Time Warner-MSG Dispute Heats Up

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Time Warner Cable and Madison Square Garden Networks are revving up the rhetoric in their carriage dispute, which is set to come to a head Sunday morning if a compromise is not reached.

Time Warner said it will begin running ads Friday in a number of New York-area newspapers explaining why Cablevision Systems Corp.-owned MSG Network and Fox Sports New York could go off the air at 12:01 a.m. Sunday due to a dispute over licensing fees.

It’s unclear how much MSGN is asking for the two network, but sources close to the situation said the fees would increase from around $2.90 per subscriber, per month to $4 under the new agreement.

Sources also said there are provisions in the deal for license-fee reductions if MSGN and FSNY lose such pro-sports teams as Major League Baseball’s New York Mets and the National Hockey League’s New Jersey Devils.

Both the Mets, with a contract with FSNY ending after next season, and the Devils, with a deal with FSNY that expires after the 2006-07 season, have made noise about leaving to possibly start up their own regional sports networks.

Along with the two regional sports networks, sources said, Time Warner would also receive Rainbow’s MetroChannels, as well as new services such as SportsDesk On Demand, based on MSG’s version of ESPN’s SportsCenter, which features updated highlights; an MSGN-FSN HD channel; and MSGN’s interactive feature, which allows viewers to choose different camera angles while watching local teams’ home games. All three of those features are currently offered to Cablevision subscribers.

Neither Time Warner nor MSGN executives would comment on the matter.

The dispute heated up late Wednesday after Time Warner apparently rejected an offer to extend negotiations to carry the programmer’s services.

The two parties have been in negotiations since December, when the cable operator agreed to extend talks and to continue carrying the programmer’s two regional sports networks and MetroChannels in New York.

According to sources familiar with the matter, the latest offer on the table offered rates for the regional sports networks that were below what Yankees Entertainment & Sports Network is charging MSOs. YES -- which ended a long dispute with MSGN parent Cablevision last year -- charges between $1.94-$2.11 per subscriber.

MetroChannels would receive a modest increase to its flat rate charge.

“Time Warner Cable has threatened to remove our two regional sports networks and to deny its customers some of New York’s most popular sports programming, including more than 400 live professional games from seven New York pro teams and 200 live college games,” MSGN said in a prepared statement.

“We have made fair and reasonable offers to Time Warner to continue carrying the services at rates that are significantly below those they've already agreed to pay the other regional sports network in the market, and they have rejected our offers,” the programmer added. “Now they have taken the extraordinary step of making their threats public while refusing reasonable renewal offers. Time Warner should not put their selfish interests ahead of their customers.”

“Once again, Cablevision is threatening to take away MSG and Fox Sports New York from New York sports fans,” Time Warner responded in a prepared statement.

“Despite our ongoing efforts to negotiate, Cablevision plans to remove their networks from Time Warner Cable customers Sunday, Aug. 1,” Time Warner added. “We are attempting to negotiate for continued carriage of these networks.”

In newspaper-ad copy set to run Friday, Time Warner said that if it is forced to drop the networks, it would offer $2 monthly rebates to subscribers.

Some 2.4 million Time Warner customers -- including those in the Hudson Valley, as well as the upstate New York cities of Albany, Rochester, Syracuse and Binghamton -- currently receive FSNY and MSGN. Time Warner plans to run ads in these and other affected markets, as well, according to sources.

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