Content provided in partnership with

The War Over Sports Fees Gets Hotter and Murkier

Fast-growing Phoenix, population 3.2 million, is the third-largest cable market in the country. It's also Cox Communications' largest cluster, a market in which Cox has frozen rates for the past two years in part to ward off competition.

Last week, Phoenix became the focal point of the clash between cable programmers and distributors when News Corp. president and COO Peter Chernin, speaking immediately after Cox CEO Jim Robbins at an investment conference, rebutted Robbins' remarks and said the 35% increase in Fox Sports Net affiliate fees cited by Robbins was only for the Phoenix market. Later, Cox issued a press release detailing the FSN increases - an average of 35% for 2004 across all 11 affected markets, and an average annual increase of 13% over the life of the five-year contract.

Most Popular Articles in Technology: An overview of continuous data protection; Why all those current ratings?; Many countries now have a mobile penetration rate above 100%, report says; The Tata Group's big telecom gamble: VSNL's recent acquisition of Tyco ...; MEASURING BANK BRANCH EFFICIENCY USING DATA ENVELOPMENT ANALYSIS: MANAGERIAL ...; More »

Unlike ESPN, which has one national rate, affiliate fees for individual FSN regional networks, which range in size from under 2 million subscribers (FSN Arizona) to about 9 million (FSN South), vary. Cox's carriage agreements with ESPN and FSN expire in coming months; at the conference Robbins said the sports programmers' proposed increases were untenable and called for them to be placed on a separate tier.

The Cox-Fox scrap is more complex than last week's comments suggest. Cox itself, attempting to secure local programming, outbid FSN last year for the rights to the NBA's Hornets when the team moved to New Orleans, thereby contributing in a small way to spiraling sports costs. The per-game price was about 300% higher than what FSN paid, or $165,000 per game, according to someone familiar with that negotiation, and more than 50% higher than FSN's final bid.

In Phoenix, Cox owned the rights to Phoenix Suns games through March of this year under a reported $10 million, five-year deal. When those rights came up for renewal, Qwest (then U.S. West) struck a preemptive deal with the Suns that reports valued at $300 million over 25 years. Qwest then sublicensed the Suns' rights to FSN in March. The team is a major addition to FSN Phoenix, which broadcasts Phoenix Coyotes and Arizona Diamondbacks games.

In a written statement, Cox spokesman Bobby Amirshahi said, "The deal by which Cox obtained rights for the Phoenix Suns was done ten years ago under much different circumstances and at significantly less cost. Our vested interest in managing that content resulted in a very reasonable net cost (gross license fees less net local ad sales) being passed on. Today, Fox Sports packages its Suns content...with other costly local sports content, resulting in extremely disproportionate price to value relationship compared to the rest of the expanded basic lineup."

The length and price of FSN's sublicensing deal with Qwest are unclear; both FSN and parent News Corp. declined to comment. What is clear, however, is that both Fox and Cox are under intense pressure to recoup investments made in the Valley of the Sun.

Technology Industry

The War Over Sports Fees Gets Hotter and Murkier

Cable World, Oct 6, 2003

Find Research Guides for:

Find Featured Titles for: Business

Most Popular Articles in Technology

Most Popular Publications in Technology