SBD/Issue 154/Sports Media

Operators Now Willing To Get Behind Sports Tier Concept

Cable operators today will testify to a Senate Commerce Committee that they are "open to separating sports channels from basic programming packages as a way to control the industry's fast-rising rates," according to David Lieberman of USA TODAY. Cox Communications CEO James Robbins will tell the committee, "Less than 20% of our customers are avid sports fans. But sports programming is disproportionately driving up cable prices for everyone" by raising carriage fees by up to 20% a year. Most large cable operators have "opposed proposals to put sports channels" on a separate tier since it would "cut sports audiences and reduce ad sales for programmers and operators alike." Cablevision Chair Charles Dolan will also testify and "will probably agree" with Robbins' position that separate sports pricing is "an intriguing solution" to rising consumer costs. YES Chair & CEO Leo Hindery will "call for legislation to prevent operators from favoring their [own] channels over those from independent programmers." Consumers Union's Gene Kimmelman "will agree with Hindery's proposal — and also ask Congress to require operators to let subscribers buy just the channels they want" (USA TODAY, 5/6).

ALL ON ESPN? National Cable Television Cooperative President Michael Pandzik said, "ESPN has become the lightning rod for this kind of discussion. ... But this is not just ESPN; this is an industry-wide clash. If we don't provide an industry solution, there will be a congressional solution and that's not our first choice." ESPN last week announced a proposal to reduce its annual fee increase from 20% to 11% by 2014 in exchange for carriage of new ESPN programming, such as ESPN Deportes and ESPN HD, on premium tiers, and the SPORTSBUSINESS JOURNAL's Andy Bernstein reports, "Several operators have made oral agreements to accept the new proposal." ESPN Exec VP/Affil Sales & Marketing Sean Bratches: "There is an acceptance of the general proposition of (ESPN) lowering the rate caps in exchange for other value." But Bratches "conceded that some operators had strong objections to the new deal" (SBJ, 5/5). Speaking last week at Kagan's Broadband Summit in N.Y., Mediacom Communications Corp. Chair & CEO Rocco Commisso, "without naming names — but clearly alluding to ESPN," said that the total fee for his subscribers' most popular network, Lifetime, "is less than the sports channel's proposed incremental bump." Commisso added that ESPN accounts for 23% of Mediacom's total programming costs. Insight Communications CEO Michael Willner said, "One way to get them is at contract renewal time, to say we're going to carry you on a tier, and if that is not acceptable to you, we're not going to carry you at all" (MULTICHANNEL NEWS, 5/5 issue). Cox Communications yesterday reported a Q1 loss of $29.2M as expenses rose 13% to $886.8M. The company "attributed the increase [in expenses] partly to the rising costs of carrying programming from ESPN and other networks" (PROVIDENCE JOURNAL, 5/6).

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