Op-Net Issues Surface at CTAM Summit

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It was a marketing conference, but continued talk of escalating sports programming costs and tiering took center and back stage at the CTAM Summit.

During an MSO programming panel Tuesday, moderated by CTAM president and CEO Char Beales, Time Warner Cable vice president of programming Lynne Costantini said: "Digital sports tiers are the best value proposition for our customers and we can manage costs."

Her company has already launched sports tiers in two-thirds of its systems, with such services as Outdoor Life Network, Outdoor Channel and Speed Channel. Time Warner Cable has also placed the regional Yankees Entertainment & Sports Network on a tier.

Cox Communications Inc. executive vice president Pat Esser added, "tiering is most significantly a solution."

Insight Communications Co. CEO Michael Willner said "most areas of programming are perfectly under control." But the entire sports system, in which the "best ball players" are commanding salaries of $40 million to $50 million, is out of whack.

"We need to use self-restraint and make responsible business decisions," Willner said.

At a press briefing following the general session on MSO programming issues last Tuesday, the conversation grew more pointed.

Esser, whose company's contract with ESPN expires next spring, said Cox wants a new long-term relationship and "solution" with the sports programmer that does not include continual 20% annual rate hikes, such as are provided for in ESPN's current affiliate contract.

Willner also said charging "$8, $9 or $10 [monthly over the course of new a long-term deal] is not acceptable" for basic carriage for a network.

"We would have to put it on a tier," he said. "If that's not acceptable, we would have to consider dropping it."

Esser added: "I would agree. That's for any service, not just ESPN."

Costantini, though, deflected the question of whether ESPN was ticketed in the direction of possible tiering. "It's not appropriate to discuss this. We have a long-term agreement with ESPN," she said.

Responding to the MSO comments, a network spokeswoman said: "ESPN has proven time and time again its extraordinary value in selling cable subscriptions and revenue generation. We continue to position ESPN as part of basic or expanded basic."

Network rebranding efforts were another topic that drew fire. Costantini — borrowing an analogy often used by her boss, executive vice president of programming Fred Dressler — likened some channel revamps to a car shopper who wants to buy a $20,000 Volkswagen and is presented with a $100,000 Mercedes-Benz. The Benz might be fabulous, but it's not what the customer asked for.

She said it was disheartening to negotiate network deals, "get the right mix" for channel lineups and then watch networks change focus in an effort to get better ratings.

Esser was also frustrated by such undertakings. "You make a conscious decision to enter into a network agreement, then they go through a metamorphosis."

Willner said operators don't design channel lineups necessarily to get the highest ratings. The Weather Channel isn't a primetime leader, he said, but it's important nonetheless. "You expect it to always be there; it's a critical part of what we offer."

Backstage, the MSO executives were asked whether they were referring to TNN, which will finally change into the more-macho Spike TV on Aug. 11. Costantini declined comment, as did Esser, who said he was really thinking about other unnamed examples.

Willner said Insight would not drop Spike TV. None of the executives would address other names that were bandied about: Bravo or AMC.

On stage, the subject of Cablevision Systems Corp.'s Rainbow DBS venture left the panelists largely speechless. Costantini said she had been on vacation the prior week and confessed she didn't know much about it. Esser and Willner didn't comment.

Summing up, Costantini said she had witnessed improvement in programmer relationships in recent months.

"I'm an eternal optimist," she said. "I'm seeing creative solutions and value-added services. I expect that to continue."

Willner said vertical integration — rising costs for networks linked together, and with broadcast outlets, by common ownership — was becoming more of a problem for operators. "It's difficult to deal with this, but we have to. Otherwise, we'll have other people dealing for us," he said, meaning regulators.

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