Time Warner Ad Warns of Service Drops

12/17/2003 10:00 PM Eastern

The latest battle on the sports-programming-cost front has wound its way back to the Big Apple.

With its contracts with the regional sports networks expiring at year-end, Time Warner Cable ran an advertisement in New York-area newspapers Thursday indicating that its subscribers might not be able to watch Madison Square Garden Network and Fox Sports New York beginning Jan. 1.

In the ad, Time Warner wrote that it has been negotiating in good faith with Cablevision Systems Corp., which owns both regional sports networks, but Cablevision has made unreasonable financial demands.

Time Warner said it has offered to keep carrying the networks at its current rate as negotiations continue. "But Cablevision has said 'no' again," according to the ad, which concluded with Time Warner saying it will offer a $2-per-month rebate if "Cablevision carries out this threat to take these channels away" and that it will continue to update the situation.

According to sources, Time Warner is currently paying Cablevision a combined $3.50 per month, per subscriber for the two networks.

Sources familiar with the situation said Cablevision is also trying to tie contract terms for the regional sports networks -- which air New York Mets Major League Baseball, New York Islanders and New York Rangers National Hockey League and New York Knicks National Basketball Association games -- to carriage of its MetroChannels. Cablevision also owns the Knicks and the Rangers.

"We have been negotiating with Cablevision and still hope to come to an agreement by the end of the year," a Time Warner spokesman said. "We need to let our customers know about this situation."

For its part, Cablevision issued the following statement: "As part of its full-scale attack on [Rainbow Media Holdings Inc.’s] networks, including AMC, Time Warner Cable is now publicly threatening to drop MSG Network and Fox Sports Net New York from its cable systems."

The statement continued, "We have offered Time Warner Cable the opportunity to allow its customers to choose whether or not to receive these well-established regional sports networks. Time Warner Cable has demonstrated a reckless and cynical approach to these negotiations in an attempt to extract unreasonable terms from a programmer."

On Dec. 4, Time Warner Entertainment L.P. filed a countersuit against American Movie Classics Co., arguing that it was within its contractual right to terminate Time Warner Cable’s current AMC carriage pact.

The suit, filed in New York State Supreme Court, countered a Nov. 14 action brought by AMC against Time Warner that sought to bar the MSO from ending its distribution deal with the network Dec. 31 due to programming changes.

AMC claimed that Time Warner’s move is a smoke screen to leverage a deal with AMC’s sister regional sports services.

Time Warner Cable of New York and New Jersey launched a digital-sports tier last month proffering NBA TV, The Tennis Channel, extreme-sports network Fuel and a trio of Fox Sports Digital Networks (Fox Sports Atlantic, Fox Sports Central and Fox Sports Pacific) for $3.95 per month.

And as of July 29, Time Warner gave customers the option of disconnecting Yankees Entertainment & Sports Network and taking $1 per month off their cable bills.

YES has sued Time Warner Cable in New Jersey, attempting to permanently block the "negative repositioning" of the network. YES wants to be on "standard" expanded basic, and not "standard plus," which costs $1 extra per month to include the network.

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