SBD/December 11, 2012/Media

Escalating RSN Costs Prompt Cable, Satellite Backlash; Gov't Intervention Coming?

TV rights deals like the Dodgers' anticipated $6-7B concern distributors
FSN “appears set to hit a new high mark for sports programming rights" by paying $6-7B for a 25-year deal to air Dodgers games on its L.A.-area RSN, and that “could be the final straw that forces a fundamental change in TV distributors’ overall programming-cost structure,” according to a cover story by Mike Farrell of MULTICHANNEL NEWS. Cox Senior VP/Content Acquisition Bob Wilson “wasn’t convinced that the Dodger deal will be the breaking point for distributors.” But Wilson said that “escalating sports costs are a growing concern.” Farrell reports rising sports costs have been a “complaint of distributors for more than a decade.” In recent weeks, the “hue and cry for some kind of reform has been louder than ever.” Time Warner Cable President, Chair & CEO Glenn Britt last week at the UBS Global Media & Communications conference in N.Y. “argued that rising costs may force distributors to drop networks that have low ratings.” Britt said, “We’re going to take a hard look at each service and those services that cost too much relative to the viewership, we’re going to drop them.” DirecTV Exec VP/Programming & Chief Content Officer Dan York said that the satellite company is “taking a long hard look at sports costs.” York: “We would love to make all of these channels available to our customers, but the sports programmers are making it impossible with their unreasonable, unsustainable prices.” Wilson said that sports channels “obviously have strong ratings and a loyal viewership, both valuable traits to a cable system.” But Farrell notes the “perceived value and the actual value of the channel is what appears to be out of whack.” American Cable Association President & CEO Matt Polka said that concerns over "rising programming costs could spur Congress to continue to hold hearings on the issue in 2013 and beyond.” Polka added that both the U.S. House and Senate have held several hearings this year “on the need to reform current rules and regulations, including retransmission consent.” Polka: “Congress will respond in times of crisis. If consumers complain more to their congressmen and senators about the rising costs of programming, then you’ll definitely see more action” (MULTICHANNEL NEWS, 12/10 issue).

BIG CITY SURCHARGE: In L.A., Joe Flint reported DirecTV has “quietly taken a step toward selling some sports channels separately from the rest of programming it offers on several of its most popular programming packages.” New DirecTV subscribers who “live in areas where there are more than one regional sports network ... and want those channels are being asked to pay a monthly surcharge of $3.” A company spokesperson said that “only about 20% of the markets around the country have more than one regional sports network -- although that number is on the rise as Comcast, News Corp. and Time Warner Cable increasingly turn to sports to develop new channels.” The move is “significant because even though it is only for new DirecTV subscribers and only used in areas where there are multiple local sports channels, it is being seen as a first step toward selling sports channels separately.” DirecTV's shift “will likely be met with a backlash” by companies with RSNs, including Fox Sports, TWC and Comcast (LATIMES.com, 12/10).
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