PLAY BALL — FOR NOW
A Respite In Latest Sports Flap
By R. Thomas Umstead -- Multichannel News, 5/15/2005 8:00:00 PM
A 62-day rain delay is over for Time Warner Cable customers who enjoy watching New York Mets baseball games — but the competing corporate teams expect to be back at it again when a respite of peace ends.
Time Warner and Cablevision Systems Corp. finally resolved their dispute over carriage of two New York-area sports channels last week, capping an intricate chapter in the ever-intriguing annals of regional sports networks business.
| Keeping Score |
|---|
| Key takeaways from the end of the New York Mets outage: |
| • MSG Network and FSN New York return to Time Warner Cable systems in the New York metro area after 62-day blackout. |
| • Five-year agreement, retroactive to 2004, calls for Cablevision-owned regional sports networks to receive a $4 combined monthly fee, through 2008. |
| • Deal returns three Fox College Sports channels to Time Warner’s air. |
| • Time Warner will not carry Cablevision’s MetroChannels and deal didn’t require binding arbitration. |
| • Agreement does not include any provisions for the not-yet-named New York Mets channel, owned by the club, Time Warner and Comcast, which will launch next spring. |
The regional sports landscape continues to morph, with interests occasionally colliding among pro-sports teams, cable companies and network owners. In New York, they collided to an extreme extent and led to shorter blackouts of the Madison Square Garden Networks channels before this lengthy outage that’s been resolved at least until 2008.
“The MSG-Time Warner situation is the tempest in the teapot of regional sports network battles,” one regional sports network executive said last week. “The regional sports network landscape of tomorrow will have little resemblance to that of today.”
KEYS AT TOP
The key to resolution this time apparently was getting Cablevision chief operating officer Tom Rutledge and Time Warner Cable chairman and CEO Glenn Britt to the negotiating table — with a last-minute assist from New York Attorney General Elliot Spitzer, who had helped to end shorter MSGN outages on Time Warner Cable over the last year and a half.
MSGN owner Cablevision was able to secure a renewal and a price increase for Madison Square Garden Network and FSN New York, even though those services have lost critical pro-sports rights.
That was a victory for Cablevision, which regained access to some 2.3 million Time Warner Cable customers at a price at least close to what Cablevision initially sought, sources said.
Sources say the two parties’ new five-year agreement is retroactive to 2004 — the previous Time Warner-MSGN agreement ended in 2003 — and extends through 2008. Neither side would reveal specifics, but sources said that MSGN will receive close to $4 for its two channels.
Under the old deal, Cablevision received a combined price of around $3.50 per month for the services.
Time Warner had balked at paying $4 for MSGN and Fox Sports Net New York because both services have declined in value, and will continue to do so.
When the previous deal was brokered, MSGN and the then-Fox Sports New York featured Major League Baseball’s New York Yankees and New York Mets, the National Basketball Association’s New Jersey Nets and New York Knicks and the National Hockey League’s New York Rangers, New Jersey Devils and New York Islanders.
Since then, MSGN lost Yankees and Nets games to the competing Yankees Entertainment & Sports Network.
At the end of this season, the Mets will leave MSGN to start a new regional sports network, teaming up with Time Warner and Comcast Corp.
Along with MSGN and FSN New York, Time Warner also returns three Fox College Sports Channels, but will not carry Cablevision’s localized MetroChannels, said MSO officials. Time Warner had carried one MetroChannel and it won’t be restored.
Score that as a key point for Time Warner Cable.
Another key for Time Warner: the dispute wasn’t handed over to an arbitrator with binding authority.
More hard talks lie ahead for Cablevision and Time Warner, along with Comcast Corp. and the New York Mets, over that planned Mets network.
Neither Cablevision nor Time Warner would comment on whether carriage for the proposed Time Warner/Comcast/Mets channel was on the table as part of MSGN negotiations.
But sources close to the MSO say that Time Warner indeed broached the topic as part of the negotiations.
“We were very surprised that it wasn’t part of the deal,” said one MSO source.
SOPS TO APPEASE
To court favor with upset subscribers, Time Warner Cable replaced MSGN and FSN New York with NBA TV and College Sports Television and promised subscribers a $2 rebate for each month the networks were off the air.
Beyond the automatic $2, though, the cable company gave customers who called to complain a $10 credit and tickets to see a Mets game at Shea Stadium. The cable company had attempted to secure radio or Internet-streamed live-game coverage, but Cablevision went to court to quash those efforts.
Cablevision — seeking to cash in on an improved Mets team before it departs — called for binding arbitration with Time Warner in a local advertising blitz. In doing so, the MSO played a card YES effectively used against it to secure a long-term carriage agreement in 2004 after a similarly bitter licensing-fee dispute.
Time Warner Cable denies having received an onslaught of angry subscriber calls, or losing a significant amount of subscribers due to the dispute, which gave satellite-TV rivals a competitive edge they promoted in ads.
But prolonged programming outages, especially of popular fare like pro sports games, can bring unwelcome attention from elected officials. This situation was no different.
“I’m sure that both parties felt the political heat,” Kagan Associates sports analyst John Mansell said. “Not to mention that there’s not much good will between [New York Mayor Michael] Bloomberg and Cablevision over the [proposed New York Jets] stadium issue.”
The Jets are seeking to build a domed football stadium on Manhattan’s West Side, blocks away from the Cablevision-owned Madison Square Garden arena. Bloomberg supports the stadium, the center piece of New York City’s bid for the 2012 Summer Olympics.
Given Cablevision’s initial rebuke of the YES Network once the Yankees left MSGN, observers say it’s almost certain Cablevision will play hardball with regards to the new Mets channel.
“Given all the battles that we’ve witnessed, it wouldn’t be that big a surprise,” Mansell said. “It remains to be seen what will happen down the line. If past is prologue, then it wouldn’t be too surprising to see some kind of a repeat.”
LAWSUIT VS. METS
Still in play is Cablevision’s lawsuit against the Mets, filed last October to prevent the start of the new network. Even though the Mets paid MSGN and FSNY $54 million in June to end a rights deal after the 2005 baseball season, MSGN claims that the team breached a term in its contract by agreeing to form a network more than one year before its current agreement expired.
The confluence of back-room carriage negotiations, team-owned startups and legal battles over carriage deals isn’t isolated to the New York market. A deal between MLB and Baltimore Orioles owner Peter Angelos to launch a regional sports network featuring the Orioles and Washington Nationals baseball games in 2007 has drawn the ire of current Orioles rights holder Comcast SportsNet.
Comcast is suing the Orioles for breach of contract, saying it has exclusive negotiating rights to renew its deal with the baseball team through Nov. 1, 2005, and it has the right to match any agreement reached between the Orioles and a third party regarding the future local pay-television rights to the club’s games.
NATIONALS SITUATION
As it stands now, the startup Mid Atlantic Sports Network is currently offering 68 Washington Nationals games via satellite service DirecTV Inc. to D.C.-area baseball fans.
A similar scenario also played out in Chicago, but this time Comcast played the matador, teaming with several local pro teams to start Comcast SportsNet Chicago, to compete with FSN Chicago.
As more teams seek to test the regional sports network waters, observers say the combustible cocktail mix of MSO regional network ownership and distribution and team network-ownership aspirations could create future financial and public-relations nightmares for all involved.
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