It has been nearly a week since HSE originally reported on the brewing conflict between Time Warner Cable and News Corp., which owns many popular networks including the entire Fox lineup. At the time, a deadline for resolution seemed to be dropping of the ball in New York City, an event that has no come and gone. Are the two parties any closer to resolution? The answer is to that question appears to be a guarded yes, which is exactly what millions of customers have been holding their collective breath to hear.
A Resolution For a New Year?
A resolution appears to be in effect following a series of closed door negotiations that continued well into the afternoon on the first, though the initial start date of such meetings is not entirely clear. The resolution will apparently keep major bowl games and other sporting events on the screens of Time Warner Cable customers along with many award winning programs that Fox and its associated networks are famous for.
The actual agreement is unknown at this point, but an educated guess would suggest that News Corp. blinked and probably had to concede most of their ground. The logic behind this speculation comes from extensive reading of the Harvard Negotiation Project and the tactics used by both sides. News Corp. representatives refusing to agree to a cooling off period or even contemplate binding arbitration would seem to cast them in the light of positional bargainers. Positional bargaining is defined by the Harvard Negotiation Project as those that negotiate based on what they want, without necessarily considering what is right, reasonable, or in the best interest if the other party or parties.
Kudos to Time Warner Cable for Playing it Cool
Time Warner Cable on the other hand constantly stated that they were always open to a deal that would serve the needs of their customers. While that sounds like perhaps a position from which Time Warner Cable could budge, the truth is that they have countless contracts with customers and cannot arbitrarily alter their pricing structure. Furthermore, the digital cable industry itself has become extremely cutthroat over the past five to ten years, and allowing content providers to begin charging substantially more than they used to would dramatically alter the profitability of individual carriers. As a result, it is fairly safe to say that Time Warner Cable would probably have been more than willing to listen to anything that News Corp. representatives had to say in an effort to reach an accord, but there may not have been much leeway in terms of finances.
What Does It All Mean?
How long will this new agreement last? That is not clear, but the good news is that the storm seems to have passed for now. This might be a very good thing for some, because the world might have been a very different place had News Corp. won this contest outright. In such a world, all basic cable service providers may have been given a precedent to attempt to charge digital cable service providers approximately $1 extra per channel per subscriber. The results could have significantly altered the pricing structures of virtually all digital cable service providers, especially those top-tier services that pack dozens of such basic cable channels into their lineups. Verizon’s FiOS. AT&T’s U-Verse, Comcast, and Time Warner Cable are all major players in this arena, but dozens of other companies offer digital cable as well. Had the tactics used by News Corp. been completely successful, it might have a destabilizing effect on the economy, stemmed countless class action law suits, and perhaps forced some providers into a less than favorable consolidation.
It would be remiss not to look at what the benefits might have been to studios and media companies before concluding this article. News Corp. undoubtedly spends a great deal of money producing their top-notch shows, and they have countless awards on their mantle to prove it. The same can probably be said of just about every other major media studio in the country: they spend a lot, but they produce results. Going back to the Harvard Negotiating Project for a moment, it would certainly seem prudent to ask what would happen if a company such as News Corp. could not be as profitable as they and their investors would like to be. Talent of all kinds are famous for being dynamic, and if News Corp. cannot offer competitive salaries, then they may lose out on quality staff members. This in turn would seem to likely have a negative effect on their performance and ratings, which is ultimately tied to profitability. Profits are the primary reason to start and/or operate a business, and thus it makes sense that companies would do what they can to try to be as profitable as possible. In that light, the heightened competition may have been a trigger of New Corp. to consider attempting a standoff of this sort, and that may mean that this is not the end of such attempts. It may be inevitable that the wide-open digital cable market results in future events similar to this. Only time will tell.
