SBJ/July 31 - August 6, 2006/This Weeks News
NFL Net, Time Warner spar as season nears
Published July 31, 2006
The tension of three years of fruitless talks between the NFL Network and Time Warner Cable is set to escalate this week, just as the nation’s second-largest cable operator finally gains control of the Adelphia systems it purchased with Comcast.
The dispute could lead Time Warner to dumping the network from its newly acquired systems as early as this week in Los Angeles and such strong NFL markets as Cleveland and Buffalo. It also could fuel a migration of NFL fans from cable to satellite or telecommunications operators after an aggressive marketing campaign NFL Network was set to launch Sunday targeting cable operators that aren’t carrying the channel on expanded basic. Network officials wouldn’t specify which cable operators are being targeted, other than Time Warner. They did say they would run the campaign in St. Louis, home to Charter Communications, and Tampa, home to Bright House Networks.
The league-owned network will spend tens of millions of dollars on the campaign, which is hitting just as NFL Network and Time Warner enter last-minute discussions to keep the network on those Adelphia systems. The talks are significant, since Adelphia has been the only top 10 cable operator to give NFL Network carriage on an expanded basic analog tier. Time Warner Cable does not carry the service on any of its tiers and posted a notice in several local newspapers, including in Cleveland, alerting Adelphia subscribers that the NFL Network could be dropped as early as this week.
As of Aug. 1, Time Warner will gain 3.5 million subscriptions from the Adelphia transaction and from system swaps with Comcast.
“We want to reach a long-term agreement with NFL Network,” Time Warner Cable spokesman Keith Cocozza said. “If we can’t reach a long-term deal, we are hoping to get an interim arrangement to keep the network on the Adelphia systems.”
Time Warner Cable was clearly aggravated by NFL Network’s marketing plans. One ad planned for a Texas market pictures a Dallas Cowboys fan with the message: “Don’t let Time Warner ruin your football season. Call and demand NFL Network now.”
“I don’t see how running negative ads against Time Warner Cable while we’re still in discussions makes sense,” Cocozza said.
For its part, the NFL Network expressed frustration at the slow pace of the talks and is hoping the campaign will force cable operators to begin carrying the channel on expanded basic.
“We’ve been in discussions with them for three years,” said network spokesman Seth Palansky. “How long do discussions need to go before they work? The market’s already been set.”
Network executives want the campaign to educate consumers about where they can find the network — that being on cable’s competitors. So far, the channel has cut deals with DirecTV, EchoStar, Verizon and AT&T. NFL Network is available in about 41 million homes, network officials say. That is much more than other league-owned networks, but it’s below the network’s goals, which are more along the lines of ESPN’s 91 million homes.
NFL Network’s new selling point this year is obviously live games, with the late-season Thursday and Saturday night package starting on Thanksgiving.
“We want to make sure that consumers know that we will have these games in their markets, even if their cable provider doesn’t,” said Jola Thun, vice president of affiliate marketing for NFL Network.
While carriage disputes like this are relatively common, this one has several implications for cable operators, which are trying to keep their programming costs in line. Cable operators have balked at NFL Network’s asking price, which is between 85 cents and 95 cents a month per subscriber for expanded basic carriage, which is where the network wants to be. Cable operators that already carry the channel on a digital tier will have to pay a surcharge of about $2 a month per subscriber, on top of the 25 cent to 35 cent license fee they are already paying, to have access to the eight regular season games, cable sources said. The NFL Network will black out the games for operators that don’t pay the surcharge or move the network to expanded basic.
NFL Network executives are counting on public interest in those eight games to force cable operators into a deal.
“Live prime-time games add a lot of value to the network,” Thun said.
MSOs don’t think they’ll lose a lot of viewers if they hold out, especially since the regular-season games will be broadcast locally in the home markets. Most cable executives seem content to wait until those regular-season games start.
That’s one of the goals of this week’s marketing campaign, which is trying to get cable operators to not wait until Thanksgiving to make a deal. NFL Network officials warn that operators that wait will have to pay more for the network than operators who cut a deal in the preseason. Network officials did not disclose what that cost would be.
The campaign this week targets the country’s strongest football markets, such as Green Bay, Dallas and Tampa. Ads will run in local print publications, radio and TV, regional buys from Sports Illustrated and USA Today and online.
“We are confident that people want to see live, prime-time games,” Thun said. “They should know that their local cable provider won’t be carrying them.”