FOX-Cablevision dispute and authentic frontier gibberish
Sunday, 17 October 2010 10:21
BY EVAN WEINER
THE BUSINESS AND POLITICS OF SPORTS
Shortly after News Corp, Rupert Murdoch's Channels 5 and 9 in New York and Channel 29 in Philadelphia because of a contract dispute with Charles Dolan's Cablevision, the New York news radio station WINS featured some authentic frontier gibberish from Long Island Congressman Steve Israel about the battle between Murdoch and Dolan. Israel was either asked a question by someone at WINS or put out a statement about the unfortunate situation that could deprive Cablevision subscribers of the Major League Baseball playoffs and National Football League games along with FOX local newscasts, Glee and a plethora of afternoon judges shows on Channel 5 and Channel 29.
Israel, a Democrat was joined by his fellow Long Island Congressman, Republican Peter King and New Jersey Senator Frank Lautenberg in urging the two heavyweights Murdoch and Dolan to go to arbitration and settle the dispute on behalf of the little people — the cable TV subscribers, even though subscribers could pull Channel 5, Channel 9 and Channel 29 in with an antenna. Even Gabby Johnson, the character who gave a moving speech loaded with authentic frontier gibberish from the movie "Blazing Saddles," could have come up with a more coherent thought than the three elected officials.
What Israel (along with King and Lautenberg) should have said was that he and his 434 fellow members of the House of Representatives and the 100 members of the Senate should revisit the 1984 Cable TV Act and become pro-choice advocates and give consumers a chance to pick and choose what cable TV channels they want.
The 1984 legislation gave multiple systems operators (MSOs) like Cablevision the right to bundle failing networks like ESPN, the Weather Channel, CNN, CNN Headline News on an expanded basic tier as one entity (which might be a real violation of the Sherman Antitrust Act) and sell it to consumers for one price. The 1984 legislation was signed into law by President Ronald Reagan and was a real victory for small and struggling media companies.
The expanded basic tier is the real goldmine for news channels and sports networks. The cable TV socialism where everyone pays (on basic and basic expanded) has filled the pockets of Murdoch (FOX News Channel), Time Warner (CNN) and Microsoft-NBCUniversal (msnbc) and has allowed "news" channels to become nothing more than the equivalent of people screaming in the corner of the park (and those people being written off as kooks back in the days when they would shout to the sky and hope someone would listen to the diatribe). The cable TV socialism has also put billions into the pockets of sports owners who signed deals with multiple systems operators who had sports channels on the basic expanded or franchises that started networks like Madison Square Garden Network (owned by Charles Dolan — both a multiple systems operator and a program provider), the YES Network, SNY, and Comcast Sports Net Philadelphia (owned by Comcast, whose properties include the Philadelphia Flyers and 76ers).
The NFL Network has not been able to penetrate the basic expanded tier while the MLB Network is on basic expanded thanks to Major League Baseball owners being smarter than their football counterparts and selling off pieces of the baseball channel to multiple systems operators.
The MSO's think the NFL Network is too expensive and doesn't have enough NFL games for their customers. But the MSO's may have an alternative motive — the NFL signed an exclusive deal with the satellite provider, DirecTV, for their Sunday package of out of market games and shut them out.
Hell hath no fury like an MSO scorned.
What would happen if Congress found a spine and actually became pro-choice and gave consumers a chance to pick and choose what they really wanted to buy?
Well the sports industry might be vaporized and the carnival barkers at the FOX News Channel, CNN and msnbc (there is no news on those news channels just a bunch of people paid in six to seven figures letting off steam hoping to attract viewers who will stay long enough to watch the commercials) might have to become real journalists because very few people would pay a premium to watch the Becks, O'Reillys, Hannitys, Dooceys, Kilmeades, Roberts, Blitzers, John and Larry Kings, Spitzers, Parkers, Coopers, Scarboroughs, Matthews, Olbermanns, Maddows and O'Donnells of the world and without the Congressional protection the 95 million or so subscribers to the news channels would drop to maybe two to three million people.
That is the dirty secret in the cable industry that no sane cable network owner or programmer would ever want to reveal. They know that the Howard Stern jump from terrestrial radio to satellite rating was an absolute disaster as Stern's former listeners on free radio did not dig deep into their pockets to buy satellite radio. Stern got his money; the satellite radio business is struggling financially.
The buy rate for cable news channels which would be at a much higher price than the estimated buck per month per subscriber that Murdoch, Time Warner and Microsoft-NBCUniversal get would be in the low single digits.
FOX junkies can scream all they want about being the number one cable news network and msnbc lovers can extol the virtues of the so-called "liberal" network but the real numbers of people watching the cable news networks are abysmal and cable executives know it. Perhaps the only people who don't realize this are journalists who give credence to the cable TV news personalities.
But sports owners might come in for a real financial drubbing if Representatives Israel and King and Senator Lautenberg attempted to reign in cable costs by introducing a la carte legislation. It has been a number of years since a Georgia Congressman named Nathan Deal tried to put the genie back in the lamp. The Georgia House member failed to get his measure to the floor.
Cable TV is transforming the Texas Rangers franchise from bankruptcy to being flush in money. Rupert Murdoch, who had the regional cable TV sports monopoly is feeling heat from Comcast in the Dallas-Fort Worth metroplex. Comcast is looking at Texas and may set up a regional sports network in Houston. In a pre-emptive shot, Murdoch has given the new Texas owners, Chuck Greenberg and Nolan Ryan a $1.6 billion, 20-year deal which will give the Rangers ownership plenty of cash to pay off the debt on the team purchase and money for signing players. For Murdoch, the investment allows him to stay in Dallas and may keep Comcast out of the metroplex.
All Murdoch has to do is stay on basic expanded and up his fees and get 100 percent of the cable universe to pay for what just a few percent watch — Rangers baseball — thanks to socialism (the very kind of thing that the Becks, O'Reillys, Hannitys, Dooceys and Kilmeades rant against on a daily basis). Murdoch makes money from American socialism that was given to cable TV networks and MSO's by Congress and Ronald Reagan.
Murdoch lost the Chicago market a few years back when Jerry Reinsdorf (Bulls and White Sox), the Tribune Company (Cubs) and the Wirtz family (Blackhawks) signed a partnership with Comcast to launch their own network and left Murdoch's regional network in Chicago for dead. Owners in Major League Baseball, the NBA and NHL are looking to start new networks and get onto basic cable. It is just not pro sports. The Big Ten has a network and the University of Texas would like a network as well.
It makes sense when there is big money available. But what would happen with a la carte? No one wants to know. Disney has lobbyists in Washington to make sure that it will never happen as ESPN (which is a Disney cash cow) would go from the so-called "World Wide Leader in Sports" to begging people to buy their costly network. The Yankees franchise would not be able to spend money freely without the revenues from YES that presently come from non-YES watchers. The sports industry would be devastated.
The authentic frontier gibberish from Israel was followed by authentic frontier gibberish from both News Corp and Cablevision. In the end, cable TV consumers in the Cablevision systems will reach into their pockets again and both Murdoch and Dolan will continue to duke it out somewhere else or make love in an another area (they were partners in a complex TV deal which also included the Knicks, Rangers and Madison Square Garden). As long as Congress doesn't rewrite the 1984 cable TV legislation, they can go on with their faux fight because at the end of the day, neither will be unhappy with the outcome as they are playing with other people's money thanks to a federal law that protects cable TV and leaves consumers reaching into their pockets to pay for something that they might not necessarily watch.
Evan Weiner is an award winning author, radio and TV commentator and speaker on the "Business and Politics of Sports. He can be reached at firstname.lastname@example.org