TNT Plus Negotiations Down to the Wire

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With a New Year's Eve deadline looming, Turner Broadcasting System Inc. and several major distributors have yet to reach carriage agreements for the Turner Network Television Plus service.

Although sources said several deals are close at hand, Comcast Corp., Cablevision Systems Corp., EchoStar Communications Corp. and Charter Communications Inc. have yet to formally announce new carriage agreements for TNT Plus — the new moniker for the full TNT service.

Turner is seeking a 10 percent annual rate increase for the service over five years, beginning in 2003. At stake: Access to TNT's major sports properties — the National Basketball Association and National Association of Stock Car Auto Racing — which Turner will withhold if a deal for the new TNT Plus isn't completed by Dec. 31.

Deals done

The network did conclude one carriage deal last week: DirecTV Inc. said it signed an agreement with Turner for its core services, including TNT Plus, though it would not reveal specifics.

That deal follows an agreement with Cox, reached two weeks ago. Along with TNT Plus, the Cox contract also included long-term licensing deals for Cable News Network, CNN Headline News, TBS Superstation, Turner South, Boomerang, CNNfn and CNN en Español. Terms of the pact were not disclosed.

"We have signed a significant majority of the industry and are confident that we will to come to terms with everyone in the industry," Turner executives said in a statement issued last week.

But the network still has to finalize deals with several major MSOs before the Dec. 31
deadline.

Negotiations with Comcast and Cablevision are particularly dicey, because Turner is attempting to rip up current multi-year carriage agreements for TNT. The programmer hopes to extract new five-year deals calling for a 10 percent annual increase. As the network currently charges operators around 70 cents per month per subscriber, it would amount to a 7 cent bump over the first year.

Turner president of domestic distribution Andy Heller has said in the past that he believes both the NASCAR and NBA coverage — both currently on TNT's lineup — are not inherently part of the network's current affiliation deal, thus allowing the network to withhold said programming without an increase in rates. Heller declined further comment last week.

If Turner can't reach agreements with Comcast or Cablevision, it would offer the MSOs a second TNT feed with unspecified replacement programming in place of NBA and NASCAR content.

Neither Comcast nor Cablevision representatives would comment on the matter.

NBA fast break

For Charter and EchoStar, TNT's current deals expire at year-end. Charter executives said the MSO is negotiating with TNT but has yet to reach a deal.

EchoStar executives say the company is "optimistic" it will reach an agreement by Dec. 31.

TNT's contract negotiations come amid a strong start to its NBA season, the first of a six-year, $2.2 billion deal reached last January. Through Dec. 12, TNT's exclusive Thursday-night doubleheader telecasts have averaged a 1.2 rating, up 20 percent from the network's 1.0 rating last year for Thursday telecasts during the comparable span.

Overall, the package is up over TNT's 1.1 rating for all of its NBA coverage last year.

Failure to reach deals for TNT Plus could have a major impact on Turner's NBA ad-sales efforts.

At last count, network officials said Turner has sold about 75 percent of its NBA inventory, but it's unclear whether the ads sold are for the whole season, based on TNT's current base of 88 million subscribers.

If TNT is unable to deliver the nearly 25 million Comcast and Cablevision subscribers, it would be forced to provide advertisers with millions of dollars in make-goods.

But Turner officials remain optimistic that the deals will be done. "We do not expect any subscribers to miss any of our programming, including basketball," the programmer said.

NBA officials did not return calls by press time.

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