Rupert Murdoch’s Fox Cable Networks Group has gotten “the message” from operators that sports costs — and license fees — can’t continue to soar unabated.
Lindsay Gardner, Fox Cable’s executive vice president of affiliate sales and marketing, told members of the National Cable Television Cooperative that “as a matter of survival” his division and parent News Corp. are refusing to fork over huge increases for sports rights.
“Over the past few years, you and your colleagues — your colleagues at bigger companies — have pushed back on us hard,” he said last Tuesday during the programmers’ forum portion of the group’s annual meeting.
“We understand that the increases we’ve been able to secure from you over the years just won’t work in the future. The days are gone when we will pay a team what a team asks us.”
He alluded to the recent state of relations between programmers and operators, particularly regarding spiraling sports costs.
“We’re coming out of a period of quite a bit of conflict for us,” Gardner said. “We get the message.”
Fox Cable, which owns a host of regional sports networks, has retooled its business and invested in technology that makes it “more efficient” to produce games, according to Gardner.
“And we’ve had very, very difficult conversations and negotiations with teams,” he said.
The evidence of that, according to Gardner, is that Fox has lost a number of teams, “and we’ve gotten many of them back, and we’ve gotten new teams.”
Whenever you read that Major League Baseball’s Minnesota Twins or the National Basketball Association’s Houston Rockets are looking to start their own cable network, Gardner said, “that’s usually a last resort” after they’ve failed to secure double- and triple-digit price increases from Fox.
Added Gardner, “We’ve done this — and are doing this — as a matter or survival, because we know, we understand that your businesses won’t support the kind of growth and expenses that they have been able to support over the last 10 years.”
Gardner was asked if Fox Cable planned to do a master carriage agreement for its regional sports services with the NCTC. Gardner said he has spent a lot of time with the NCTC over such a potential agreement.
“It’s hard to do one national deal,” Gardner said. “We may get there. Part of the challenge is that there are limits to the extent that you can act like an MSO.”
That’s because the NCTC, even though its member systems collectively have about 15 million homes, typically hasn’t been able to guarantee programmers a specific number of subscribers as part of an affiliation contract — the way a single MSO can.
But panelist Kim Martin, executive vice president of distribution and affiliate marketing for AMC and WE: Women’s Entertainment, said she’s in the midst of doing an NCTC deal for video-on-demand services Mag Rack and Sportskool.
