New York-area cable operators might soon be facing pitches from a fourth regional sports network, if the New York Mets go ahead with tentative plans to launch a channel.
The Major League Baseball club last week exercised an option under its 1996 rights agreement with Madison Square Garden Networks to terminate the deal at the end of the 2005 season, according to MSGN officials.
The move sets the stage for operators to potentially repeat the nightmarish carriage battles endured three years ago, when the New York Yankees — the Mets’ crosstown rivals — bolted MSGN to start a team-controlled regional sports service, the Yankees Entertainment & Sports Network.
Industry observers say the Mets could partner with YES Network to create a powerful regional sports service, or could team with a local cable operator like Time Warner Cable or Comcast Corp. to leverage cost and carriage opportunities.
A third option could be to renegotiate with MSGN for a more lucrative TV deal. Either option would represent a financial setback for MSGN’s two regional sports services — Madison Square Garden Network and Fox Sports Net New York — which would either have to pay the Mets substantially more to retain the games, or cut the license fees charged to operators to compensate for the loss of a major programming package.
The Mets paid MSGN $54 million to terminate a deal that was to expire in 2011.
That’s far more than the $30 million Yankees owner George Steinbrenner paid MSGN in 2001 to get out of its deal — or the $6 million Steinbrenner paid SportsChannel New York in 1988 to terminate that deal.
The Mets last week retained Allen & Co. to handle the process of exploring all potential options. “We will actively explore all options concerning the telecast of Mets games for the 2006 and future seasons,” according to a team statement. “We are excited about the opportunities that are available to us for the distribution of Mets baseball in our television market and are confident that a new arrangement will be established that will serve the Mets and our fans well.”
METS’ YES ENVY
The Mets have made noise in the past about starting their own regional sports network, especially after watching the Yankees launch YES in 2002.
LHB Inc. president Lee Berke — who has consulted with several pro-sports clubs seeking to start standalone networks — says the Mets are in a strong bargaining position and can afford to take their time and explore all options.
“The Mets see what’s happening nationwide [with regional startups]; they see what’s happened with the Yankees, so from a negotiating standpoint it’s of great value to have as many different options as possible,” Berke said. “If you’re the Mets, you know the combination of Fox Sports [which owns 30% of Fox Sports Net New York] and MSGN truly needs you.”
Losing the Mets would deal Fox Sports Net New York and MSGN a major blow. Currently the two networks split 100 Mets games, with another 50 airing on local broadcast television.
Without a pro baseball team to support its summer programming schedule, industry observers believe Cablevision Systems Corp. — which holds a majority interest in the two channels — would be forced to compensate by reducing the services’ combined $3.50 to $4 rate card.
Through 32 telecasts, the Mets currently average a combined 2.11 rating, well above the rating for any other sports property including MSGN’s telecasts of New York Knicks basketball (1.73) and New York Rangers hockey (0.75) games, or Fox Sports Net’s New York Islanders hockey games (0.31) and New Jersey Devils hockey (0.26) games.
MSGN president Mike McCarthy said in a statement: “As is the case with all team rights negotiations, this is a process that we hope and expect will result in a continuation of the long-standing partnership between the New York Mets, MSG and Fox Sports Net New York.”
Of course, a Mets channel — one local radio wag said it could be called “MESS,” a dig at the team’s recent futility on the field — would fall short of marquee winter pro sports programming, although it could attempt to lure the Devils from FSN New York once that team’s deal expires in 2006.
The Mets could also team with YES, which has rights to New Jersey Nets pro basketball games.
Sources close to the network said the Mets could offer games in return for a minority share in the network.
YES, in that case, would have to pitch a second channel to operators to take overflow content when both teams are playing simultaneously.
YES executives would not comment on the matter.
A third option could see the Mets team up with either Time Warner Cable or Comcast to start a new service.
While such a deal would give the Mets guaranteed carriage, the merged network would still have to convince other operators to carry a fourth regional sports channel.
Neither Time Warner nor Comcast would comment on the matter.
OPS SOUND LEERY
Cable companies weren’t welcoming the prospect of a fourth regional sports network last week.
While none of the major area MSOs would comment directly on the prospect of a Mets channel, executives said no one want a repeat of the difficult and often bitter carriage battles fought between distributors and the YES network just two years ago.
Cablevision and YES fought a nasty battle that ended up in the courts and became the lightning rod for Congressional hearings on the high costs of sports rights.
Cablevision, which wanted to carry YES on a tier or as an a-la-carte service, and YES, which wanted basic carriage, eventually settled their differences through an arbitration deal brokered this past March.
Berke believes that operators would not foot the bill for another expensive sports network.
“The New York market will not support four regional sports networks,” Berke said. “The Mets can go a long way in determining who those three networks will be.”
With distributors already paying around $6 for MSGN, FSN New York and YES, DirecTV Inc. senior vice president of programming acquisitions Michael Thornton says it’s highly unlikely a fourth network will gain any traction.
“Whether you contract the two [Cablevision/Fox] networks into one or the Mets team up with YES, it seems likely that New York will continue to have three but [is] unlikely to have four,” he said.