The war between operators and programmers has escalatedbeyond description since ESPN told cable operators that their programming fees would soar20 percent, in part to foot the bill for its $5 billion National Football League contract.
And that war has spread to other programming services, withoperators reasoning that if at the end of the day, they really do have to accept that 20percent increase, they'll scrape up every nickel and dime off the floor byre-evaluating every program service.
"Every program service is now vulnerable, in terms ofbeing dropped," one MSO programming executive said.
In fact, this source -- who, like many in this chronicle,did not want to be named -- said, "Never in my 15 years of dealing with programmershave I seen the relationship with them be so hostile."
Thankfully, a few voices of reason remain, among them SteveGreenberg, co-president of ESPN Classic Sports and former deputy commissioner of MajorLeague Baseball under Fay Vincent.
"It's a mistake to lump everything under the suntogether," says Greenberg, who has been with Classic Sports for five years, and whois now part of ESPN's mushrooming family of sports services.
"There's a lot of posturing and disingenuousrhetoric out there right now. There's talk about going to [Washington,] D.C., toregulate sports. But who owns sports?" Greenberg asks. "TCI, Cablevision andComcast are partners in just about every regional-sports network."
If the government were to regulate sports, those MSOs wouldbe "the biggest losers," Greenberg maintains.
But you can hardly blame frustrated operators from tryingto pull every rabbit out of their hats to offset the pain from ESPN's 20 percentincrease.
And what leverage do they have? Well, some are talkingabout not carrying Toon Disney -- the new network from ESPN's parent company, TheWalt Disney Co. -- or about not moving Disney Channel to basic and out of premium.
Then, in recent weeks, there's been some ratherwild-eyed, pie-in-the-sky talk about cable operators moving ESPN and other sports networksto a sports tier -- not that any of the programming contracts currently allow that sort ofarrangement.
But cable operators are rethinking the whole sports model-- especially the smaller ones.
For example, Michael S. Willner, president of InsightCommunications, points out that only 25 percent of cable subscribers would pay just aboutany price for sports programming, but the other 75 percent of the subscriber base does notwant to pay more for sports, period.
But Greenberg reminds us that not all that long ago,operators had spent years just trying to get regional-sports networks off tiers for fulldistribution because it's more profitable.
Nor does Greenberg see the economic model of a sports tieras viable, especially for the larger MSOs with sports holdings.
"Do you think Leo [J. Hindery Jr., president and chiefoperating officer of TCI], Chuck [Dolan, chairman of Cablevision] and Brian [Roberts,president of Comcast] want a tier that will hit only 15 percent?" Greenberg asks.
That's a good question from a man who can relate tothe current friction between operators and programmers, given his former life dealing withfeuding team owners and players who all complained that the other side was always gettingthe better deal.
"Like baseball, operators and programmers, like ownersand the teams, should all be working together to win," Greenberg notes.
But is that really possible where, in the case of sports,neither the cable operator nor the programmer -- ESPN -- is really calling the shots?
Another sports-programming executive who did not want to beidentified says he doesn't know what the answer is, but he sums up the problem inthis way.
"Actually, there is no other business in this worldbesides sports TV where competition has been the worst thing ever for consumers," heasserts.
For example, he continues, with so many entities, likeTurner, Fox ESPN and the broadcast networks, bidding against each other, the ante is uppedalmost logarithmically.
And the winning bidder doesn't necessarily benefitfinancially because the money goes to the players. That leaves the winning bidder tofigure out a way to share the pain among its cable operators and advertisers.
And don't forget the hapless fans: They'll notonly see increases in their cable bills, but ticket prices will soar, as will the costs ofa beer and a hotdog.