Short Stop for FSN Channels
By R. Thomas Umstead -- Multichannel News, 12/17/2006 7:00:00 PM
Three regional sports networks soon to be acquired by Liberty Media most likely will make a temporary pit stop with John Malone’s company before ending up with Comcast, industry executives said last week.
Liberty is expected to acquire Fox Sports Net-owned regional networks based in Pittsburgh, Seattle and Denver when it swaps its $11 billion stake in Rupert Murdoch’s News Corp. for 39% ownership of satellite service DirecTV, as part of an effort to lessen the tax burden on the deal. Once out of News Corp.’s hands, FSN Pittsburgh, FSN Northwest and FSN Rocky Mountain could eventually become part of the growing regional sports business headed up by Comcast Programming Group president Jeff Shell, said sports-programming consultant Lee Berke and other executives in the field.
The nets came into play because at least 5% of the Liberty and News Corp. deal has to include assets that seller News Corp. has controlled for five years or more. News Corp. only purchased the main asset it is selling — DirecTV — in December 2003.
| Sports Nets In Play | |||
|---|---|---|---|
| Liberty Media may acquire these Fox Sports Net regional channels — then turn around and sell them. | |||
| Subscribers (000) | Affiliate Revenue (000) | Ad Revenue (000) | |
| FSN Pittsburgh | 3,030 | $53,460 | $17,172 |
| FSN Rocky Mountain | 2,834 | $59,157 | $23,734 |
| FSN Northwest | 3,482 | $76,390 | $12,880 |
| SOURCE: Kagan Research data |
|||
Berke, president of LHB Sports, Entertainment and Media, said Malone’s long-term plans do not include running regional sports networks. Liberty teamed up with News Corp. in the mid-1990s to operate regional sports networks around the country under the Fox Sports Net banner — as a national competitor to ESPN — but pulled out of the venture in 1999 when it couldn’t land a marquee national sports-TV contract. Liberty has steered clear of that business ever since.
Representatives from Liberty would not comment on the matter.
“I just don’t see on a long-term basis that Malone is going to want to be in the RSN business again,” Berke said, however. “Comcast, the telcos and the teams in those markets are potential candidates [for those networks].”
Comcast has been very aggressive on the regional sports front, developing owned-and-operated networks under the Comcast SportsNet banner in Philadelphia, Baltimore/Washington D.C., Sacramento and Chicago. The Denver, Pittsburgh and Seattle services are in Comcast-dominated markets, making them perfect acquisition targets, said Berke. A Comcast SportsNet spokesman would not comment.
But if Liberty does acquire the three regionals, it couldn’t sell them for at least three years, according to executives close to Liberty. By that time, it’s possible the overall value of the acquired Fox Sports Networks could have diminished significantly.
FSN Northwest could lose the rights to the National Basketball Association’s Seattle Supersonics if the team follows through with threats to relocate to Oklahoma City by 2010, if its current hometown does not finance a new stadium. That would leave the net with baseball’s Seattle Mariners as its only pro sports franchise.
In Pittsburgh, the National Hockey League’s Penguins franchise is nearing the end of its deal with FSN, which would leave the regional net with just baseball’s Pittsburgh Pirates.
In Denver, FSN Rocky Mountain already faces competition from upstart Altitude Sports & Entertainment.
Linda Moss and Mike Reynolds contributed to this report.
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