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RED SOX SUED OVER CABLE RIGHTS FEES
Published May 29, 1996
Boston's WSBK-TV has filed suit against the Red Sox and Bruins, its partners in NESN, claiming the teams are "threatening to run NESN into the ground by grabbing for more of its revenue than the teams are owed," according to David Halbfinger of the BOSTON GLOBE. As owners of NESN, the Red Sox (47%) and Bruins (31%) supply content, while WSBK (19%) supplies production equipment and services. An additional 3% is split among the three. The dispute involves the rights fees the teams receive from games -- originally $.11-.16 per subscriber/per game. But Michael Gass, attorney for WSBK, notes that deal was negotiated when NESN was purely a premium cable service. However, more cable systems recently have begun moving NESN from premium to basic cable, cutting the channel's monthly per subscriber share from $4-5 to around $.50. Gass noted that since '85, "to account for the disparity," the teams accepted lower rights fees. But in January, according to the suit, the Red Sox and Bruins labeled those lower fees an "experiment" and threatened to terminate if the fees didn't rise. Gass, on the demands: "This would put NESN into the red this year, and further and further into the red every year after. And Channel 38 would lose money on the deal. It's inconsistent with keeping the venture alive." The GLOBE's Halbfinger notes the "bad blood" between the Red Sox and WSBK-TV, the team's broadcast partner for 21 years until a switch this year. Also, the $2.1M the Sox are demanding would help balance $5M in local broadcasting losses under their new deal with WABU- TV and $4M in national TV losses (BOSTON GLOBE, 5/25). Red Sox attorney Daniel Goldberg accused WSBK's owner, Viacom, of being "far off on their facts." Goldberg: "Rather than come back with a proposal, they came back with a lawsuit" (Jeffrey Krasner, BOSTON HERALD, 5/25). BEHIND THE BRIEFS: The GLOBE's Joan Vennochi writes the suit "is about revenge, money" -- and the Red Sox's new TV rights deal, negotiated by team Exec VP John Buckley. Vennochi writes that Buckley's deal with WABU for roughly $9M per year "may have put the team is such a bad bargaining position, management is anxious to make up the difference elsewhere --like NESN" (BOSTON GLOBE, 5/29).