Carriage Spat Yields Mets Mess

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Time Warner Cable and Madison Square Garden Networks took to the airwaves late last week in an effort to influence public support in their ongoing carriage dispute — a squabble set to come to a head early Sunday morning if a compromise could not be reached.

Time Warner ran ads July 30 in several New York City area newspapers and both sides ran crawls on several networks last Thursday and Friday explaining their positions as to why the Cablevision Systems Corp.-owned Madison Square Garden Network and Fox Sports Net New York could be pulled off Time Warner Cable systems at 12:01 a.m. on August 1, due to a dispute over licensing fees.

At press time, both sides were standing firm on their respective positions regarding the dispute, which initially cropped up on Dec. 31, 2003, when Time Warner's carriage agreement with MSGN and FSN New York expired. The dispute heated up again last Wednesday, after Time Warner apparently rejected an offer to extend negotiations to carry the programmer's services.

According to sources, Cablevision is asking for fee increases for MSGN and Fox Sports Net — available to 2.4 million Time Warner subs in metropolitan and upstate New York — that would push current fees from around $2.90 to $4.00 per month under a new, long-term agreement.

Sources also said there are provisions in the deal providing for license fee reductions if MSGN and Fox Sports Net lose such pro sports teams as Major League Baseball's New York Mets and the National Hockey League's New Jersey Devils. Both the Mets, whose contract with Fox Sports Net New York and MSGN ends after next season, and the Devils — whose deal with Fox expires after the 2006-07 season — have made noise about leaving to possibly start up their own regional sports networks.

Neither team returned phone calls by press time.

Along with the regional sports networks, sources said Time Warner, which will offer a $2 monthly rebate should the sports nets go dark, would also renew its deal for Cablevision's MetroChannels, as well as new services such as “SportsDesk On Demand,” based on MSG's version of ESPN's SportsCenter, which features updated highlights; a MSGN/Fox Sports Net HD channel and an MSGN interactive feature that allows viewers to choose different camera angles while watching local teams' home games. All three of those features are currently offered to Cablevision subscribers.

But a Time Warner spokesman said the additional features don't justify the increase in fees: “It would seem Cablevision recognizes the diminishing value their current programming has with our customers and is trying to bolster the offering, however, they have refused to provide us with a carriage extension and refused to continue negotiations on the subject.

“We have made fair and reasonable offers to Time Warner to continue carrying the services at rates that are significantly below those they've already agreed to pay the other regional sports network in the market, and they have rejected our offers,” MSG Networks said in a prepared statement. “Now they have taken the extraordinary step of making their threats public while refusing reasonable renewal offers. Time Warner should not put their selfish interests ahead of their customers.”

Sources close to Cablevision said that the fee increases would still keep both sports networks below the $1.94-$2.11 per subscriber the Yankees Entertainment & Sports Network receives as part of an April arbitration ruling reached to settle a carriage dispute between the two-year old network and Cablevision. That spat meant Cablevision subscribers didn't recieve the entire 2002 New York Yankees baseball season.

“YES established the precedent in the market with regards to regional sports network rates in the market,” said the source.

Given the potential National Hockey League strike and the possibility of losing the Mets and Devils over the next two years, Kagan Associates sports analyst John Mansell said MSG is looking to lock in the best rates based on the current environment.

“It all comes down to what rates [Cablevision] can get for the networks,” he said.

For Time Warner's part, a spokesman said the MSO has no plans or desire to move either of the networks to a sports tier despite an MSO mandate to try to relocate expensive sports programming to digital sports tiers, which carry an additional cost of around $3 to $5.

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