SBJ/October 2 - 8, 2006/This Weeks News

A key player in cable battles will step down

Sports networks will not have to deal with their biggest antagonist in the cable industry for too much longer as one of the most influential executives in sports television is retiring at the end of the year.

Dressler and Time Warner took the lead
in putting sports nets on digital tiers.
Fred Dressler, who makes the major programming decisions at Time Warner Cable, has been telling friends and colleagues in recent weeks that he is leaving the country’s second-largest cable operator after about three decades.

Rumors of Dressler’s pending departure have been a cable industry staple for several years, based partly on the fact that he had been spending a lot of time at his home in South Carolina, away from Time Warner Cable’s corporate office, where he serves as executive vice president of programming.

Dressler’s departure will leave a huge void in the cable industry, since he has been cable’s most vocal and consistent critic on the rising cost of sports rights. He made his mark by taking the lead on establishing a dedicated digital sports tier that costs consumers about $5 a month, and his hard-line stance has led to public fights with several networks through the years, including a well-publicized dispute with NFL Network this year.

Time Warner Cable has not decided on Dressler’s successor. Right now the front-runners look to be his top two lieutenants, Melinda Witmer and Lynne Costantini.

Time Warner Cable brass also have targeted cable executives outside the company, but sources predict they will have a tough time convincing a high-profile executive to join it based on a new management structure that was put into place last year, several cable sources said.

The multisystem operator has contacted Andy Heller, Turner’s president of domestic distribution, but Heller was not interested, sources said. Heller did not return phone calls for this story.

The problem is that Dressler’s replacement will not have nearly as much power as Dressler, thanks to a reorganization of the unit last year that put senior executive vice president Robert Marcus in charge of the programming group.

Previously, Dressler had reported directly to president and CEO Glenn Britt.

“Because of the new structure, it’s unlikely they will bring in a big name from outside,” said a cable executive who has negotiated with Dressler.

Still, the decision is an important one, since Dressler’s replacement will be negotiating programming contracts for the second-largest cable operator, with about 14.5 million subscribers.

Marcus is overseeing the process of finding Dressler’s replacement.

Nobody knows who Marcus will pick, but industry speculation gives a slight nod to Witmer, who has handled almost all of the tough sports network negotiations in recent years with networks such as ESPN, Fox Cable and YES Network.

Several network executives describe Witmer as a tough-as-nails negotiator not afraid to ruffle the feathers of the top programmers. If Witmer gets the nod, sports networks should expect Time Warner Cable to keep the same, aggressive stance it has had with Dressler, program executives predict.

These same executives describe Costantini as a detail-oriented negotiator who doesn’t relish conflicts as much as Dressler, one executive said.

Costantini recently increased her standing at Time Warner Cable after she reached a deal with NBC Universal last October that included coveted on-demand rights for NBC’s cable programming.

Dressler’s pending departure comes as the issue of rising sports costs made news just weeks ago when Comcast’s Brian Roberts called for a “serious” industrywide dialogue to figure out what to do with expensive sports networks. “I’m worried that there is a sea change occurring, a tipping point, with the amount of new sports channels that are getting created and how that cost gets distributed,” he said during a public Q&A session after a speech in Washington, D.C., on Sept. 21.

Dressler’s answer has been to place these channels on a dedicated sports tier that costs consumers about $5 per month and has led to public fights with several networks.

During his last three months with Time Warner Cable, Dressler will continue battling with two more sports networks. He is refusing to give NFL Network expanded basic carriage, preferring to put it on a digital sports tier. And he has not reached a deal to carry the Mountain West Conference’s channel, either.

Though not well-known outside of cable circles, Dressler has wielded considerable power over the sports industry.

He helped YES Network by being the first cable operator to carry the RSN. But he hurt several others, such as the Minnesota Twins’ Victory Sports channel, which never signed a deal with Time Warner Cable and wound up shutting down.

He also hurt the Charlotte Bobcats’ RSN C-SET by forcing that network onto a poorly penetrated digital sports tier. C-SET wound up shutting down last summer and subsequently sold the team’s rights to Time Warner Cable’s News 14 Carolina network.

Time Warner Cable would not officially comment on Dressler’s future or the status of a job search.

Fred Dressler in his own words

On Time Warner Cable looking to put NFL Network on a sports tier:

  • “Every time [programmers] tell me sports tiers don’t work, I always respond, ‘They’re not working for whom?’ They’re working for me. They’re working very well for the customer. Two out of three ain’t bad.” — Sept. 18, 2006
  • “Every network loves to be paid by all of the people who don’t watch their network. We don’t think that any of these networks in the long term can or are willing to control their costs.” — Sept. 18, 2006
  • “In order for us to have a healthy business, I don’t know that we have to have every sports network in the world on. But we’re happy to have it on for those people who want it.” — Aug. 28, 2006
  • “Sports tiers are certainly not what we hoped they would be and they’re not where we think that they will be. They are a work in progress. No question in my mind that they would do a little bit better if we had NFL Network on the sports tier.” — Nov. 10, 2004

On the cost of sports networks:

  • “In New York City, the aggregate cost of sports, just the sports networks, is about $7 a month. So we took a look at this and said this can’t be sustained, this is not a model that makes sense for us. We are in a tremendously competitive environment against the satellite guys, our retail price in general is higher than the satellite guys, and we need to come up with a way to deal with this. In the aggregate, were costing so much money, that we at Time Warner decided the best way to offer that was to group those on a tier.” — Nov. 19, 2003
  • On the launch of NFL Network not being on Time Warner:
    “They’ve come to us and told us what their plans are and what they would like to have. And we’ve told them that we don’t think there’s sufficient value in the proposition to do a deal.” — Oct. 13, 2003
  • On pro teams creating their own RSNs:
    “Teams are missing the point on starting their own nets as the problems will resurface after the first contract. They are perpetuating the problem by taking the middle man out, but the next contract will come along and you’re sitting right where we are today. … We are not interested in substituting teams for the current RSNs.” — March 13, 2003
  • On the RSN-cable system relationship:
    “I think that the [RSNs] are not worth what they think they’re worth anymore. I think the myth has been dispelled that you can’t live without the local teams. … You don’t have to bend over and take whatever price these guys can dream up.” — March 3, 2003
  • On Time Warner Cable’s plans to create a premium sports tier on digital cable:
    “We’re primarily looking at newer networks that don’t have the leverage when they come to the table. What I have told the new sports programmers is the only way they could get on (our system) is to agree to be on a sports tier.”
    — April 1, 2002

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