In Demand Working with Smaller Ops

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After some small cable companies complained about pricing structures proposed during the past two weeks by In Demand for the right to carry pay-per-view sports packages, the programmer decided to negotiate accommodations with those operators that would keep the content available, parties to the dispute said Friday.

While the pricing issue appeared to fade late last week, the small cable companies -- which are often more vulnerable to losing customers to channel-intensive direct-broadcast satellite providers than are larger MSOs -- are still fretting the potential loss of In Demand’s PPV movie channels.

Some small operators claimed that In Demand -- which is owned by several large cable companies, including Comcast Corp. -- was linking the sports packages to other content it offers, such as HD programming. If an operator didn’t carry the HDTV channels, it faced paying a fee of $2.25 per digital subscriber, per year. That fee was to be levied on top of the typical revenue split paid by operators.

“Substantially more” than 50% of the revenue goes to In Demand and sports entities such as Major League Baseball, the National Basketball Association and the National Hockey League, said one affiliate, Atlantic Broadband Inc. CEO Dave Keefe, an operator with 248,000 customers in six Eastern states.

In Demand’s pricing was a hot topic of conversation Oct. 5 when the American Cable Association -- the trade group for 900 cable companies ranging in size from fewer than 100 customers to several-hundred thousand -- met in Miami.

ACA CEO Matt Polka said the In Demand programming issues affected most of its members’ subscriber base.

But by week’s end, In Demand and system executives said the parties were negotiating “accommodations” that would allow systems to continue to offer its baseball, National Association for Stock Car Auto Racing and hockey packages.

Small-scale operators are still concerned, though, over a separate issue: the possible loss of two-thirds of their theatrical PPV channels in 2006.

Jacobson confirmed In Demand might make the “difficult choice” of cutting the number of transponders that now distribute movie content -- an action that could cut the 21 channels currently distributed down to seven channels at the beginning of next year.

That decision is part of a natural evolution of the PPV business, he added, because the distribution of “linear” PPV now accounts for a small fraction of In Demand’s revenue.

Major operators now rely on video-on-demand to sell movies.

Small operators contended that the sports pricing, plus the decrease in movie availability, are levers to force them into a transition into VOD. That’s a leap most will take, but they want it on a timetable that’s dictated by their own budgets.

For more on In Demand, please see Linda Haugsted’s story on page six of Monday’s issue of Multichannel News.

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