News Corp. resisted the offer.

In past programming disputes, distributors have agreed to arbitration proposals in part because it would weaken programmers' negotiating position by removing the potential for a blackout.

The programming blackout is likely to provoke outcry from consumers, raising the potential of a public backlash against both companies that could be costly. Cablevision risks losing subscribers, while Fox's ratings and ad revenue could suffer.

The first significant program affected by the blackout was game one Saturday of the National League Championship Series. The next big event that would be affected is the New York Giants' NFL game at 1 p.m. ET Sunday.

Both Fox and Cablevision have reputations for being hard-nosed negotiators that will take on the risks of a programming blackout in order to further their interests.

Currently, cable networks--including 19 regional sports channels--owned by Fox are blacked out on Dish Network Corp.'s (DISH) satellite system, and the two companies face a more important contract renewal for Fox's broadcast stations at the end of this month.

For its part, Cablevision temporarily lost access earlier this year to programming in similar negotiations with the Walt Disney Co.'s (DIS) ABC network, as well as the Food Network and HGTV channels, which are owned by Scripps Networks Interactive Inc. (SNI).

News Corp. and Cablevision have pinned blame for the stand-off on each other in a blitz of public relations. Cablevision is running a scrolling announcement on the Fox stations, explaining its position and blaming News Corp. for the blackout.

Fox, meanwhile, took out advertisements in local newspapers and launched a website, KeepFoxOn.com, advising Cablevision subscribers to switch to pay-TV providers in order to keep watching Fox programming. The company said Cablevision paid itself and charged other pay-TV companies more for its own channels, MSG and MSG Plus, than all 12 of the Fox Channels they carry, even though the Fox channels enjoy higher ratings.

-By Nat Worden, Dow Jones Newswires; 212-416-2472; nat.worden@dowjones.com

(George Stahl contributed to this article.)

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