Eurosport Threatens to Pull Plug in Finland

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Helsinki, Finland-European sports channel Eurosport recently delivered an ultimatum to Finland's cable TV operators: Pay more or no more.

At issue is a proposed price hike that would increase the price operators pay for the service by some 15 million Finnish Markkas ($2.4 million) by the end of 2002, according to Jyrki Ojala, managing director of the Finnish Cable Television Association (FCTA). The sports network, owned by French media heavyweights TF1 and Canal Plus, has set a July 31 signing deadline for operators.

It's certainly not unusual for Finnish operators to dispute Eurosport's requests for more money. Finnish operators started paying a distribution fee in 1997, following a yearlong dispute during which the network blacked out its signal. A second blackout occurred in 1998, also over a proposed rate hike.

The situation this time is more contentious, officials on both sides of negotiations said, because all compromises have failed.

Now, rather than negotiating with the FCTA, Eurosport is talking to individual operators. So far, none of those talks has borne fruit.

"The operators have enough funds to invest in the digitization of their networks, but seem to forget-partly at least-why they are doing it," said Märta Rydbeck, general manager of Eurosport Ab in Stockholm. "Namely, to bring high-quality services such as programming."

Finland was the last Scandinavian country to pay rights fees, she noted. Denmark started paying in 1991.

"Generally, we get 60 percent of our income from distribution and 40 percent from advertising," she said. "And it is important to understand that sports rights have risen astronomically. The next World Cup rights will be 66 times more than those for France '98."

Part of the problem has to do with the peculiarities of Finnish pay TV law.

"Legally, Finnish cable companies cannot charge for basic-tier services," said Ojala, who noted that the 1998 deal was a secondary agreement tailored to suit the Finnish industry's situation. "Cable companies could distribute Eurosport on a building-to-building basis, not by individual household."

That's because in Finland, an apartment block is owned by a "housing company." Apartment owners are shareholders, with shares allocated according to the size of their property. Those buildings that did vote Eurosport in were filtered out, "which is an expensive business when we are investing in digitalization and a waste of network capacity," Ojala said.

Satellite-master-antenna television and direct-to-home services are unaffected by those rules.

Helsinki Television-Finland's largest operator, with 200,000 homes-is negotiating on its own behalf in what may be the first crack in the operators' united front.

"We will continue to distribute Eurosport if we can agree a price that we think a [housing company] will pay," said Jouko Teräsniemi, HTV's marketing manager.

It appears that Eurosport is ready to negotiate individually with each operator, as it does in Sweden, where it deals even with housing companies on an individual basis.

Finnish viewers currently make up 1 million of Eurosport's total base of 19 million subscribers. It will drop to 500,000 Finnish homes following the July 31 deadline.

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