Fox vs. Cablevision TV Blackout Extends to Internet

Editor’s note: This is a guest post by Joseph Pope (Linkedin), who works in Broadcast Media. He previously worked at MTV Networks as a Senior Sales Planning Analyst. He has BS, Information Studies and Technology from Syracuse University, and has a MBA, Finance and Media Management from Fordham University.

Did you catch Fox’s hottest new fall TV drama? If you don’t live in the Northeastern United States, you may have missed it. It wasn’t a new show, but a contract dispute over carriage fees between Fox and their distribution partner Cablevision.

During fruitless contract renewal negotiations in mid-October, News Corporation-owned Fox blacked-out their channels from Cablevision households, affecting 3.5 million homes in Long Island, Brooklyn, New York City, Connecticut and New Jersey. Cablevision risked losing angry consumers who might abandon their service for competitors while Fox had to bear substantial decreases in ratings.

 What makes the current blackout truly unique is that News Corp extended the Cablevision embargo from the TV to the Internet. The goal was to prevent Cablevision subscribers from ‘cutting the cord’ and watching all of their Fox programming for free on Hulu or Fox.com. Hulu, which is partly owned by Fox, staked a neutral position. Blackouts might be fairly common during television contract negotiations (at least in recent years), but restricting access over the Internet is unprecedented.

The Internet blackout was flawed in execution and scrapped after a few hours. Not all Cablevision households were actually barred while some non-Cablevision households were blocked from Hulu and Fox.com. This is partly because some users have Cablevision as their Internet provider, but use another service, such as DirecTV for their television.

Although mobile video is not as ubiquitous as online video, it is another medium that blackout-affected Cablevision users could have used to ‘illicitly’ view Fox programming. Blocking Fox programming from Cablevision subscribers who have wireless carriers like AT&T or T-Mobile in that blackout region is a logistical and technical impossibility. Consumers may not wish to view Fox content over their iphone’s small screen on Hulu or Fox.com, but perhaps they will on an iPad or Wi-Fi connected netbook.

With an ever expanding world of viewing devices (iPad, SlingBox), content aggregators (Netflix, Hulu), and delivery pipelines (TCP/IP, Wi-Fi, 4G) content providers like Fox will have their hands full keeping their intellectual property under tight control. As the years go by, hard drive memory space will double, Internet bandwidth will increase, video compression technologies will keep file sizes small, and Fox will find it that much harder to maintain control.

For now, Fox may find it advantageous to wield a stick over a carrot during contract negotiations. What Fox will do when consumers have scores of other media consumption options at their disposal remains to be seen.