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Other MSOs Enthusiastic About ESPN Deals

2/29/2004 7:00 PM Eastern

The ink was barely dry on ESPN's new long-term affiliate deals with Charter Communications Corp. and Cox Communications Inc. before other distributors began clamoring for the similar terms for their ESPN renewals.

Meanwhile, ESPN could face competition for national sports rights from a proposed joint entity involving the National Football League, Fox Sports and Comcast Corp., according to published reports. Sources last week also said the pro-football league could offer more games to cable through a Thursday-night window as part of a new cable and broadcast package that might be negotiated this fall.

Cable executives enthusiastically greeted ESPN's distribution agreements with Cox and Charter, which reportedly keep the network's annual increases to an average of 7% over the next nine years — well below the 20% increases operators had been paying under prior agreements.

The National Cable Television Cooperative said it hopes to reach a "comparable deal" for its 6,500 member systems. The rate hikes in the recent ESPN deals are far lower than the sliding-scale agreement ESPN offered to the organization that started with a 16% climb in the first year, before dropping to an 11% uptick in the final four years of the deal.

"Cox's agreement with ESPN shows that their efforts did have an impact on securing a better ongoing rate for ESPN's multiple networks," NCTC senior vice president of programming Frank Hughes said. "ESPN's subsequent agreement with Charter shows that ESPN is making an effort to strengthen their industry relations and that their new pricing is not just MSO-specific."

An executive at No. 1 direct-broadcast satellite carrier DirecTV Inc. said the ESPN, Cox and Charter deals were a "step in the right direction." But he would not comment on any negotiations between the two parties or disclose the length of its current pact with the sports programmer.

DBS rival EchoStar Communications Corp. also would not divulge terms of its ESPN deal, nor would it comment on whether it is in negotiations.

With the cantankerous Cox contract negotiations behind it, ESPN may now have to focus its attention a potential new competitor in the sports marketplace.

A published report in Television Week
alluded to a potential union of Fox Sports, Comcast Corp. and the National Football League in the development of a national sports cable service that would compete with ESPN for marquee sports rights.

Fox Sports chairman David Hill confirmed in The New York Times
that the concept is "something we've talked about — the same as we talked about Speed Channel and Fox News Channel before they got started," Hill said. "But we've also talked about things that haven't gotten done."

Comcast executives could not be reached for comment at press time. The NFL would not comment on the matter.

An ESPN spokeswoman said the network is ready for any potential competitor.

"Just like the sports world we cover, we operate in a competitive environment," said the spokeswoman. "ESPN is well-positioned with our growing portfolio of services, distribution, and the value we bring to leagues, affiliates, advertisers and fans."

Coming on the heels of the potential network was a USA Today
report that has the NFL pitching cable and broadcast networks several fresh options for a new television agreement, including a potential weekly, cable-based Thursday night game package. Potential suitors for the weeknight package include Turner Network Television — which held part of the ESPN's Sunday-night package in the early 1990s — and Home Box Office, according to the story.

TNT Sports president David Levy said in a statement that the NFL as an entity "meets all the criteria that we look for in sports properties. If there's an opportunity to get in we're interested."

HBO executives could not be reached.

The NFL's eight-year, $17.6 billion deal with ESPN, ABC, CBS and Fox expires after the 2005 season, as does NFL Sunday Ticket — its exclusive out-of-market pay-per-view package — with DirecTV.

Kagan Associates sports analyst John Mansell said that given the falloff in ESPN rate fees, the NFL may be preparing to make up for a potential loss in TV rights revenue.

During its current contract, ESPN pays the NFL an average of $600 million per season.

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