Will Carriage Dispute Lead Live Streaming Services to Drop Fox, Fox News? Will Subscribers Be Forced to Pay ‘Fox Fee’?

Following the settlement of the defamation lawsuit filed by Dominion Voting Systems against Fox News, much of the discussion has been about the $787.5 million that the Murdoch-owned cable channel agreed to pay Dominion, the lack of an on-air acknowledgment for Fox’s part in spreading lies about the company’s non-existent plot to fabricate vote totals during the 2020 presidential election, or any sort of apology from Fox executives or anchors.

Then last week, Fox News announced that it had parted ways with its most popular primetime anchor Tucker Carlson, causing shock and confusion across the entire cable news industry. While these stories are undeniably massive and have far-reaching consequences, there is another Fox News thread that has the potential to impact even more people than actually even watch the cable network.

Happening in the midst of all of the Fox News upheaval is the fact that the channel’s parent company Fox Corp. is currently negotiating an extension of its carriage agreements with multiple cable and live TV streaming providers, including the largest cable provider in the country, Comcast. Fox’s goal is to drive up the fees that these providers have to pay for the right to include Fox channels as part of their subscription packages.

The public is usually not privy to the specifics of these types of deals, but considering that the Fox network is one of the main broadcasters of NFL games and Fox News is the No. 1 cable news network in the country, it appears that the media conglomerate is going to be looking to use its leverage in an attempt to squeeze even more money out of cable, satellite, and live streaming platforms, even though these outlets are all looking to cut costs as their subscriber bases continue to errode.

“In the negotiations that are taking place this spring between Fox and the likes of Comcast,” Brian Stelter wrote in Vanity Fair, “Fox wants to break past the three — buck mark — meaning three dollars per cable household per month, according to sources familiar with the matter. Even though the American cable universe is shrinking, Murdoch and his son Lachlan Murdoch are still extracting billions of dollars.”

Since no business — especially a traditional TV provider in today’s ever-escalating cord-cutting environment — is just going to willingly give up a larger portion of its revenue, two things can happen if Fox continues its attempts to extract more money per subscriber from providers. The first is that said providers cave and pay up, eventually passing the added expense onto customers. This is one of the major reasons that it feels like the costs of cable and streaming services keep going up fast than ever.

However, depending on the service, executives might not be willing to pay an exorbitant price increase for the Fox channels, especially if the company’s news network just fired its most popular anchor. In this case, there is a possibility that providers will refuse to renew at a higher rate and the two sides will find themselves in a stalemate that results in a service interruption for consumers. It is not unusual for channel owners and service providers to have carriage disputes that result in channels going dark on a service for a period of time, but more often than not these are resolved fairly quickly.

That being said, things get a little more complicated in cases like what we are seeing with Fox. Because the company makes its channels available as a package — including the broadcast channel, the cable news network, Fox Sports 1, Fox Sports 2, and Fox Business Network — cable companies and live TV streaming services who stand strong against increased carriage fees risk losing a slew of channels that customers have come to rely on; and when those channels focus on sports and news, losing them can cause significant concern.

Last summer, while cable news channels were feverishly covering on the January 6 hearings, Fox News was focused elsewhere, leading some to wonder about its place as part of the news media environment. However, we here at The Streamable posited that even though other conservative networks had been dropped by cable and streaming platforms,Fox News never would be, because of its bundling with the Fox broadcast network.

There is no denying that NFL is king when it comes to media and entertainment, so no cable, satellite, or live streaming service would be comfortable with losing Fox, which airs roughly half of the games during the league’s jam-packed Sunday afternoon windows. The draw to live sports is one of the reasons that ESPN is far and away the highest-priced channel bundle when it comes to service carriage fees.

A recent report from Bloomberg indicates that ESPN is currently able to charge $9 per cable subscriber for its suite of channels — including its flagship, ESPN2, ESPNews, and ESPNU. While that total is three times what Fox is hoping to get from its upcoming agreements, carriers have to be willing to pay it to make the demands beneficial to content owners.

Last year, Dish CEO Charlie Ergen stood by his decision to allow the carriage agreement between his company and local CBS affiliates owned by TV giant TEGNA to expire, meaning that his company’s customers had to go without some NFL games.

“We have a number, and if we’re at X and somebody’s at 2X, we’re not going to carry it, because it’s more beneficial for us not to pay the money,” he said. “If they get to X, we’ll do a deal. If they’re X+1, we won’t do a deal. TEGNA was 2X, it didn’t happen. We lost subs, they lost revenue. But when football season was over … where was the leverage?”

Dish, which owns live streamer Sling TV, does still carry Fox, ABC, and NBC — all of which carry NFL games — but does not include CBS affiliates on any of its subscription tiers.

While this is a pretty drastic step for any provider to take, and one that isn’t likely to happen across the board, a company the size of Comcast does have the ability to push back a bit against Fox. Comcast CEO Brian Roberts is known for being a shrewd negotiator, even getting NFL commissioner Roger Goodell to call him directly to resolve a one-day service interruption of NFL Network following last weekend’s NFL Draft.

So, it is pretty unlikely that any major cable or streaming provider will end up dropping the Fox stable of networks, but there is an organization currently urging customers to contact their content providers to encourage them to stand against the Fox carriage demands, calling any potential rate increases that would result from a new contract a “Fox Fee.”

Whatever the outcome of these negotiations ends up being, it will no doubt likely come down to leverage. Fox likely believes that its NFL rights and cable news dominance make it indispensable to content providers. However, without a subscription streaming service of its own, if the company loses relationships with cable and live streaming services, a significant portion of its revenue immediately disappears.