SBJ/July 17 - 23, 2006/This Weeks News

With deal, Turner steals OLN’s buzz

It was only nine months ago that OLN was setting itself up to be a national sports alternative to ESPN. The network had just won exclusive rights to the NHL, it was expecting to pick up exclusive rights to an eight-game package from the NFL and it figured to be in the mix for most major sports packages that were available.

TBS has long carried Braves baseball, but that
will end with the new MLB agreement.
While all eyes were on OLN, Turner Sports was developing its own high-profile sports programming portfolio, featuring the NBA, NASCAR and professional golf, a lineup to which the network is now adding MLB.

The moves have industry executives now pointing to TNT/TBS, not OLN, as cable’s second most important sports outlet, behind ESPN.

“Turner is definitely building something,” said Tim Brosnan, MLB’s executive vice president of business. “It’s very interesting to see what they’re doing.”

Turner bolstered its position as a sports outlet when it agreed last week to shell out about $100 million a year for exclusive rights to MLB’s League Division Series games and 26 non-exclusive, regular-season Sunday afternoon games through 2013. It also acquired the rights through 2013 to any tiebreaker games and the All-Star Game selection show, rights currently held by ESPN.

The deal finally gives a stable home to the divisional playoffs, which have been on several different outlets in recent years, including Fox, ESPN, Fox Family, ABC Family and FX.

Last week’s deal dissolves the agreement Turner signed last year to carry 70 Atlanta Braves games a year nationally. Turner will stop carrying Braves’ games nationally after next year.

Industry insiders speculated that TBS is dropping its national Braves coverage because its corporate parent, Time Warner, is selling the team. Turner officials denied such a connection.

“Turner was obviously looking for a way to get out of the Braves situation because of the team’s sale,” said former Clear Channel TV Chairman Mike Trager. “If someone else owns the team, they have no real incentive to carry them nationally.”

From 2008-13, the local independent broadcaster Turner owns in Atlanta, WTBS, will carry 45 Braves games locally in the Atlanta market. TBS still holds the rights to broadcast the games regionally in the Southeast.

Turner Sports President David Levy said last week that the months of negotiations with MLB leading up to last week’s deal swung once the league agreed to give the network exclusivity on the LDS playoff games. Those games will not be broadcast on over-the-air local broadcast stations.

“Exclusivity was key to us,” he said.

It apparently was the lack of that exclusivity — at least, as far as the Sunday afternoon regular-season games go — that made OLN take a step back from the table. After meeting with MLB executives several times over the past couple of months, OLN became increasingly concerned about the glut of regular-season baseball games on cable. Officials there viewed the $700 million price tag as too steep, a source said, and not in line with their current programming strategy.

That strategy calls for building signature elements out of its sports agreements, whether it’s with the hockey and pro bull riding content currently in the OLN lineup or with the exclusive eight-game NFL package the network wanted.

“We feel like we can be a unique network and can stand for something that makes us valuable in the field of all the networks that offer sports and entertainment,” OLN President Gavin Harvey said. “We don’t necessarily have to have another [major sport]. But I wouldn’t rule that out. … There will always be the worldwide leader in sports and entertainment. There is room for other unique brands in the sports world.”

Industry observers believe OLN, which is rebranding to Versus in September, will continue to be in the mix for sports rights packages.

“With Comcast, it has deep pockets,” said Larry Novenstern, Optimedia’s executive vice president and director of national electronic media.

For Turner’s part, the baseball deal helps it further its “One TV World” ad-sales strategy that more closely aligns itself with over-the-air broadcasters than a cable sports network.

Novenstern predicted that TBS will treat the baseball playoffs in much the same way that Fox treats them: to heavily promote its entertainment schedule.

“Fox used the baseball playoffs as a centerpiece to gain momentum and a promotional platform for new shows to come,” Novenstern said. “TBS has to do the same thing.”

Turner plans to use the same strategy of “appointment viewing” for its TBS baseball coverage that it uses for its coverage of the NBA on TNT.

“Just like you know on Thursday nights that you can find the NBA on TNT, we hope to do the same thing on Sunday afternoon for baseball,” Levy said.

TBS will not be using its baseball playoffs to charge cable and satellite operators a license fee surcharge now that it has the MLB rights. Turner drew the ire of the cable industry four years ago, when it extracted a surcharge from most cable operators for TNT’s NBA and NASCAR programming.

According to cable operator sources, TBS currently charges cable and satellite operators about 75 to 85 cents per subscriber per year. By comparison, ESPN charges about $3 and OLN charges roughly 25 cents.

ESPN is in 91 million homes, TBS in 90 million and OLN in 69 million.

Several of the biggest cable operators say TBS’s contract does not expire for several years, adding that they are happy to see TBS making moves to strengthen its programming lineup.

“We view this as a top-rated network that is looking to bolster its attractiveness by investing in live sports programming,” an executive with one of the biggest multiple system operators said.

That lineup includes NBA programming, six NASCAR races per year through 2014, and early round coverage of the British Open through 2009 and PGA Championship through 2011.

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