In Depth

Big Ten Network Aims for Fair Play

Channel Is Still Trying to Work Out Comcast Carriage

In an effort to end the standstill with giant cable operator Comcast over carriage of the fledgling Big Ten Network, the network’s co-owner is not shutting the door to a discussion wherein Comcast would take an ownership interest in the Big Ten Network.

So says Bob Thompson, president of Fox Cable Sports Networks. Fox owns 49 percent of the Big Ten Network.

September’s launch of the Big Ten Network has resurrected the bitter feuds of recent years between cable operators and sports networks. Meanwhile, fans looking for Big Ten games in the Midwest are left without access to the channel on their cable providers.

After two months, the Big Ten Network claims access to 30 million viewers, including deals with DirecTV and EchoStar.

Mr. Thompson sat down recently with TelevisionWeek Deputy Editor Chris Pursell to discuss the imbroglio. The full transcript follows.

TelevisionWeek: What about giving Comcast a piece of the Big Ten Network?
Bob Thompson: We’ve got to get past the carriage issues before we get into that kind of discussion.

TVWeek: But would that help seal the deal?
Mr. Thompson: We’re not ruling anything out.

TVWeek: Given the short history of the Big Ten Network, there already seems to be a clear line drawn in the sand over carriage of the channel, especially with Comcast. Opponents seem very aggressive in terms of trying to tear down the Big Ten Network and implying that it is trying to overcharge people or that people will get it that don’t even want it. What is the status of negotiations right now?
Mr. Thompson: Well, I think the status of negotiations is that at this point there is really nothing going on. I would say that really since mid-August there probably haven’t been any serious negotiations whatsoever. I mean they seem to be very dug in on their “sports tier or nothing” [position] and we are of the mind that this channel has programming of a level of popularity that it needs to be on something more broadly distributed than a sports tier.
So that’s where the line in the sand has been drawn by both parties. And look, I understand it’s a business decision for them. I don’t think anybody at Comcast in Philadelphia has an ax to grind with Big Ten per se. I do think maybe they have misunderstood the market in the Midwest as to what the popularity of this programming is.
When we put these games on, they do very, very well … from a ratings standpoint. And so you know that’s sort of what drives our belief that the thing needs to be extremely widely distributed. From their point of view—I’m not gonna downplay—it’s a lot of money. There’s no doubt about that.
But I think Comcast had realized the popularity and the value of the programming by the fact that they had been in negotiations with the conference to sort of be in the place where Fox ended up.
The other thing I’ve heard is if they bow down on this one, there’s gonna be a bunch of these channels. I don’t think that’s necessarily the case. I think if you look at where each different conference is, you’d see that it would be very difficult for them to do, whether it’s the ACC, SEC, Big 12, Pac-10 or Big East.
I think you could see some various similar ventures, with nowhere near as much programming in terms of, say, 40 football games, 140 basketball games, etc., and the level of exclusivity [as Big Ten]. That means probably a lower rate and someone might accept a lower distribution level of service.

TVWeek: It’s interesting, seeing Comcast reportedly tied in with a possible SEC channel.
Mr. Thompson: Well, it’s, you know, “Do as I say, not as I do.” Look, they’ve already got one conference channel in The Mountain. In Utah, The Mountain is on basic, standard basic. So obviously I think you know when it suits their needs, they can view the same issue from both sides of the fence. So I think you know that’s a tough one.

TVWeek: There is an argument that people who don’t even watch sports would be forced to pay for games they will never see. Why not put the channel on a sports tier? Mr. Thompson: Well, for two reasons, really. This whole idea—I guess I sort of missed when the press release came out, it said anything from here on out is going to be on a la carte or on a tier. I don’t think that makes a lot of sense.
The programming is very important locally and needs to be widely distributed. Now, Comcast themselves are distributing a sports channel in the Northwest; does everybody want to watch the Portland Trailblazers? No. But they decided that it needs to be on a standard basis. Similarly, does everybody want to watch the University of Michigan? No. Does everybody want to watch Michigan State? No, but we believe that that part has enough lure that it’s certainly going to be one of your top-10 rated cable channels and certainly one of the most popular in your top 30 to 35 channels, and it needs to be very widely distributed
In addition, it’s a tough argument for me to sit there and read that it’s simple as “we’re protecting you from the big bad, Big Ten Network and big bad Big Ten Conference and big bad Fox,” when the fact of the matter is what they’re really looking to do is just upsell customers into their higher digital packages.

TVWeek: Reports had you demanding $1.10 in the Big Ten states and a dime through the rest of the country. Would that really make it one of the most expensive national channels?
Mr. Thompson: I can tell you this much, it’s significantly less than ESPN. It’s significantly less than a lot of regional sports networks. Especially if you amortize the cost over the entire U.S., and I believe this product has value throughout the U.S.
All these guys used to carry these exact same games on pay-per-view around the country. These games were all a part of ESPN’s plan. People were paying 20 bucks a pop for them. When they devoted the channel space, felt the games were compelling enough to offer them on pay-per-view, I find it hard to believe that a dime doesn’t—a dime in the outer market and the ability to put it on a sports tier doesn’t somehow provide them an opportunity. So if you take that dollar, use a dollar or whatever you want to call it, in the core, the higher rate of the core, and a dime outside the core and you amortize that cost, it’s a relatively inexpensive channel. So obviously we have a different point of view on that.

TVWeek: What about charges that most of these games used to be available for free over the airwaves?Mr. Thompson: Well, Ohio State and Michigan are free, if you don’t have cable service and you just pick it up off the air. The whole idea of some of these ads I’ve seen from a variety of operators and cable service, you’ll get all these games for free. We talked about it. If you’re a Time Warner subscriber, you’re going to get all these Big Ten games for free. That’s not true. You know who gets those for free is the guy who's got rabbit ears on top of his TV. Other than that, there is a payment in there. You know, maybe they don’t charge for local ABC affiliates, but yeah, there’s a retrans deal that got ESPN 5, 6 and 7 on the air and you’re paying for that through your cable bill.
This whole idea of free is a huge misnomer. But the average viewer, fan, subscriber, they don’t get that. So I think they’re a little bit sort of fast and loose with the truth going on here.

TVWeek: There are obviously two sides to every argument, but from your point of view, what’s wrong with this sentence: “Sports fans will have to pay $1.10 per person to watch fifth-tier football games and women’s volleyball.” Mr. Thompson: Well, the $1.10 has been probably the most oft-quoted figure, which is just not true. I mean, everyone knows that within the cable satellite programming business, there’s always a rate card and there’s always a price. Everybody also knows that basically nobody pays rate card, nobody pays that exact price. There are discounts for coming on early. There are discounts for volume, there’s discounts for how many channels. I mean there’s a ton of discounts, always some discounts. So, the $1.10 just isn’t right and none of the operators who are holdouts have seen that $1.10 rate. Where would they pay the $1.10 rate? That’s not the price. It’s like the analogy that nobody pays sticker price on a car unless you’re an idiot.
The part of the fifth-tier game, I don’t understand that. I mean I think we never pick fifth, there’s no scenario where we pick fifth. There’s scenarios where we pick second, third, and you know we’ve made the decision to not only pick in those days second or third, but we also take all the rest of the games because these games—there’s no such thing as a fifth-tier game if it’s your school and your team.
Basketball is different. You’re picking the entire basketball season sometime in the middle of the summer or early September, and I defy anybody to sit there and say which college programs will be “the” teams who are going to be there at the end—it just doesn’t happen. Is there a picking order? Yeah. But we’ve got the bulk and ultimately the odds are on our side that we’re going to have the better games just because of how it goes. You don’t know who is going to blow a knee.

TVWeek: So, if it’s not $1.10, how much are we talking about?
Mr. Thompson: Less than a buck. I’ve seen numbers like 90 cents for things like that. I would not have a problem with that.

TVWeek: Is it true that Comcast would lose money if it took this latest deal?Mr. Thompson: I don’t see how. I think we’ve provided them with a variety of opportunities to recoup a significant portion of their investments through the HD channel, through the VOD, through what we can do with them on broadband, through the local ads, especially at what we are offering them the channel for.

Comcast has been saying that the license fee charged by the Big Ten Network is too high compared to other networks, although many of its owned channels, indicated below in bold, charge more. The monthly fee per subscriber for regional sports nets ranges from $2.15 to a mere 20 cents, with the average $1.44. Big Ten Network reportedly is charging $1 per sub.

Regional Sports Network License Fees

Channel Monthly Fee Per Subscriber
 

1. YES

$2.15

2. SportsNet NY

$2.00

3. Comcast Sports NW

$1.98
4. Comcast Philadelphia $1.97
5. Comcast Mid Atlantic $1.95
6. Fox Sports North-Minnesota $1.95
7. NESN $1.95
8. FS West
$1.93
9. FS Detroit $1.92
10. Comcast Chicago $1.90
11. FS Northwest $1.90
12. FS Southwest $1.85
13. MSG Network $1.85

14. FS New York

$1.80
15. FS Rocky Mountain $1.78
16. FS Bay Area $1.77
17. FS North-Wisconsin $1.70
18. FS Ohio $1.70
19. Prime Ticket $1.70
20. FS Arizona $1.65
21. Altitude $1.60
22. FS Pittsburgh $1.60
23. FS Midwest $1.55
24. FS South $1.50
25. MASN $1.50
26. Sun Sports $1.45
27. FS Florida $1.35
28. FS New England $1.30
29. SportsTime Ohio $1.30
30. Big Ten Network $1.00
31. Cox Cable 4 SD $0.95
32. Comcast SN West $0.85
33. Carolina Time Warner $0.75
34. Cox New Orleans $0.50
35. Royals TV/RSTN $0.38
36. Comcast Sports SE $0.37
37. SportSouth $0.33
38. Chicagoland $0.31
39. The Mountain $0.20
   

Source: SNL Kagan

Updated on 10/23/07 at 12:50 p.m. PT

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