Cox Renews Contract With Fox Sports

Settling one of two nasty fights with its programming suppliers, Cox Communications Inc. agreed Wednesday to renew its contract for carrying regional sports channels owned by News Corp.’s Fox Sports on its cable systems nationwide.

Under the deal, Cox will continue to carry the sports channels for six more years on systems that serve 3.3 million customers in cities including San Diego, Phoenix, Tucson and New Orleans.

Cox’s contract with Fox expires at the end of the month.

Cox, the nation’s fourth-largest cable operator, has been leading a charge among cable operators against Fox and ESPN over the escalating cost of sports programming that these distributors say is driving up consumer rates.

This fall, Cox Chief Executive Jim Robbins threatened to drop the popular channels if they didn’t temper their demands for higher subscription fees.

Neither Cox nor Fox would discuss terms of the new agreement. But industry sources estimate that Fox will get an average yearly rate increase of about 9% to 10%. Fox also gets distribution for additional channels such as National Geographic and Fuel, an extreme sports network.

Fox was demanding a 35% increase.

Cox is trying to hammer out a new contract with ESPN to replace the one that expires at the end of March. Cox is looking for single-digit yearly increases.

ESPN, which is owned by Walt Disney Co., has become the nation’s most expensive basic cable channel after raising subscription fees paid by cable operators by 20% annually for the last five years.

“In a world where the average American received a 4% increase in his paycheck this year, and savings accounts are earning 1% in interest, how can ESPN continue to justify 20% increases?” Cox asks on a Web site it launched as part of its campaign against rising sports programming costs.

Cox contributes about $400 million to ESPN in subscriber fees and advertising, according to Merrill Lynch.

In a report Wednesday, Merrill Lynch said questions about ESPN’s future revenue and its management stability were helping to weigh down Disney stock.

Contracts covering half of ESPN’s 87 million subscribers will expire in the next two years, subjecting the company to demands for rate rollbacks, Merrill Lynch said.

Cox’s Robbins has been a proponent of putting sports channels on a special tier, like Home Box Office, so that subscribers who don’t watch them aren’t forced to subsidize their cost.