More cable TV wars....
http://www.nytimes.com/2007/06/18/sp...pagewanted=all
Not Everyone Wants Channel That’s All Big Ten, All the Time
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By RICHARD SANDOMIR
Published: June 18, 2007
Correction Appended
One barometer for classic sports conflict in the Big Ten is Ohio State and Michigan at the Big House in Ann Arbor. But a percolating fight between the conference and Comcast is evolving into a battle that Keith Jackson, in his rumbling baritone, might call one between two “big uglies.”
The two powerhouses are headed for a clash over the newly created Big Ten Network, which the conference vows will satiate its universities’ fans and alumni as the YES Network has become a TV clubhouse for Yankee fans.
It is, in essence, the Wolverines, the Badgers, the Nittany Lions, the Buckeyes, the Spartans, et al., versus Comcast, which recently won an early court fight against the NFL Network and settled a battle with the MLB Channel, receiving a minority stake in the network partly in exchange for giving millions of its subscribers access to the channel when it starts in 2009.
“We take risks; we want to be competitive,” said Jim Delany, the Big Ten commissioner. “It’s in the nature of our sports and our institutions.”
The Big Ten is one of the largest and strongest conferences in college sports, with 111 years of history, including Jesse Owens sprinting and long jumping for Ohio State; Joe Paterno coaching at Penn State since the Korean War; 14 Heisman Trophy winners; 30 Rose Bowl victories; and 39 appearances by its universities in the Final Four of the N.C.A.A. men’s basketball tournament.
By carving enough rights to create the Big Ten Network out of a new 10-year, $1 billion contract with ESPN and ABC, Delany has bucked the trend to be satisfied only with rights fees from networks and has chosen to extend the conference’s brand, expand the reach of its recruiting and build a valuable asset.
The channel, which Fox Cable Networks will run and own 49 percent of, will carry 35 football games, 105 men’s and 55 women’s basketball games, archived games dating from 1960, Olympic sports (the rights to some of which are still owned by CSTV through the 2007-8 season) and 660 hours a year of academic programming.
The dispute over the Big Ten Network, which is to go on the air in August, is typical of the tensions between cable operators and sports networks. The cable operators prefer not to add sports channels, whose costs of acquiring the rights to carry teams are inflated by high player salaries.
The Big Ten Network will be paying the conference a $50 million annual rights fee — not much less than what SNY is paying the Mets or YES is paying the Yankees.
Comcast discussed becoming the Big Ten’s partner in the network, before Fox entered, but the talks foundered over the cable operator’s view of a more limited, less expensive channel than the conference envisioned.
Comcast is developing a campaign that will attempt to prove that the network is too expensive and too provincial to be broadly distributed.
“I have no doubt that the Big Ten will try to rile up their fans and alumni to say that big bad Comcast is denying their content to Big Ten fans and alumni,” said David Cohen, an executive vice president of Comcast.
He added, “We’d like to make the network available to those who want to watch it and not force customers who have no interest in the content to have to pay for it.”
The argument echoes those raised in previous disputes between cable networks and operators, such as the one Cablevision waged against YES.
“I’m not confident of anything right now,” said Delany, who can expect a bruising few months. “All I’ll say is I have a hard time seeing many more offerings with more appeal than ours.”
The Big Ten Network is a hybrid of a regional sports network and a national one. It lacks the eclecticism and scope of events on ESPN but focuses on the interests of a particular fan constituency. Unlike YES, which carries the Yankees and Nets to a defined market, the Big Ten is devoted to the sports at 11 universities, like a super-regional CSTV or ESPNU.
“It’s a national network with a heightened appeal within the eight states, but the level of competition and quality games will give it a national feel,” said Mark Silverman, the channel’s president.
But the Big Ten’s hopes of substantial outer market distribution raise questions about whether there are enough alumni and displaced fans to justify, say, a Gainesville cable system carrying it in a Florida hotbed, or even whether enough Nittany Lions fans care enough in the Northeast.
“I can’t speak to Pocatello, Idaho, but I can to Phoenix, Southern California and New York, where we have a lot of alumni,” Delany said.
Silverman said the network had balanced the interest in Big Ten sports inside and outside its region by seeking a monthly subscriber fee of $1.10 to be carried as an expanded basic channel to 18.5 million cable subscribers in the conference’s states, but 10 cents a subscriber everywhere else.
“We think the pricing is compelling,” Silverman said.
But Comcast, with 5.7 million subscribers in the eight states with Big Ten universities, does not. Its position is that the Big Ten Network’s cost is far too high — the only national channel priced higher is ESPN, at nearly $3 a subscriber, according to the industry research firm SNL Kagan — and would be carried only on its digital sports tier, which requires an extra monthly fee. A state court in New York ruled last month that Comcast could banish the NFL Network to that tier. The decision is on appeal.
Cohen, a blunt executive who served as the chief of staff to Philadelphia’s mayor in the 1990’s, Edward G. Rendell, said the offer to place the network on the sports tier was not an opening gambit or a negotiating ploy.
As for carrying the network in non-Big Ten markets at 10 cents a subscriber, he said Comcast would most likely make it available as a subscription service like Major League Baseball’s Extra Innings out-of-market package.
“They have a right to do as they wish,” Silverman said.
A spokesman for Time Warner Cable, with the second-most subscribers in Big Ten markets, said its position was similar to Comcast’s.
If Comcast’s view prevails, it will impede the Big Ten Network’s earning potential because digital sports tiers are not purchased widely by customers. But if all the subscribers in the eight states got the channel on expanded basic at $1.10 a subscriber, the revenues would add up to $237.6 million, more than any regional sports network’s except YES, which generated $277.2 million from subscribers in 2006, SNL Kagan estimated.
That figure does not count what the Big Ten is getting from DirecTV, which will carry the channel to its nearly 16 million satellite subscribers.
Comcast’s resistance to the Big Ten Network’s proposed price would evidently be reduced if the channel had rights to the best possible games. But in football, particularly, ABC always gets first choice. The Big Ten will have second choice in 3 of 12 weeks, the third selection after ESPN in three other weeks and the fourth choice after ESPN2 in the other six weeks. The Big Ten will choose its men’s basketball games after CBS Sports.
Cohen called it “second- and third-choice games with the first-choice games available on broadcast and cable networks already on our systems.” Delany said the question of his network’s lacking top-quality games sounded like negotiation spin.
“The value of what we’re doing is not in one game,” he said, “but we’re selling a football schedule, a basketball schedule, Olympic sports, classics, video-on-demand and university programming.”
Comcast’s position on the Big Ten Network is also partly a warning to other conferences not to expect broad distribution if they create similar channels. The Big 12 had been analyzing one until it made its new eight-year, $480-million deal with ESPN, but the Southeastern, Pacific-10 and Atlantic Coast Conferences have voiced various levels of interest in such ventures.
What Cohen insisted was at stake “is the Big Ten and any other major sports conference going against the consuming public.”
He estimated that five conference networks, priced similarly to the Big Ten, would eventually cost cable subscribers $1.58 billion in additional fees.
Correction: June 20, 2007
A sports article Monday about tense negotiations over the Big Ten Network’s placement on cable systems misstated the financial terms of a new 10-year contract that the Big Ten has with ESPN and ABC. It is worth $1 billion, or an average of $100 million a year — not a total of $100 million.
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