NFL, ESPN Work on NFL Network Deal

By Jon Lafayette

The National Football League, which has been unsuccessful in getting major cable operators to carry its NFL Network, is talking to Walt Disney Co. and its ESPN unit about forming a partnership, sources familiar with the talks said.

The deal reportedly could put NFL Network programming—including eight live regular season games on Thursday and Saturday nights on what is now the low-rated ESPN Classic networks. ESPN Classic has about 63 million subscribers and the NFL Network 40 million, mainly via satellite. The Wall Street Journal initially reported the story Friday.

Given that ESPN has long-term contracts with most of its cable distributors in place, it is unclear whether the network would be able to raise the fee it charges for EPSN Classic if football was added to the lineup.

Spokesmen for ESPN and the NFL Network declined to comment beyond prepared statements Friday.

ESPN said in its statement that it has a long-term and extensive relationship with the NFL.

“To that end, we are always in discussions with them about mutual projects,” the cable sports network said.

Similarly, the NFL Network said, “We talk to ESPN all the time on a wide range of issues.”

When the NFL created a new television package consisting of eight regular season games, Comcast offered to pay $400 million for it in order to turn its Versus network (then called OLN) into a national sports network that would compete with ESPN.

The NFL elected to keep the games and create its own channel as an outlet for them. But that strategy failed when large cable operators including Time Warner Cable refused to pay the steep 70 cents-per-subscriber fee being sought by the league. Comcast, which had been carrying NFL Network on a digital basic tier, moved it to a sports tier with far fewer subscribers.

That meant high profile games were not available to most cable subscribers, which led to customer complaints to operators, and trips to Congress and the courts by both parties.

The NFL Network in May filed a complaint with the Federal Communications Commission, charging that in deciding which networks to carry broadly, Comcast is illegally discriminating between networks it owns, such as Versus and the Golf Channel and the NFL Network, which it doesn’t own. It also charged that Comcast had demanded equity in NFL Network before it would agree to a carriage agreement.

Comcast Friday evening filed a response with the FCC, asking the agency to dismiss the NFL Network’s complaint.

The cable operator argued that the network got exactly the deal it bargained for and that Comcast hasn’t broken any carriage rules, having never demanded a stake in the network as a condition for making a deal. Comcast also said the complaint should be dismissed on procedural grounds.

In its response, Comcast said that adding carriage of the NFL’s Season Ticket package of out-of-market games and getting rights to air the newly created package of eight regular season games, what it called “joining the club,” were the main reasons it agreed to carry the NFL Network when it launched in 2004.

That agreement included a stipulation that if Comcast did not gain rights to one of those packages, it could move NFL Network to a sports tier.

Subsequently, Season Ticket remained exclusively on DirecTV and the regular season games were put on NFL Network.

When NFL Network raised its price the carry the network with those games to 70 cents a subscriber from 15 cents a subscriber, Comcast said it decided to exercise its right to move NFL Network to a sports tier.

Comcast also said it never sought a stake in the NFL Network. Instead, the company said the NFL sought equity in Comcast’s Versus network as partial payment for the eight-game package, partly in order to shield some of the value of that transaction from the NFL Players Association.

Commenting on Comcast’s response, the NFL Network said in a statement that “Comcast continues to deny millions of fans fair access to quality NFL programming by placing NFL Network on a narrow, expensive sports tier. Meanwhile, Comcast-owned sports networks that are less popular are included in broader tiers that virtually all cable customers must buy, and are thus more widely distributed.

“Comcast uses its control over access to millions of homes to discriminate against independent programmers and unfairly favor its own programming,” the NFL Network added.

(Editor: Baumann)