Fox, Time Warner Cable ink temp deal to avoid blackout

The two sides continued to negotiate for a longer-term deal into the early hours of Friday morning.

Time Warner Cable also agreed a short extension with Scripps Networks Interactive's Food Network.

But another cable operator, Cablevision Systems Corp, which has 3 million subscribers in the New York area, said early on Friday it had been unable to reach a new carriage agreement with Scripps and dropped both Food Network and HGTV.

It said in a statement it had no expectations of carrying Scripps programing again.

The last-minute negotiations over how much cable operators pay networks to distribute their programing are often contentious. In 2008 Time Warner Cable went to the wire with Viacom Inc on New Year's eve in a similar dispute.

In the last 12 months talks between cable operators and program providers have become even more tense. Programmers have been seeking better affiliate fees as they have seen advertising revenue hurt by the U.S. economic downturn and remain uncertain about the future of TV advertising as more marketers turn to the Web.

FOX VS TIME WARNER CABLE

The short-term extension between Fox and Time Warner Cable comes after a months-long dispute over how much the second largest U.S. cable company should pay for the right to deliver the free-to-air Fox broadcast network to its subscribers in major cities like New York and Los Angeles.

News Corp, which is controlled by media mogul Rupert Murdoch, has been targeting around $1 a month per subscriber, a sum which Time Warner Cable has described as unreasonable. Time Warner Cable executives have privately pointed to deals with other smaller broadcasters for around 20-25 cents a subscriber.

The dispute has played out in the press and aggressive marketing campaigns from both companies seeking support from the affected subscribers.

Neither side is well-positioned for a long standoff. Time Warner Cable, which faces stiff competition for video customers from satellite providers and phone companies, will be reluctant to lose popular shows like American Idol which returns to Fox on Jan 12.

Meanwhile, the prospect of sports fans not being able to watch college and NFL football games on Fox's free-to-air broadcast has attracted attention from the U.S. Federal Communications Commission Chairman Julian Genachowski, Senator John Kerry and some other members of Congress.

Fox will also be hurt by a loss in advertising dollars if more than 13 million homes are not able to see its shows.

(Reporting by Yinka Adegoke; Editing by Kim Coghill)