Regional Openings for Comcast

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Comcast Corp.’s burgeoning regional sports business could be a major beneficiary of the recent News Corp.-Cablevision Systems Corp. financial restructuring of their shared sports holdings.

Industry sources said Comcast could vie for Cablevision Systems Corp.’s stakes in the non-New York area regional sports networks Cablevision will own once the new structure of the Regional Programming Partners, in which Cablevision and News Corp. hold respective 60% and 40% shares, is complete.

In what the parties are labeling “a generally tax-free exchange of assets,” once the restructuring is finalized Cablevision will own 100% of Madison Square Garden and its assets: the arena; the Theater at Madison Square Garden; the National Basketball Association’s New York Knicks; the National Hockey League’s New York Rangers; the WNBA’s New York Liberty; Radio City Music Hall; Madison Square Garden Network; and FSN New York. Cablevision also gets 100% of FSN Chicago and continues to co-own FSN New England with Comcast.

Cablevision will continue to manage all of these operations.

News Corp. gets 100% of FSN plus FSN Ohio, FSN Florida and National Advertising Partners.

News will assume management of both FSN Ohio and FSN Florida and continue its management of FSN and NAP.

Finally, Cablevision and News will continue to maintain a 60-40 split, respectively, of FSN Bay Area through their partnership, with Cablevision retaining management.

The stage is set for Cablevision to sell its non-New York area regional sports networks, the way it sold its cable systems outside the New York DMA several years ago.

“The regionals certainly don’t fit into their core strategy,” Kagan Associates sports analyst John Mansell said of Cablevision. “It made a lot of sense when they owned systems in Ohio and New England, but they don’t anymore. It’s also a tougher business, with teams collaborating [with other MSOs] or going out on their own.”

Likely buyer: Comcast, which has recently created regional sports networks in markets where it is the dominant MSO.

It’s almost certain the MSO will obtain FSN Chicago, as it has already siphoned all of the pro sports rights from the network to create Comcast SportsNet Chicago, in partnership with four local sports teams.

Comcast would also be the likely suitor for Cablevision’s share of FSN New England, as it already owns half of the network and has a big cable presence in the area.

“It’s a more likely scenario that it will be the cable operator in the market that buys the [regional] networks,” Mansell added.

Comcast and Cablevision officials would not comment on the matter.

The deal effectively resolves the regional sports partnership Fox and Cablevision forged in 1997.

Back then, News Corp. and Liberty Media paid Cablevision $850 million for 40% of Regional Programming Partners, the holding company for the Garden, the pro teams, MSGN, what was then SportsChannel New York and several regional sports networks. (News bought out Liberty’s portion of the partnership in 1999.)

At the time, the idea was to combine all the regional networks to provide a national footprint for Fox Sports Net to effectively compete with ESPN.

But Fox Sports Net failed to vie with ESPN for pricey rights to marquee national sports packages.

Further, Comcast’s entry into the regional sports business with networks in Philadelphia, Washington, D.C., and more recently in Chicago and Sacramento, Calif. — and team-based regional networks in Denver and Charlotte, N.C. — has made it tougher for FSN to deliver significant product to a number of key markets.

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