Time Warner Cable and News Corp's Fox Networks Group agreed to a brief extension of their current carriage contract late on Thursday to avoid a blackout that would have prevented 13 million U.S. homes from seeing TV shows like The Simpsons and House as well as college and NFL football games.

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

The short-term pact 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 demanding 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)

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