Kent: NCAA Deal Could Help Boost Turner Fees
Says Nets Expect Distributors to Recognize Value
Mike Farrell -- Multichannel News, 5/27/2010 5:17:55 PM
Time Warner's Turner Broadcasting System has managed to keep affiliate fee increases in check - and out of the papers - over the years, but TBS chairman and CEO Phil Kent told analysts Thursday that its recent deal with CBS to carry the Men's College Basketball Tournament could lead to big increases for the channels.
Speaking at Time Warner's Investor Day at company headquarters in New York, Kent said the company does not like to negotiate deals publicly. But he said Turner networks average mid to high single digit percentage increases in affiliate fees. That, he said, means that some networks have gotten increases in the mid-teens while others have gotten substantially lower.
And while Turner has managed to keep its negotiations rather cordial compared to other carriage battles between other networks and distributors, that stance shouldn't be mistaken for timidity.
"Don't assume it's always that nice," Kent said of negotiations. "We are not making these investments in sports and other must-have content as a public service. We do expect to get paid. It goes from TruTV to March Madness; whether advertisers, whether distributors, we expect them to recognize the value. That's a diplomatic way of saying yes, we do expect to get even more rate increases in the future."
Kent's comments reflect those made in April by Turner Sports president David Levy who said at some point the network would ask for fee increases to reflect the value of the tournament.
Turner teamed with CBS in April to jointly purchase the rights to the NCAA Division I Men's Basketball Championship games beginning in 2011. The 14 year deal, valued at $10.8 billion, would allow all 68 games to be shown across four national networks - CBS, TNT, TBS and TruTV.
"I think we will look back on this as one of the smartest deals this company has ever made," Kent said.
Earlier, Warner Bros. Entertainment chairman and CEO Barry Meyer said that efforts to narrow the video on demand windows of theatrical releases are still underway. Last Saturday, a report in the Wall Street Journal said that Warner Bros. and other studios were mulling a proposal by Time Warner Cable to narrow VOD windows for certain movies to 30 days from its current four months after their release in theaters. The movies would then be offered on pay-per-view basis to cable customers for between $20 and $30 each.
Meyer said that nothing has been done on that front yet, although he did believe it is a direction that the entire industry is moving toward. He added that Warner Bros. will be sensitive to all parties involved, including theater owners.
"We are very, very aware and very cognizant of the partners we have on both sides of the equation," Meyer said, adding that about 90% of a film's total revenue is achieved within the first 28 days of its release in theaters. "That's something to keep in mind."
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