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Ops, Nets Take Swings Over Sports Tiers

11/16/2003 7:00 PM Eastern

After proclaiming that there isn't any ill will between operators and programmers, executives from both sides battled it out over the issue of sports rights during a lively conference here last Thursday.

Calling MSOs' recent battle cries over increasing programming rates a cover for their power play to maximize profits while controlling both content and distribution outlets, Yankees Entertainment Sports Network president Leo Hindery said offering tiers for sports programming would hurt, not help, operator revenues. And if tiers are the future, Hindery said, they should include not only sports, but all networks — including those owned and operated by MSOs.

"Cable operators are trying to use the focal point of ESPN and the regional sports networks as a power play," Hindery said at the SportsBusiness Journal Sports Media & Technology Conference. "The cable industry needs to pay the fair market value of programming."

But Time Warner Cable senior vice president of programming Fred Dressler called Hindery's power-play argument "silly," adding that the only real financial beneficiary from rising sports costs are the players.

"When the customers say no to us we have to take a look at our cost structure, and at Leo's customers. When we say no he has to take a look at his cost structure," Dressler said. "At some point, George Steinbrenner is going to have to look at his players and say, 'I can't pay as much to free agents.' But just because George can't say no to a player, doesn't automatically mean I have to say yes to Leo."

Time Warner Cable carries YES, but the network brought suit against the MSO last August for breach of contract after Time Warner began offering YES on an à la carte basis.

Hindery found an ally in National Cable Television Cooperative Inc. president and CEO Michael Pandzik, who agreed that

all networks should be offered in some sort of à la carte or affinity tiered platform to give subscribers choice and to curtail rising costs to both operators and consumers.

"Until [the retail subscriber] has a choice to accept the programming, watch it and pay for it or reject the programming … there is no end to this," he said.

But Dressler downplayed tiers, saying that an early 1980s test by Time Warner Cable of a fully tiered programming format in Denver drew the ire of both subscribers and local politicians. "The argument is not choice anymore, it's price," he said.

Still, College Sports Television president Brian Bedol said new networks such as CSTV could survive on sports tiers if the penetration of those tiers reach the 50% level or higher.

But Pandzik said that startups in general are doomed, unless the industry abdicates its current subscription-based platform and moves toward à la carte offerings.

"If you were a cable system, why would you take on more overhead [licensing fees] if you knew it wasn't going to net you any more subscribers?" Pandzik asked.

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