TIME WARNER, FOX Near Pact For New Channel-Source

(From Reuters -- By Kenneth Li)

TIME WARNER CABLE is close to a deal to carry FOX NEWS' BUSINESS CHANNEL, which would give the yet-to-be-launched network a critical mass of subscribers to compete against incumbent CNBC, a source close to the matter said on Monday.

FOX, which is owned by NEWS CORPORATION, is seeking carriage of the business channel on TIME WARNER CABLE's "expanded basic" channel line-up, giving it 9.8 million viewers. NEWS CORPORATION executives have pledged to have a minimum of 20 million viewers for the channel before its debut, expected in early 2006.

TIME WARNER INC. would prefer to put the channel on its digital tier, but that would give the channel only 4.8 million subscribers, the source said.

"The deal could fall apart," the source added.

The negotiations are part of talks to renew FOX NEWS' carriage on TIME WARNER systems, the source said. FOX NEWS has unseated TIME WARNER's own CNN channel as the most watched cable news network.

TIME WARNER CABLE confirmed that it was in negotiations to carry the news channel with FOX.

"A deal is not imminent," FOX NEWS said in a statement, calling reports of a deal to distribute the channel "overblown."

Media analysts have said FOX could pressure cable operators to carry new channels as part of negotiations to renew deals to carry FOX NEWS, which begin to expire next year. They said FOX NEWS is expected to exact steep price increases over its current contracts.

FOX has further leverage for the new channel through its controlling stake in DIRECTV, the largest U.S. satellite television service with 14 million subscribers.

PETER CHERNIN, chief operating officer of NEWS CORPORATION, in January told investors the company was aiming to launch a business channel that would be available to more than 20 million viewers on its first day.

FOX NEWS is aiming to challenge CNBC in the U.S. cable business news market. Viewership at the network controlled by GENERAL ELECTRIC COMPANY has slumped from late-1990s levels following the collapse of Internet stocks.

CNN bowed out of the business news market after it shuttered its CNNFN network late last year. BLOOMBERG LP, the privately held financial news and data company, also operates a cable business news network.