Palmer doc to air around Masters Fox Sports execs like trends at FS1 Silver lines up input for media talks Penguins set for five-peat atop ratings Ratings bump from Sochi hockey unlikely Programmers, teams could benefit SI adding features to 50th Swimsuit IOC to explore channel launch SportsNet LA marketing Dodgers USSA leaving time buys behind
Upcoming Conferences and Events
SBJ/Aug. 19-25, 2013/Media
Distributors hold the line
Sheer numbers help them resist Fox’s price for FS1
Published August 19, 2013, Page 1
Just days before last week’s scheduled launch, Fox told some of the biggest U.S. distributors that they could carry Fox Sports 1 with the same deals and at the same rates that they carry Speed, which costs about 23 cents per subscriber per month. The move surprised industry insiders. In essence, Fox decided to punt, opting to fight Fox Sports 1’s carriage battles another day.
Score one for the distributors, at least for now.
Much of the leverage came from sheer numbers. Fox was seeking significant increases from DirecTV, Dish Network, Time Warner Cable, Cox and Cablevision, which account for nearly 55 million homes. It’s bruising enough to fight any one of those distributors on their own. But carriage fights with all of them — all of which have been champing at the bit to take a stand against sports costs — at the same time? Fox executives, led by distribution president Michael Hopkins, said no thanks. It made more sense to spread out these deals over the next few years and negotiate them one at a time.
Distributors also believed that they gained more leverage as the channel’s launch approached. On background, many of them pointed to a key juncture as a turning point. That being March 1 — when company executives unveiled Fox Sports 1 and pledged to launch the channel to 90 million homes. At the time, one distribution executive said, “The only way Fox can get to 90 million is with my subscribers.” Other distributors had the same thought: Fox needs us right now more than we need them.
Fox signed rights deals and advertising clients predicated on the channel having 90 million homes. News stories had the network at near full distribution. There seemed to be no question that it would have full distribution at launch.
On the other side of the table, distributors held their cards and bet that the longer they waited, the more likely Fox would move from its initial asking price in order to bulk up its distribution numbers. Even as the distributors became embroiled in high-profile fights with other networks (Time Warner and CBS; DirecTV and Pac-12 Networks), they believed they would be able to wait out Fox Sports 1.
The massive PR effort by Fox continued in the weeks leading up to launch. The network sent out multiple releases each day on FS1, from new talent to planned shows to charter advertisers. But distributors believed that Fox faced more pressure as the Aug. 17 launch date neared. What if after so much hype, the next big competitor to ESPN launched only to a handful of homes? Talk about a buzz kill.
Distributors are used to being the punching bags when it comes to sports channels. Leverage will return to Fox, which is certain to get the price it wants for FS1 eventually — maybe as early as this fall.
That’s when Time Warner Cable’s affiliate deal for YES Network ends. Fox, which owns part of YES and handles its distribution, could get its Fox Sports 1 price during those negotiations. Cox’s deals with several Fox-owned RSNs are up at the end of this year, as well. Expect Fox to package Fox Sports 1 at that point.
But for this one moment, distributors took solace that they did their part to keep sports rights down. It’s a solace they know won’t last long. As one executive said last week, “This feels never-ending.”