SBD/December 8, 2011/Media

Chase Carey Hints News Corp. Would Oppose Putting Sports Channels On Tier

Carey said News Corp.'s goal is to continue to have the NFL be a centerpiece
News Corp. President, COO & Deputy Chair Chase Carey yesterday hinted that his company "would oppose any push from pay-television providers to put sports channels on a specialty tier," according to Joe Flint of the L.A. TIMES. Speaking at the UBS Global Media & Communications conference in N.Y., Carey said that sports "is a 'product that is uniquely important to a large segment of customers' and that it is crucial that the industry 'respect the business models we built.'" When asked about the status of talks for a new TV deal with the NFL, Carey said, "The NFL is a fabulous franchise. ... Our goal is to continue to have it be a centerpiece." Carey also reiterated that News Corp. "should be paid more in monthly subscription fees from multichannel video programming distributors for its broadcast and cable channels." He said, "If ESPN is worth $4, then Fox is worth $5" (L.A. TIMES, 12/8).

COSTS SOARING: In L.A., Meg James notes cable nets are "beginning to feel the pinch of dramatically higher programming costs." ESPN in '06 "spent $3.5 billion on programming for its flagship channel." Consulting firm SNL Kagan indicated that ESPN's content costs this year "have mushroomed to $5.2 billion -- a nearly 50% jump from five years ago." Meanwhile, programming expenses for TNT "have soared 55% since 2006 to $1.1 billion this year, propelled by sports rights fees for NBA and NCAA basketball as well as a lineup of original dramas." Programming expenses for Versus "have expanded 120% from 2006 levels, in large part because of a recent $200-million-a-year deal" with the NHL. ESPN's programming expenses "soon will soar even more." The net in two years will begin paying the NFL "$1.9 billion a year for professional football -- a 72% increase over the network's current fee." That is "part of the reason ESPN, with its pricey lineup of sports properties, has a lower cash flow margin of about 25%." The media industry "is bracing for the next big hit as CBS, Fox and NBC negotiate their new NFL deals" (L.A. TIMES, 12/8).
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