Cable Operators

Packaging Power

8/26/2005 8:00 PM Eastern

Comcast Corp. is taking some bold steps to transform and beef up its content portfolio, from acquiring professional hockey for OLN to starting affiliate-sales consolidation for its networks.

According to industry sources, Comcast’s game plan is to use sports programming — from its emerging OLN as well as its regional sports networks — to gain what major programmers like News Corp. and The Walt Disney Co. all have: leverage with distributors.

That leverage will be a tool for top U.S. MSO Comcast to seek license-fee increases and wider carriage for its growing programming stable, by packaging the various services through one central affiliate-sales force. Expected to lead that sales team is Bill Bridgen, former president of HorseRacing TV and a veteran of the Fox Cable Networks Group.

Comcast Content Stable
Comcast Corp.’s programming holdings include CN8, several regional sports networks and a stake in TV One. The top U.S. MSO also owns (or majority owns) and manages these national services:
Name Subscribers
E! Entertainment Television 87.6 million
The Golf Channel 67.8 million
Outdoor Life Network 64.1 million
G4 52.4 million
Style 41.7 million
AZN 12 million
PBS Kids Sprout[1] N.A.
Source: Nielsen Media Research
[1] Launches in September; stakes also owned by PBS, HIT Entertainment and Sesame Workshop.

Despite Comcast’s denials, all signs point to Comcast trying to turn OLN — once the hunting and fishing-heavy Outdoor Life Network — into a venue for national sports in a league with ESPN, by pursuing not only hockey but some Major League Baseball and National Football League games.

After acquiring rights to the National Hockey League for $135 million, Comcast wasted no time trying to use that marquee sport to jump-start OLN.

Comcast president and chief operating officer Steve Burke has already said OLN will most likely ask for an increase in its 20- to 25-cent license fee to help offset the $135 million NHL deal. With most of the network’s affiliation agreements up at the end of the year, operators expect Comcast will try to use an OLN deal to gain better rates or greater distribution for its other networks.

“If Comcast gets the NFL package, they will be very difficult the deal with when they come calling,” one small-MSO executive said. “They’re getting just as egregious as the other sports guys.”

Comcast’s programming stable includes not only OLN but other national services such as E! Entertainment Television, Style, The Golf Channel, G4, AZN Television and several regional sports networks.

That portfolio is growing. In late September, Comcast will launch PBS Kids Sprout as a linear network. And the MSO’s partnership with Sony Corp. to acquire Metro-Goldwyn-Mayer Inc. will result in the creation of several cable networks. Comcast is also considered a potential buyer of Hallmark Channel, which is on the block.

OLN has already begun to play hardball with operators over the NHL. OLN last week told MSOs that carry the network on sports tiers that they would not receive the network’s live hockey telecasts unless they distribute the channel on analog or digital basic.

While 90% of OLN’s 64 million subscribers get the service via analog or digital basic, several MSOs — including Cablevision Systems Corp. and Cox Communications Inc. — stand to lose OLN’s weekly Monday and Tuesday night NHL telecasts, as well as postseason coverage, because they offer the channel on low-penetrated digital tiers.

OLN said in a statement that the provision “is common in professional sports network carriage agreements” and that it is already working with our affiliates “to bring hockey to as many homes as possible.”

A Comcast spokesman declined to comment and Jeff Shell, president of Comcast Programming, was out and not available for comment.

AFFECTS CABLEVISION, COX

Cablevision, which offers the service on a $9.95 sports tier with such other networks as Comcast’s Golf Channel and Fox College Sports, said in a statement that it has “every intention of delivering the games that will appear on OLN,” along with its coverage of local New York area teams via the MSG Network and FSN New York regional sports networks.

Cox, which carries OLN on its “sports and information tier” in several systems, confirmed the service’s stance on the matter, but wouldn’t comment further.

An NHL spokesman said only that with more than a month to go before the season’s opening faceoff, fans should not be “overly concerned” about not seeing the telecasts.

OLN hopes to use the NHL to increase its distribution, although if it reaches 80 million subscribers within two years, it will have to pay the NHL an additional $15 million. That additional fee also kicks in if OLN acquires another sports property such as MLB, the NFL or NASCAR — all of which the network is actively pursuing, according to sources close to Comcast.

OLN might look to further enhance its sports profile by teaming with Time Inc.’s Sports Illustrated magazine, according to a report in last Friday’s New York Post. SI unsuccessfully tried to enter the television sports business in 1996 with CNN/SI, a collaboration with Time Warner Inc. corporate sibling Cable News Network, in an effort to compete with ESPNews. The network, however, failed to gain adequate distribution and was disbanded in 2002.

Time Warner officials couldn’t be reached for comment at press time; Comcast declined to comment.

With the emergence of OLN and the appeal of its owned regional sports networks in Philadelphia, Chicago, Southern California and Baltimore/Washington, D.C., Comcast has an arsenal of marquee sports product at its disposal.

SINGER, SHEEHEY SHIFT

Bulking up in that regional-sports content arena, last week Comcast shifted Allan Singer and Michael Sheehey to the unit, to develop other programming opportunities for the sports services.

Singer, formerly Comcast’s senior vice president of programming investments, will take the newly created position of senior vice president of sports-business development, in charge of securing programming relationships for Comcast SportsNet.

Sheehey, who most recently served Comcast’s vice president of sports content for Comcast, will become senior vice president of sports content, responsible for identifying programming opportunities for the regionals. Both executives will report to Comcast SportsNet president and CEO Jack Williams.

While Comcast’s OLN deal made headlines, behind the scenes Shell has taken steps to consolidate affiliate sales, by recruiting Bridgen.

Comcast is expected to name him an executive vice president, in charge of consolidating, and then overseeing, affiliate sales for its stable of cable networks, both national and regional sports, several informed sources said last week.

“Bill is an extremely smart, tough negotiator,” one veteran affiliate-sales official said. “He’s not very well known, but he’s very competent.”

As part of the restructuring Brad Fox, most recently E! Entertainment Television’s senior vice president of affiliate sales, will take that title for Comcast overall, several sources said.

Comcast declined to comment on Bridgen and Fox.

But in a statement, a Comcast spokesperson said: “Comcast’s content is a rapidly growing part of our business because we’re adding premier content like movies from the Sony-MGM agreement, the NHL on OLN and children’s programming on PBS Kids Sprout. As our networks grow, we’re focused on providing our distribution partners with more efficient and consistent service across our networks.”

SPORTS IN BUNDLE

Consolidating affiliate-sales functions will not only be more cost efficient, it will allow Comcast to make the most of its sports services, by bundling them with its other networks, sources said. Bridgen, a lawyer, learned the affiliate-sales ropes at Fox Cable, and Fox Sports Net.

“From the training he got at Fox, he really understands how to package networks,” one affiliate-sales executive said. “He understands how it works, how to take networks and use the leverage of the RSNs to package them all together.”

Currently Comcast’s networks have their own individual affiliate-sales teams scattered in offices around the country, in Los Angeles, Connecticut, Chicago, Boston, Florida and Philadelphia. For example, OLN senior vice president of affiliate sales Becky Ruthven is now based in Stamford, Conn. But all this will change, according to several sources.

Comcast is planning to have only two affiliate-sales locations for its networks, namely Philadelphia, where the MSO is headquartered, and Los Angeles, sources said.

Shell knows Bridgen from their days at Fox Cable, where Shell was president and Bridgen was a Fox Sports Net affiliate-sales executive.

At Comcast, Shell wants Bridgen to concentrate on inking carriage deals with the top MSOs and building a team of national account executives, several sources said. That will likely include the hiring of a senior vice president of national accounts.

FOX FOR FIELD TEAMS

Brad Fox, on the other hand, will be in charge of getting Comcast’s affiliate-sales teams in place out in the field and managing those operations, according to several sources.

For the Philadelphia-based East Coast team, Fox is looking to hire two vice presidents of affiliate sales. Two directors will report to each of those vice presidents, and those directors will have several representatives, sources said.

On the West Coast, the affiliate-sales team will be somewhat smaller, with two vice presidents and several directors, according to sources.

Affiliate-sales personnel now with Comcast’s networks will essentially be asked to reapply for the jobs that will be available in Philadelphia and Los Angeles, sources said. And not everyone on board now will want to relocate, sources said.

Comcast’s new affiliate-sales structure will be implemented over the next couple of months, and probably won’t be finished until the early part of next year, sources said.

October
November