The Tennis Channel: Not Playing in NYC

Expensive sports channels frequently run into roadblocks when cable systems refuse to pony up the several-dollars-a-month fees charged for every subscriber who can watch the channel.  Sports programming is, hands down, the most expensive type of programming carried on cable television basic/standard lineups.  Getting the rights to show major sporting events is usually decided through bidding battles.  Before 1992, most television rights were won by one of the broadcast television networks, who were the only ones capable of turning in the big bids.  But by the mid-1990s, basic cable sports networks like ESPN started competitively bidding for sports programming — and won.

Recouping the multi-million dollar bids through advertising alone wasn’t enough, so sports networks began increasing their fees charged to cable systems for carrying their programming.  In turn, that helped fuel ever-increasing cable rates for consumers, even for those who have never watched any sports-related programming.

In an effort to slow down rate increases, cable systems began to create special “sports tiers” on their digital cable lineups.  For $4-6 a month, sports aficionados could subscribe to a package typically including 10 or more regional sports channels, as well as those devoted to individual sports.  Since cable networks typically charge cable systems based on the number of subscribers who can watch, this dramatically reduced the costs of carrying such networks.  Only those who want the sports tier need be charged.

Of course, sports cable networks do not like specialty sports tiers.  They can earn much higher revenue (and get a higher profile) if they collect from every basic/standard customer.  Some sports networks steadfastly refuse to allow their channels to be carried on such sports tiers, to varying degrees of success.  Usually, an obstinate network tries to leverage the value of their programming (and the anger from sports fans denied access) by running public relations campaigns telling fans to bug the local cable company to add the network to their basic lineup.  It’s then up to the cable company to try and explain why they want to carry the channel on a special sports tier, one that neither the programmer will accept, nor the subscriber, who is not thrilled to learn he has to pay even more to watch the channel in question.

That brings us to the latest squabble — The Tennis Channel and New York City cable systems.

Time Warner Cable

Time Warner Cable’s New York City system has opted out of providing the free two week preview of The Tennis Channel that it is promoting in several other cities where it has cable systems.  That’s annoying for tennis fans, who this year won’t find the U.S. Open on the USA Network, where it has traditionally been televised in years past.  Instead, it will be found on ESPN 2, which is carried by Time Warner Cable and can easily be found on the lineup, and the much more obscure Tennis Channel, which is “buried” in a digital sports programming tier Time Warner Cable sells for $3.95 a month.  Only a small percentage of subscribers pay the four bucks a month for more sports, so that effectively means subscribers will have to take what they can get from ESPN 2.

Why did Time Warner decide not to carry the two week free preview?  Why give it away for free when you can make money selling it:

Ken Solomon, the Tennis Channel’s chief executive, said it was surprised when Time Warner said it was not considering New York. The New York system had carried free previews of the last three French Opens — all that the cable operator had been offered. “They changed their mind, saying they wanted to sell the sports tier, it’s the U.S. Open, it’s in New York and they’re in New York, and they shouldn’t have to give it away for free,” Solomon said.

He added: “It’s disappointing, but it’s not a giant issue. At the end of the day, we’ll be in 54 million homes, not 55.5 million. This is not a business maker or a business breaker.”

Why didn’t USA Network simply keep providing coverage themselves?  The cost.  Inflation in the bids for sports programming television rights is just as outrageous as the ever-increasing cable television bill consumers face every month:

USA no longer had much interest in sports or in paying $22 million a year to show the United States Open, regardless of the tradition it had become. So ESPN stepped in, agreeing to pay $140 million over six years to gain the cable rights to its fourth Grand Slam tournament. And the Tennis Channel, seeking credibility and more subscribers, also coveted a fourth Grand Slam tournament and sublicensed its coverage from ESPN. CBS, of course, is still the tournament’s broadcast partner and has not surrendered the singles semifinals and finals to cable.

So New Yorkers will either need to pay to get The Tennis Channel on the digital sports tier, find another provider that does carry the channel on its basic/standard lineup, or do without.

Cablevision

At least Time Warner customers can subscribe to a package to get The Tennis Channel.  In suburban New York, particularly on Long Island, Cablevision subscribers can’t get the network at all because of a nasty spat between the channel’s owners and the cable company.

The Tennis Channel executives were just annoyed with Time Warner burying their channel on a sports tier, but they are tearing their hair out over Cablevision, which wants $5.95 a month for their digital sports tier.  The channel refused to sell to Cablevision under those terms and declared the negotiations were at an impasse.  But a creative employee at Cablevision figured out they could theoretically get access to the network despite the failed negotiations.  The cable company, one of the nation’s largest, joined the National Cable Television Cooperative, which serves the nation’s smallest family owned and independent cable systems.  Since volume discounts are provided to cable systems based on the number of subscribers they have, the NCTC was formed to pool small cable systems together to get a volume discount price for programming.

The NCTC already has a contract with The Tennis Channel for its member systems, so Cablevision simply hopped on board the NCTC contract.

Not so fast, comes the reply from The Tennis Channel, who turned out to have the last word for now.  They have refused to activate Cablevision’s receiving equipment to receive their encrypted satellite signal.

Cablevision insists that it has a valid deal to carry the channel on its sports tier and is portraying the Tennis Channel as the intransigent party that is denying fans access to its United States Open coverage. The Tennis Channel says the deal is not valid and has not flipped the switch to enable Cablevision to carry it.

Cablevision said that the Tennis Channel is “refusing to do the right thing.”

Assuming negotiations over the creative NCTC “solution” to problem fails, the next chapter in this saga will likely include the lawyers.