Updated: DirecTV, Comcast SportsNet In License-Fee Battle

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DirecTV and Comcast are involved in a license-fee dispute over two of the regional sports networks owned by the cable operator and could be headed to arbitration.

Derek Chang, executive vice president of content strategies at DirecTV, says the satellite provider’s contracts with Comcast SportsNet New England and Comcast SportsNet Bay Area expired on Dec. 31 and that both RSNs are seeking sizable license fee hikes. That has prompted the DBS distributor, which currently continues to air both RSNs, to seek baseball-style arbitration as redress, under a provision tied to Comcast and Time Warner Cable’s purchase of Adelphia Communications in 2006.

Chang said Comcast SportsNet New England, the home to the defending National Basketball Association champion Boston Celtics, is seeking a 25% jump in license fees, while Comcast SportsNet Bay Area wants a 40% jump. DirecTV would not specify the license fees the networks were receiving under the recently expired contracts.

Relative to Comcast SportsNet Bay Area, Chang claims that RSN not only wants the increase, but that it plans on shifting Oakland A’s Major League Baseball games and San Jose Sharks National Hockey League contests to Comcast SportsNet California, the RSN home to the NBA Sacramento Kings. 

“In New England, Comcast wants 25% more for the same product, and 40% in the Bay Area, where they’re planning to air more than 30% fewer pro team telecasts,” said Chang.

Comcast SportsNet issued the following statement Wednesday night: “We continue to negotiate in good faith and have put a fair offer on the table that reflects the growing value of our networks, the investments we have made in them, and is reasonable based on market trends. As a company with several regional sports networks of their own, DirecTV should be familiar with the rising cost of sports and the negotiation process. We would prefer to resolve this at the negotiating table, but are prepared to proceed with the arbitration process because our goal has always been to serve our viewers without interruption."

DirecTV parent Liberty Media owns a trio of RSNs --

FS Northwest, FS Pittsburgh and FS Rocky Mountain

-- as part of the swap of its 16.3% stake in News Corp. for a 41% interest in the top U.S. satellite provider that was completed in March 2008.


DirecTV, according to Chang, has notified Comcast of its intent to go to arbitration over the matter. The DBS giant is plying the

Federal Communications Commission’s arbitration remedy

that was adopted as a condition for approval of Comcast and Time Warner Cable’s purchase of Adelphia back in July 2006. The FCC instituted this provision as means to address anticompetitive effects of the acquisition whereby Comcast could enhance its market power via its ability to raise the price of “must have” regional sports network programming or withhold the fare from its rivals. The FCC aslo imposed an arbitration requirement to prevent Comcast from using market power to harm consumers in this way.    

Chang said that its arbitration notification, in turn, triggers a “15-day cooling off period,” presumably when the parties would try to bridge their financial differences. After that span, Chang said DirecTV would seek a hearing with the American Arbitration Association. Under baseball-style arbitration, the arbiter would decide between DirecTV’s offer and Comcast’s license-fee request.

Alluding to Comcast stands over Big 10 Network and NFL Network and their attendant license fees, Chang said “we’re in disbelief that Comcast is being so aggressive about the high costs of sports on the one hand, and then trying to stuff these rate increases down our throat on the other.”

Comcast didn’t carry the Big Ten Network during its rookie season and is currently involved with various forms of litigation with NFL Network, which the operator presently only carries on its sports tier. Positioning and pricing were at the root of both of those conflicts.

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