Local politicians drop ball in Cablevision-FOX dispute
WEDNESDAY, 27 OCTOBER 2010 10:44
BY EVAN WEINER
THE BUSINESS AND POLITICS OF SPORTS
So just who is to blame in the Rupert Murdoch/News Corp-Charles Dolan Cablevision battle that has dragged on for more than a week and has cost Cablevision viewers programming on News Corp-owned stations in New York (Channel 5 and Channel 9) and in Philadelphia (Channel 29). Three million Cablevision subscribers have lost New York Giants, Philadelphia Eagles and NFL telecasts along with the National League Championship Series and shows like "Glee." (There is no word from Cablevision whether there will be a refund for lost programming but based on cable TV history when subscribers did not get rebates when Major League Baseball went on strike in 1994 and settled in 1995, when the National Hockey league had locks in 1994-95 and 2004-05 and the National Basketball Association had a 1998-99 lockout, don't expect any reimbursement.)
Murdoch and FOX wanted a lot more money from Dolan and Cablevision for the three stations and some minor FOX cable programming (the big dog — FOX News Channel is not on the table in these negotiations). The Dolans won't give into Murdoch's demands and the Dolans can be pretty stubborn. When George Steinbrenner ended his talks with Dolan's Madison Square Garden Network and started a Yankees channel with Goldman Sachs and other partners, Dolan didn't exactly give George a going away present or parting gifts in 2001 and did not put the YES Network programming on Cablevision systems in 2002. A truce brokered by local New York politicians enabled the two sides to reach an accord that gave Cablevision subscribers the network in 2003.
So who gets blame? The Australian Murdoch who worked the political system to get a foothold in the United States or Dolan who worked the political system on Long Island to get Cablevision going in the 1970s? The answer may be surprisingly neither. Murdoch has taken his signal off of Dolan's systems but WNYW, WWOR and WTFX are available on digital TV, phone company and satellite TV. Some of FOX's programming is available on broadband. Dolan's deals with municipalities require Cablevision to provide "a quality of service."
A clause in the 1998 Cablevision-Bayonne, New Jersey agreement spells out what "a quality of service" means for customers.
"Cablevision shall maintain the same mix, quality and level of video programming as is now provided to Bayonne subscribers and which appears in Cablevision's Application For Renewal. Cablevision shall provide Bayonne subscribers with the broad categories of programming which appear in Cablevision's Application For Renewal, including, but not limited to: community programming, regional professional sports and national collegiate and professional sports, news and public affairs, minority programming, local broadcast television stations, children's and educational programming, weather and a broad selection of general entertainment programming, including cultural, entertainment, music, religious and other special interest programming."
Dolan has similar agreements with all of the other municipalities that have granted him a cable TV systems operator franchise. In other words, Dolan has promised to different the highest quality of service in a contract but three times this year, Dolan and Cablevision have been in disputes that have seen signals disappear and nothing has happened in his franchise agreements with various municipalities.
The Cablevision-name the municipality where Cablevision operates agreement is available to the public and municipalities have cable TV boards which hold public meetings. It is at that level, that someone can go after Dolan and threaten to pull the franchise agreement and create some problems for the Long Island cable TV king, network owner (Madison Square Garden) and Knicks and Rangers-Madison Square Garden baron.
But inexplicably no municipality has exercised their right to hold the billionaire cable TV operator (and Dolan made his money from cable TV) accountable.
Dolan is actually pretty sharp. He recognized that he needed to provide local programming on Long Island and in New Jersey and established News12 and gave the New York Islanders franchise a huge hunk of cash that was better than any baseball cable TV deals in the early 1980s. Dolan also has the rights to New Jersey Devils games on Madison square Garden Network so he is providing his subscribers with local programming.
Murdoch's lawyers and Dolan's lawyers are sending letters to the Federal Communications Commission and arguing and assigning blame in the battle for other people's money (subscribers) which is going to add up to hundreds of millions of dollars over the life of the new agreement. The game is being played in the wrong stadium in Washington. Politicians that have contracts in hand with Cablevision have dropped the ball. This battle should be fought in the trenches with the cable TV municipal boards taking the lead and forcing Dolan's people to talk to them and their customers face to face not on some canned TV ad with some vague facts.
Murdoch is no angel here either. He wants to soak Dolan's customers for as much as he can. Murdoch's only angle is to make money, if Martians landed on earth and got cable TV and watched news in droves, the FOX News Channel would tilt Martian in a nanosecond. Murdoch's only political ideology can be found in targeting an audience that can make him the most dollars, pounds or Australian dollars.
Both Murdoch and Dolan have worked the political system so well that politicians seem to be afraid of crossing them. But politicians can bring both of them to their knees if they decided to rewrite the 1984 Cable TV Act.
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. Murdoch's carnival barkers on FOX News Channel take care of the Republicans and push the party's agenda so don't expect House or Senate Republicans to push for a revision of the 1994 Cable TV legislation (other cable TV "news" networks take care of Democrats). All networks spend millions lobbying Congress to keep cable TV just the way it is.
That's why the local politicians need to go after Dolan. The locals are the last and only line of defense in cable TV disputes and in this war of aging media barons, the local politicians have failed miserably to pressure the two sides to an agreement.
Evan Weiner is an award winning journalist, author, radio-TV commentator and speaker on "The Business and Politics of Sports." He can be reached at email@example.com