Mediacom May Lose 22 Sinclair Stations

Some football fans who pay for cable television in Cedar Rapids, Iowa, will need to make special arrangements to catch Sunday's NFL playoff game between the New England Patriots and the New York Jets. Ditto for devotees of "Grey's Anatomy" in St. Louis who want to catch Thursday night's hotly anticipated new episode.

The culprit? A financial stalemate between cable operator Mediacom Communications Corp. and Sinclair Broadcast Group Inc. (SBGI), the owner of the CBS affiliate in Cedar Rapids and the ABC affiliate in St. Louis.

Because Sinclair did not extend its retransmission consent to Mediacom past midnight Friday, Mediacom will not carry those stations and 20 others owned or programmed by Sinclair unless Sinclair agrees to binding arbitration of a dispute over how much Mediacom should pay for the right to include the stations in its cable package.

Late Friday, Mediacom said in e-mailed statement that Sinclair "has refused to extend Mediacom's right to carry the Sinclair broadcast stations and directed Mediacom to pull the stations from the channel lineup as of midnight tonight." Mediacom also said it would provide content from other programmers on the channels previously occupied by the Sinclair stations.

A 1 a.m. EST Saturday, KDSM-TV in Des Moines, Iowa, a Fox affiliate that is a Sinclair station, went to a blank screen, then broadcast alternative programming. However, in Birmingham, Ala., WDBB-TV, a CW affiliate, was still broadcasting that network's shows.

Essentially, Sinclair argues that it provides some of the most popular shows on television and should be compensated accordingly. Mediacom contends that Sinclair is nothing more than a middleman for programming generated by the major broadcast networks, unlike cable channels that produce original programming.

"Sinclair made the case that they want to get paid like cable networks. They certainly don't behave like cable networks," Mediacom Chairman and Chief Executive Rocco B. Commisso said Friday in a conference call.

Barry Faber, vice president and general counsel of Hunt Valley, Md.-based Sinclair, said Sinclair was asking for a fraction of what Mediacom pays for cable channels that appeal only to niche audiences.

"If they were taking off Animal Planet, I don't think this would be quite the big issue that it is," Faber said. "The reason it's a big issue is that people care about our television stations because they're popular."

The Federal Communications Commission's media bureau on Thursday rejected Mediacom's complaint alleging that Sinclair didn't negotiate in good faith as the companies tried to agree on the value of Sinclair stations that reach Mediacom customers in 13 states.

The panel "strongly encouraged" the parties to submit to binding arbitration while noting that it does not have the authority to require them to do so.

If the dispute went into arbitration, Mediacom would continue to carry the Sinclair stations until a decision is reached, Commisso said.

"We offered binding arbitration to Sinclair and are still awaiting their response," he said.

But Faber said Mediacom had not been specific about how it wanted the case to be handled if it went to arbitration.

"The suggestion of doing binding arbitration 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.

Commisso alleges that Sinclair has made "outrageously escalating demands" and is trying to charge Mediacom significantly more than it charges larger cable operators for carrying its stations. He did not specify the financial terms of Sinclair's offer but said the rates it has proposed to Mediacom are "100 percent to 500 percent" higher than what it has offered other companies.

Faber said he wouldn't base negotiations with Mediacom on his deals with other companies.

"Every negotiation is different. It's impossible in many ways to compare one to the other," Faber said. "We think we're offering them a tremendous deal."

Middletown, N.Y.-based Mediacom is the nation's eighth-largest cable company, with about 1.3 million subscribers. By comparison, the largest cable provider, Comcast Corp. (CMCSA), has 24 million subscribers, according to the National Cable and Telecommunications Association.

The dispute affects more than 800,000 Mediacom cable subscribers in Alabama, Florida, Georgia, Illinois, Iowa, Kentucky, Minnesota, Missouri, North Carolina, Tennessee, South Carolina, Virginia and Wisconsin.

The Sinclair stations include six Fox affiliates, four ABC affiliates, four CW affiliates, one CBS affiliate, one NBC affiliate and six affiliates of MyNetworkTV - the network formed by News Corp. (NWS) for stations left out when the WB and UPN networks merged to create CW.

Sinclair has warned Mediacom customers that the dispute could mean they might not able to see their favorite programs and is urging them to switch to satellite providers. The company is offering rebates for Mediacom subscribers who sign up for DirecTV.

"We think people who care about our programming will continue to find ways to watch it," Faber said. "We don't think that people are going to change what they want to do because two businesses can't come to an agreement." [via]