SBD/August 22, 2011/Media

LHN Signs Deals With Small Distributors Ahead Of Friday's Scheduled Launch

TV officials expect LHN to cut a "flurry of deals" ahead of Friday's launch

The Longhorn Network is scheduled to launch Friday and the net "has cut several deals with small distributors" in Texas, while it is "counting on several more this week," according to John Ourand in this week's SPORTSBUSINESS JOURNAL. ESPN execs late last week "were in final negotiations with Verizon and Grande Communications," and sources "were confident that both [deals] were close at hand." Industry observers "expect a flurry of deals for Longhorn Network to be cut this week, in advance of its launch." But Ourand reports the "biggest distributors in Texas appear to be far from a deal, including the state's biggest cable operator, Time Warner Cable, the state's biggest satellite distributor, DirecTV, and the country's biggest cable operator, Comcast." Sources said that TWC "appears to be the closest of those three." The "holdup with Comcast, DirecTV and Time Warner Cable apparently deals with questions over what programming the channel can actually carry." Sources said that the three companies "will not agree to a deal with Longhorn Network until there's clarity on exactly what rights the network has." Ourand notes LHN is "seeking 40 cents a subscriber a month from distributors in Texas, Louisiana, New Mexico and Oklahoma" (SPORTSBUSINESS JOURNAL, 8/22 issue).

WIDE RECEIVERS: In Ft. Worth, Art Garcia noted Univ. of Texas and ESPN officials "aren't worried about a distributor blackout." ESPN's promotions department "has a campaign titled 'Don't Make Bevo Angry,' urging Time Warner customers to ask for LHN," though Charter "hasn't made much progress in adding the burnt orange channel to its lineup." Charter Dir of Government Relations Kevin Allen said, "We've had discussions with ESPN to try to come up with a reasonable agreement to carry the Longhorn Network, and so far we haven't reached one. As of now, we don't have a timetable." Garcia noted adding another UT football game to the broadcast schedule "may alleviate some of the content concerns and make for a better sell to distributors." Sources said that if the season-opening Sept. 3 Rice-Texas football game "remained the only game for this season, some carriers might pass on LHN for an entire year if agreements weren't reached." Another point of negotiation between ESPN and potential distributors "is the service level at which LHN is carried." Industry officials indicated that ESPN "is pushing for LHN on basic service plans ... guaranteeing the highest level of penetration and subscriber fees." Charter has "about 150,000 subscribers through Texas," and if LHN is "carried on basic packages at a monthly rate of about 40 cents, that revenue dwarfs what would probably be available from subscribers willing to pay extra on a premium package." One industry exec said, "How much value would Longhorn Network subscribers get out of volleyball and track?" (FT. WORTH STAR-TELEGRAM, 8/21). 

REGIONAL SUCCESS: In N.Y., Richard Sandomir noted with "a few exceptions, regional sports networks are money-printing operations that heavily promote the teams they carry." Media consultant Chris Bevilacqua said, "What you're seeing, especially in professional sports, is the inherent value inside a team [is] its media rights. A prospective buyer looks at a team as if you're buying a regional sports network that happens to have a team." Research firm SNL Kagan reported that the "average regional sports network in 2010 had revenue of $137.8 million." The Yankees' YES Network topped the list at $435.2M, but Sandomir noted "the Big Ten's take was hardly chump change -- $227 million." Below is a list of the top 10 RSNs, ranked by '10 revenue (N.Y. TIMES, 8/20).

TOP TEN RSNs (RANKED BY '10 REVENUE)
NETWORK PRIMARY TEAMS
'10 REVENUE
YES Network Yankees, Nets
$435.2M
FS Southwest MLB Rangers, Mavericks, Stars, Spurs, Thunder
$276.4M
MSG Knicks, Rangers
$272.8M
FS West Lakers, Angels, NHL Kings
$250.7M
SportsNet N.Y. Mets
$227.7M
Big Ten Network Big Ten conference
$227.1M
MSG Plus Islanders, Devils
$219.1M
Comcast SportsNet
Mid-Atlantic
Wizards, Capitals
$212.1M
Sun Sports Rays, Lightning, Magic, Heat
$191.2M
FS South Braves, Hawks, Thrashers*
$190.6M
   

NOTES: Source for RSN revenue data is SNL Kagan. * = The Thrashers relocated to Winnipeg for '11-12 season.

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