MSG Nets Sue Breakaway Mets10/31/2004 7:00 PM Eastern
Fighting the prospect of being left with primarily professional hockey and basketball games on its two regional sports networks, Cablevision Systems Corp.'s Madison Square Garden Networks sued the New York Mets last week in a bid to block the Major League Baseball team from moving games to a new regional sports network in 2006.
New York Supreme Court Justice Helen Freedman declined to grant MSGN's request for a temporary restraining order last Thursday.
HEARING IS SET
Freedman scheduled a Nov. 17 hearing, where she'll consider arguments about the networks' request for a restraining order and preliminary injunction.
Even though the Mets exercised a contract option in August and paid Cablevision $54 million in to terminate a rights deal at the end of the 2005 season — six years before it was set to expire — MSGN argues that the club violated a clause in the deal that prevents its from shopping TV rights until Nov. 1, 2005.
The Mets plan to launch a regional sports network in 2006 co-owned by Time Warner Cable and Comcast Corp. Comcast will manage the service.
MSGN says it would be “irreparably harmed” by losing Mets rights, and would lose leverage with cable operators and advertisers.
“MSG Networks has suffered, and will continue to suffer, severe damage to almost every aspect of its business which cannot be calculated in monetary terms and is inherently uncertain,” MSGN told the court.
It's the latest sports blow against Cablevision, whose MSG Network lost New York Yankees rights when the team launched its own regional sports service, the Yankees Entertainment & Sports Network, in 2002.
That led to a bitter dispute over positioning and rights fees that kept YES off of Cablevision systems during its rookie year.
In 2003, an arbitrator pushed an interim agreement upon the parties hours before the first pitch of the MLB season.
An arbitration panel's decision then resulted in a six-year deal between YES and the MSO this past March.
Cablevision CEO Jim Dolan said during a radio interview Friday that he didn't think Cablevision would be able to refuse to carry the Mets network, as it had refused to carry the New York Yankees' YES Network the first year after its launch.
“No, I don't think so,” Dolan told WFAN-AM's Mike and the Mad Dog show.
Dolan also warned that sports programming costs would escalate with the addition of another network.
“You're going to have four different networks, and each one of them is going to price itself under the Yankee model. That's going to be a big ticket,” Dolan said.
Without baseball, MSGN would be left to program MSGN and FSN New York with games from the New York Knicks and hockey games from the New York Rangers and Islanders, and the New Jersey Devils.
Kagan World Media analyst John Mansell said MSG and FSNY would still be able to survive without the Mets by acquiring other sports and entertainment content, noting that MSGN primarily ran movies when it debuted in 1969.
The Mets are also taking a risk by launching a regional sports network, he noted.
“Who is to say that the Mets network ultimately is going to be successful? It could be that they have a bad team for a long period of time, or there could be a work stoppage,” Mansell added.
TIME WARNER IMPACT
MSGN would be left with little leverage in carriage talks with MSOs if it lost the Mets. The company told the court that it was in the midst of cutting a new deal with Time Warner Cable, which pulled the plug on MSG and FSNY for 10 days in August, when the Mets were talking about launching a new network with Comcast and Time Warner. The Mets said in a prepared statement that it the MSGN suit is “entirely without merit, and we will contest it vigorously.”