ESPN said to push college channels on Altice

Published on Tuesday, 19 September 2017 22:10
Written by Gerry Smith

Bloomberg

ESPN is pushing cable operator Altice USA to carry two of its college sports channels and make its flagship network more widely available as part of negotiations to renew a contract expiring at the end of the month, according to a person familiar with the matter.

The negotiations are the first between ESPN and Altice since the latter bought Cablevision Systems last year, obtaining about 2.4 million pay-TV customers in the New York City area. The talks will test whether Walt Disney Co.’s sports network can use its leverage as owner of ESPN, ABC and the Disney Channel to make pay-TV providers carry programming that may not interest all viewers.

ESPN is looking to strike deals that help stem audience losses as more people drop cable or sign up for lower-cost pay-TV packages that don’t include sports channels. ESPN’s subscribers have fallen to 87 million from a peak of more than 100 million in 2011, according to Nielsen. Yet the main ESPN channel still generates roughly $7.5 billion in annual subscriber fees and is one of the largest contributors to Disney profit.

The negotiations with Altice are the first of several that Burbank, California-based Disney will undertake with traditional pay-TV providers over the next two years. Rich Greenfield, an analyst at BTIG LLC who’s been a frequent critic of Disney, outlined the issues in a research note Monday.

Disney is asking Altice to carry the SEC Network and the new ACC Network in the New York City area. Neither conference has a team based in that market. Disney is also seeking to have the main ESPN channel carried in a higher percentage of Altice’s subscriber homes, meaning the cable provider couldn’t sell as many packages without the network. Disney is also pushing for higher rates for its ABC broadcast channel, the person said.

“Our proven history of providing extraordinary value to consumers and distributors is unmatched,” ESPN said in a statement. “Our negotiations continue in earnest and we remain optimistic that we can reach a deal.”

At a media conference this month, Disney CEO Robert Iger said ESPN, with its wide array of live sports, could continue to negotiate favorable prices and distribution.

“We have all the confidence in the world that as we enter our new cycle of extensions with the traditional distributors that we’re well-positioned,” Iger said.

Like other cable operators, Altice sees new channels as a cost that must be passed on to consumers in the form of higher bills. More people are dropping conventional pay TV service in favor of new, less-expensive online options. Pay-TV providers also want more flexibility to offer packages that don’t have pricier sports channels.

The talks involve only New York-area markets formerly served by Cablevision. Altice, the fourth-largest U.S. cable company, also has subscribers in the south-central U.S. that aren’t part of the discussions.

Altice USA declined to comment on its talks with ESPN. It said in a statement that sports networks seeking higher fees are contributing to consumers’ rising cable bills.

“We are always working hard to keep these costs as low as possible for consumers by negotiating carriage agreements that are reasonable and in the best interest of all our customers,” said Bethpage, New York-based Altice.

Analyst Greenfield wrote Monday that he believes ESPN’s talks with Altice “have deteriorated” and that ESPN may not be able to seek higher fees given the decline in its audience and consumer demand for less expensive TV bundles.

If the two sides don’t reach a deal, Altice subscribers could lose ESPN or be forced to switch to Verizon Communications Inc., the main competitor in the New York area, Greenfield said. Altice subscribers could also switch to one of several new online TV services, including Dish Network’s Sling TV or AT&T’s DirecTV Now.

ESPN’s negotiations with pay-TV partners may also be complicated by its recently-announced plan to introduce a direct-to-consumer video service next year.

The service, which will be available without a cable subscription, will air roughly 10,000 events a year, from Major League Baseball, the National Hockey League, Major League Soccer, Grand Slam tennis and college sports. It will be a supplement to ESPN’s cable channels, not a replacement, a move aimed at not upsetting ESPN’s pay-TV partners.



Posted in The Bristol Press, Bristol, General Business, General News on Tuesday, 19 September 2017 22:10. Updated: Tuesday, 19 September 2017 22:12.