SBD/Issue 245/Sports Media

Disney, TWC Deal Includes Creation Of New ESPN-Branded Services

TWC Will Be Able To Offer Some
ESPN3 Programming On Its Sports Tier
Sixteen hours after its midnight deadline passed, Disney and Time Warner Cable have signed a long-term deal that will see the cable operator launch at least several new ESPN-branded services. In addition to renewing deals for ESPN, ESPN2, ESPNU, ESPN Classic, ESPN News and ESPN Deportes, Time Warner and Bright House Networks agreed to launch ESPN3, ESPN 3D, ESPN Deportes HD and two RedZone-style services centered on college sports, ESPN Goal Line (college football) and ESPN Buzzer Beater (college basketball). (Time Warner Cable negotiates programming deals for Bright House.) The ESPN3 deal is particularly interesting, since it marks a significant change in ESPN's financial model for the broadband service. ESPN has sold the service to ISPs based on their total number of broadband subscribers. Time Warner Cable agreed to buy it, but only if it could limit its access to its broadband subscribers that also subscribe to video. This means that a Time Warner Cable sub who subscribes to DirecTV, for example, will not have access to ESPN3 programming. In another first, Time Warner also convinced ESPN to allow it to make some ESPN3 programming available on its sports tier. Neither Time Warner nor ESPN could say when the service actually will be available to Time Warner subscribers. "We've been flexible consistent with the needs of our distributors, in this case Time Warner Cable," an ESPN spokesperson said. "Every negotiation/deal is different and we continue to make a better overall service for distributors and customers." To that point, sources said ESPN recently signed a deal that charges Comcast a flat fee, rather than per subscriber, for access to ESPN3.

COST ANALYSIS: The companies are not commenting on press reports that Time Warner is paying $0.40-0.50 per subscriber per month for ABC's O&Os. Sources told THE DAILY that Disney was seeking one fee for all its programming.

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