Big Ten, Time Warner Still Locked At Scrimmage Line

11/14/2007 6:33 AM Eastern

NEW YORK-- Like linemen locked in battle at the line of scrimmage, executives from Big Ten Network and Fox Sports Networks and Time Warner Cable and Cox Communications butted helmets over content and economic issues associated with carrying sports networks.

Depending on the vantage point, the executives, speaking here today at the Sports Media & Technology conference, hosted by Street & Smith’s SportsBusiness Journal, either enunciated their long-held positions or rhetoric, often quite spiritedly, over distribution ramifications relative to sports networks in general and BTN in particular during a panel entitled: “The Programming and Distribution of Conference- and League-Owned Networks.”

The backdrop: While BTN, which is co-owned by the conference’s 11-member schools and Fox National Cable Sports Network, now counts more than 31 million subs via deals with DirecTV, Dish and telcos, plus 160 pacts with small cable and municipal providers, it remains on the sideline with Time Warner Cable, Comcast, Cox, Mediacom and Charter. Those operators have not budged on terms that call for the service to tackle expanded basic positioning for around a $1 per monthly subscriber fee in the conference-footprint states, and 10-cents for customers outside that territory. Time Warner and Comcast believe BTN should be positioned on a sports tier.

In broad strokes, the discussion from BTN president Mark Silverman and Fox Sports Network president Bob Thompson centered on the appeal of sports, the avidity of fans and strong ratings BTN has produced with football during its rookie season to date. For their part, Melinda Witmer, senior vice president and chief programming officer at Time Warner Cable and BobWilson, senior vice president of programming at Cox, repeatedly mentioned price/value equation and the needs to meet broad consumer interests via a palette of services.

The long and short of the discussion: bet the over about when the Big Ten Network will find its way onto Time Warner Cable or Cox systems.

Both sides did agree on one point: Nobody wants the government to get involved in price regulation and that market forces should be allowed to take hold.

Otherwise, the parties mostly agreed to disagree.

Thompson said BTN’s “basket of rights,” encompassing broadband, VOD and mobile and HD-presentations, make for a compelling product. He said that the 160 deals BTN has signed so far shows that distributors “like the product and see value in it,” adding that placement on “lower, widely distributed tiers validates” the network.

Wilson said that for Cox, which only has about 60,000 subs within BTN’s footprint, content is not the sole determinant for its offerings. He said that whereas satellite operators remain principally video providers, Cox has to make its programming decisions based on competitive elements that factor in price/value relationships and customer service, particularly via its bundled offerings against telcos.

Wilson said that 40% of Cox’s expanded basic video costs were tied to sports, which generated just 10% of the package’s ratings. Witmer later said that when retransmission costs for broadcast network affiliates offering sports are factored into the cost equation that ratio could exceed 50%.

Witmer remarked that sports networks needed to be more flexible in terms of packaging. She said that if fans are so avid – as an example she cited people painting their winnebagos in school colors— they should be willing to pay more for sports and relieve the burden for other consumers. She also asked rhetorically if Time Warner Cable put BTN on expanded basic, what would come off in its stead:  PBS, Discovery or Speed.

Silverman responded by saying that there are households without children that receive Disney Channel and homes without women that get Lifetime Television. Why should sports services be held to a different standard, he wondered.

Silverman also declared that in BTN’s footprint, there aren’t 60 channels more important to residents of those eight states. He said the network is producing strong ratings in its coverage areas, pointing to a pair of Ohio State football games that were among the top five shows in the Columbus, Ohio market in September and that an exhibition Buckeye basketball game last week set the Nielsen pace in the DMA.

In turn, Witmer talked about the notion of carriage positioning perhaps being reexamined based on networks’ ratings or their capacity to maintain same. Later, she talked about what ratings BTN would generate past the September through March period when its 180 combined football (40) and basketball games expire.

“You want to compare with USA and FX come May, June and July,” she said.

Silverman rejoined by noting the seasonality of other sports networks and questioned how many cable networks had “180 top events.”

Witmer also expressed concern on more than one occasion about whether college conference networks would spawn, “the [Michigan] Wolverine Network” or the like.

Countered Silverman: “We are the Buckeye channel in Columbus, We are the Michigan channel in Ann Arbor [Mich.]. The rights are all with us.”

Although there has been speculation about the SEC or ACC considering similar plays, Thompson said considerations relative to conference and market strength, geography and ultimately rights could all mitigate against a rush to more conference networks. To that end, he mentioned situations where rights have already been spoken for (Big East with ESPN); don’t expire for six or seven years (ACC or Pac 10); or where individual schools control their own packages (University of Kentucky with basketball).  

Talk also bounced around about vertical integration, with comments made about Comcast favorably locating its own networks like Golf Channel and Versus, and allusions to SportsNet New York, in which Time Warner, Comcast and the New York Mets all own stakes, gained a favorable channel position when it launched before the 2006 Major League Baseball season.

Thompson said there are no discussions of expanded basic or digital basis for BTN, “but a sports tier.”

Wilson said that Cox positions regional sports networks anchored by professional teams, including its Cox Sports Television, which showcases games of the National Basketball Association’s New Orleans Hornets on expanded basic. “Pro sports have broader appeal,” he said.

Not surprisingly that remark drew Silverman’s attention. “I don’t follow that,” he retorted.

The disagreements continued after the panelists exited the stage. Witmer was queried about whether Time Warner Cable was engaged in BTN conversations outside this type of open-air forum. “We talk to those guys all the time,” she said. “They need to open up, there are lots of options.” Discussions, she said, have included pay-per-view game proposals, like the operator offered to the NFL Network for its slate of eight primetime games.

For his part, Thompson was asked if BTN was at a stalemate with Comcast and Time Warner Cable. “It’s hard to talk to them [Time Warner Cable]. We have occasion to talk to [Comcast] about a lot of things, and it [BTN] comes up.”

Still, the post-session takeaway: the positions on both sides of the line aren’t going to change anytime soon.

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