TS News - Time Warner Picks MSNBC In Favor Of Fox News

TELE-satellit News, 28 September 1996

Time Warner Picks MSNBC In Favor Of Fox News
  NEW YORK, New York, USA, 96/09/28 (TS) -- It could turn out to be one of
the most far reaching decisions taken in the broadcasting world - Time
Warner announced last Friday that it would carry the MSNBC news service of
Microsoft and NBC in favor of Rupert Murdoch's new Fox News on half of its
cable networks, some six million homes.

  The USA's number two cable operator is merging with Ted Turner's Turner
Broadcasting and US regulators ruled it must carry a news channel to compete
with Turner's dominant CNN. Time Warner and News Corporation has apparently
come to a deal to carry Fox News but reversed and chose MSNBC instead,
according to Fox.

  The reason was simple, say many. Broadcasting magnet Ted Turner is afraid
of no other company or person in the broadcasting business bar one - Rupert
Murdoch. In choosing MSNBC over Fox News he deprived Murdoch's soon to
launch news channel of a massive potential audience on Time Warner cable
systems and gave MSNBC a big boost.

  After the decision was announced News Corporation all but declared war on
Time Warner. They reneged on a solid deal to carry Fox News, says Fox CEO
Chase Carey. Now his company will "evaluate all our options" -- including
taking Time Warner to court. Carey alleges that Time Warner led Fox on to
show the Federal Trade Commission that it would consider carrying
competition to CNN.

  That became a condition for FTC approval of Time Warner's acquisition of
Turner Broadcasting System. Time Warner said it didn't want to sign a deal
with Fox before the FTC vote because "that would be giving up a chip" to the
FCC, Carey said. Time Warner executives said they did not have a deal with
Fox. They were more concerned about a dispute with NBC over its news
channel, MSNBC. Once that was resolved, Time Warner decided to increase its
distribution of MSNBC from 3 million homes to 5.8 million.

  The nation's third and fourth-largest cable operators agreed this week to
roll out Rupert Murdoch's Fox News Channel to more than half a million
subscribers.  Time Warner Cable, however, continued to reject broadcasting
the 24-hour news channel. In exchange for the vote of confidence, Fox will
pay Comcast and Continental cable companies about $10 per subscriber, the
highest launch-budget fee in the history of cable.

  Rupert Murdoch's News Corp. is preparing to retaliate against the cable
giant. "We've notified them we are going to pursue legal remedies for breach
of agreement," said one News Corp. executive, who said the notice was made
in a letter to Time Warner.

  While News Corporation plans second to Turner and Time Warner in the
United States the situation is very different overseas. The UK, a major
English speaking market for both companies is ruled by News Corp's BSkyB
service making it almost impossible for any broadcaster to launch a pay TV
service without dealing with BSkyB for subscriber management systems.

  News Corp also commands a large number of viewers in Asia via Star TV and
is moving into Central Europe. All this means a battle in the US may be
costly for Time Warner and Turner overseas.

  New Corp. is preparing to file comments with the Federal Trade Commission,
which recently approved Time Warner's purchase of Turner Broadcasting System
for $6.7 billion. Fox executives said it was likely that the network would
strike on the business front as well- Murdoch has already prevented one of
Time Warner's entertainment networks from being launched on his BSkyB
service in Europe. Arthur Siskind, a News Corp. general counsel refused to
be more specific but said that the situation could "affect all of our
relationships with Time Warner."

  Source: Don Fitzpatrick's Shoptalk contributed to this report. USA Today

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