Cox Communications Inc. CEO Jim Robbins continued to take a hard-line stance on high sports-programming costs, but he told analysts Tuesday that negotiations with at least one sports programmer are moving along.
Robbins fired the first shot in the debate last month, when he complained at an industry conference that aside from a 20% rate hike from ESPN, Cox was being asked to swallow a 35% increase from the Fox Sports Net regional channels.
Robbins pointed out that the two networks account for 32% of Cox’s total programming costs, while only 8% of its customers watch. He called for either more realistic pricing or the ability to place the networks on a separate tier so that only customers who want such programming would pay for it.
On a conference call with analysts Tuesday discussing Cox’s third-quarter results, Robbins said the goal is to get contracts from both FSN and ESPN at the current price or with a small increase.
"If we can’t get to reasonable terms, it comes down to the fact that they will not let us carry their programming," Robbins said. "If we have to go that direction, we’ll go that direction."
He added, "We have a good negotiation going on with one of these vendors right now, and when we have more to say about it, we will. We certainly hope we won’t have to go to the extreme position with either of them, but we’re prepared to if we have to."
Although Robbins didn’t name names, it is likely that those "good negotiations" are occurring with FSN. Last week, ESPN president George Bodenheimer held a press conference in Washington, D.C., justifying the rate increases and spending a lot of time refuting Cox’s claims.
Nevertheless, Cox had a strong third quarter, with revenue up 15% and operating cash flow up 20%. That growth was fueled mainly by strong subscriber additions in high-speed data (169,290), digital cable (121,744) and telephony (73,019), all of which exceeded analysts’ expectations.
Cox also increased its full-year-2003 guidance for operating-cash-flow growth from 17%-18% to 18%-19%, based on its third-quarter performance.