Entertainment Industry

Category: Sports

Cable programming costs will continue to rise

Sports rights drive programming costs
While subscriber growth is slowing for cable television companies, the cost of content continues to rise.

According to a new report from Nomura Equity Research analysts, the money that distributors such as Comcast Corp. and Time Warner Cable shell out for programming rose 8.2% in 2011 and is likely to jump 8% in each of the next two years.

Although the typical cable household gets more than 100 channels these days, most of those channels are owned by a handful of companies including News Corp., Time Warner Inc., Comcast, Discovery Communications, Viacom and Walt Disney Co. Overall, cable and satellite companies coughed up $33.5 billion to content providers in 2011.

Walt Disney Co., parent of ESPN and Disney Channel, two of the most expensive cable channels, accounted for almost 25% of that $33.5 billion, according to the report. ESPN, of course, spends very large sums on sports rights, including the National Football League. 

Time Warner, parent of TNT, TBS, CNN and HBO, received 21% of the overall spending. Comcast, which owns USA, MSNBC and Bravo, accounted for 16%. News Corp., whose holdings include Fox News and FX, had a 14% slice of the pie. Combined, those four companies account for 75% of cable programming costs.

Cable programming isn't the only cost that is increasing. Broadcasters such as CBS, News Corp.'s Fox Broadcasting, Comcast's NBC and Disney's ABC are now getting fees from cable and satellite operators as well. Nomura said that in 2011, the big four broadcast networks took in almost $400 million in so-called retransmission consent fees, more than twice what they made in 2010. In 2012, the figure is expected to double again to $750 million. Nomura said Fox and CBS are the most aggressive among broadcasters.

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 Dodgers sale could mean bigger cable bills

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Media giants score legal victory against foes of bundling channels

-- Joe Flint

Photo: San Francisco 49er players celebrate. Credit: Marcio Jose Sanchez/AP.

Dodgers deal comes with Hollywood element (again)

Peter Guber

Peter Guber is bringing some Hollywood flash, and drama, to the Dodgers.

A longtime player in film and television, Guber, who is part of the Magic Johnson-led group that is buying the team for a record $2 billion, is a largely unknown commodity in sports circles. But he is a much more visible, and complicated, figure in the entertainment world.

Guber and Magic Johnson have joined forces before, including on the Dayton, Ohio, single-A minor-league affiliate of the Cincinnati Reds, which they continue to own. Guber also once owned the Dodgers’ triple-A affiliate when it was located in Las Vegas.

In Hollywood, Guber, 70, has had a hand in some of the best-known movies of the last four decades -- including “Batman,” “Rain Man” and “Midnight Express” -- but also has a checkered record, stemming primarily from his troubled tenure as head of Sony Pictures.

Beginning his career as a film and record producer, Guber came to run Sony in 1989. On his watch, the studio launched such TV shows as “Mad About You” and films including “Terminator 2” and “City Slickers.” But Guber also drew criticism from established Hollywood figures including director Michael Apted and producer Rob Cohen, who said Guber deceived him in negotiations.

Guber, who left Sony in 1994, later became the subject of a book, “Hit and Run: How Jon Peters and Peter Guber Took Sony for a Ride in Hollywood,”  which painted a largely unflattering portrait of Guber and his former partner.

Guber has also drawn supporters in the industry. Bradley Fuller, a producer who is working with Guber’s current company, Mandalay Entertainment, on a new version of Alfred Hitchcock’s “The Birds,”  said in an interview on Thursday that he admired Guber's people and deal-making skills.

“He’s a very compelling personality,” Fuller said. “When you come out of a meeting with him you find yourself saying, ‘Let’s do things the way Peter wants to do them.’” Guber could not be reached for comment.

In recent years, Guber has been expanding into sports via his subsidiary, Mandalay Sports Entertainment.  He is a co-owner of the Golden State Warriors and also is an owner of a host of minor-league baseball teams -- including the New York Yankees’ triple-A affiliate in Scranton/Wilkes-Barre. Guber will not have to divest his minor-league teams as a result of a Dodgers deal.

Although  Guber’s involvement brings an element of Hollywood know-how, fans could be forgiven for being wary of an owner who has an entertainment pedigree. It was less than a decade ago that the team was owned by 20th Century Fox parent News Corp. and run by former Warner Bros. honcho Bob Daly -- who later admitted that selling the team to Frank McCourt was a mistake.

ALSO:

Dodgers sale could mean bigger cable bills
Tribune threatens to pull stations from DirecTV
Fox Sports channel to rival ESPN is no sure thing

-- Steven Zeitchik

twitter.com/ZeitchikLAT

Photo: Peter Guber at a Golden State Warriors basketball game in Oracle Arena in Oakland, California. Credit: Getty Images

Fox speaks out about Time Warner Cable and Dodgers

FOX DODGERS TIME WARNER CABLE

You can tell a fight is getting ugly when the companies involved stop hiding behind anonymous quotes and come right out and say what's on their minds -- on the record.

That's what is starting to happen with Fox Sports and Time Warner Cable in their battle to see who will end up with the television rights for the Los Angeles Dodgers. Fox's Prime Ticket currently has the Dodgers, and Time Warner Cable wants them for its new regional sports network, which is launching next year.

Under scrutiny is a 2004 contract Fox Sports signed with the Dodgers to carry the baseball team's games on its Prime Ticket cable channel. The contract contains a provision that prohibits the team from creating its own channel in partnership with Time Warner, Comcast or Walt Disney Co.'s ESPN should it decide to discontinue its relationship with Fox Sports when the current pact expires.

The deal under the current contract, which runs to 2013, will peak at a value of nearly $40 million a year. A new deal could double that annual figure.

At the time the contract was signed, Time Warner Cable was still part of the entertainment giant Time Warner Inc. In 2009, it was spun off into a stand-alone company and does not feel that the 2004 provision applies to it and its regional sports network (RSN).

Fox, part of News Corp., begs to differ and is now speaking publicly about it.

“The contract, which was written in 2004, states the Dodgers are restricted in partnering with 'Time Warner' in an RSN and both sides have always, up to today, acted consistently with the understanding of the meaning that Time Warner Cable is restricted from making a media rights deal with the Dodgers," Fox Sports spokesman Chris Bellitti said.

The subject of the contract came up in a hearing Thursday in U.S. Bankruptcy Court in Delaware, where Fox lost a fight to stop the Dodgers from selling a new TV deal along with the team. A Dodger lawyer suggested that the team was able to strike a deal with anyone it pleased, which Fox is still disputing.

"For their lawyer to indicate otherwise is revisionist history designed to mislead prospective buyers into thinking the Dodgers are unfettered in making a media rights deal with whomever they choose,” Bellitti said.

While Fox is charging the mound, Time Warner Cable is still staying in the dugout. For now.

RELATED:

Dodgers can hold early sale of TV rights

Contract provision is key in fight between Time Warner Cable, Dodgers and Fox Sports

-- Joe Flint

Photo: The Dodgers' Matt Kemp hits one out. Credit: Michael Robinson Chavez / Los Angeles Times

Contract provision is key in Dodgers-Fox-Time Warner Cable fight

Dodgers
The outcome of the fight among Time Warner Cable, Fox Sports and the Los Angeles Dodgers over a new TV deal for the baseball franchise may hinge on a legal interpretation of a key provision in the current contract between Fox Sports and the team.

When News Corp.'s Fox Sports signed an agreement to carry Dodger games on its Prime Ticket regional sports network in 2004, it included a clause that prohibited the team from creating its own channel in partnership with Time Warner, Comcast Corp. or Walt Disney Co.'s ESPN.

Now Time Warner Cable is trying to land the Dodgers for its new regional sports network and Fox is crying foul.

Here's the rub: When Fox signed its deal with the Dodgers in 2004, Time Warner Cable was a unit of Time Warner Inc. Five years later, Time Warner Cable was spun off from Time Warner, becoming its own publicly traded company.

It appears that Fox's contract with the Dodgers was not amended to reflect that Time Warner Cable is now a separate entity, said people familiar with the agreement who declined to speak publicly about the ongoing legal issue.

Time Warner Cable probably will make the case that the provision does not apply because it is a separate company from Time Warner. Fox probably will counter that the intent of the contract is clear and that there is no loophole for Time Warner Cable to exploit.

The Dodgers are currently squaring off in U.S. Bankruptcy Court in Delaware against Fox. At issue is whether the team, which is currently in bankruptcy and for sale, can opt out of its pact and negotiate a new and more lucrative agreement with someone else.

Ultimately, the new owner of the Dodgers will have the final say on future TV deals.

There are two potential outcomes to the provision kerfuffle: Either a court will decide whether Fox or Time Warner Cable is right about the provision, or Fox will get a settlement from the Dodgers or Time Warner Cable.

Either way, the lawyers will clean up as usual.

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Time Warner Cable snags Galaxy rights

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-- Joe Flint

Photo: Dodger pitcher Clayton Kershaw. Credit: Harry How / Getty Images

Fox Sports announces deal with Ultimate Fighting Championship

 
Mixedmartialarts

Fox Sports on Thursday announced a seven-year deal with Ultimate Fighting Championship that brings mixed martial arts fights to the Fox broadcast network four times a year, and 32 live Friday night events on the company's FX cable channel.

Fox declined to disclose financial terms, but the Sports Business Daily reported the multi-year package was worth as much as $90 million.

The deal is significant because it elevates the sport of mixed martial arts to the television mainstream.  Fox has become the home of big-ticket championship events: broadcasting baseball's World Series, football's Super Bowl and auto racing's Daytona 500.

"This is where I wanted to be, and this is the deal that I wanted," Dana White, UFC president, said during a morning news conference at a Fox Sports television studio in Los Angeles. "It took a long time to happen."

The two groups have been in talks for almost a decade. Fox Sports Chairman David Hill conceded that it took a few years for him to recognize the potency of mixed martial arts. He and others over the age of 50 grew up watching boxing, he said, adding that today's youth is more attuned to the "three-dimensional" nature of mixed martial arts.

In addition, during his tenure overseeing programming at DirecTV, which offered pay-per-view mixed martial arts, "We saw the widespread popularity of the sport," Hill said. "This group has taken a little niche sport and in 10 years they have made it to a mainstream sport.... The growth and potential of this is explosive."

UFC's television homes have been on Comcast Corp.'s Versus channel and Viacom Inc.'s Spike. 

" 'The Ultimate Fighter' Season 14 in September will be our last," Spike said in a statement. "Our six-year partnership with the UFC has been incredibly beneficial in building both our brands, and we wish them all the best in the future."

The Fox deal provides Zuffa, owner of the UFC brand, with a platform on more networks -- and more prominence. The sport will make its prime-time debut on the Fox broadcast network Saturday, Nov. 12.

FX will carry Friday night fights and the retooled "The Ultimate Fighter" program beginning next year. Fox's niche sports Fuel channel and Spanish-language Fox Deportes also will host pre- and post-fight shows and other events.

Founded in 1993, Ultimate Fighting Championship has seen muscular growth since it was acquired by Zuffa in 2001. UFC's flirtation with Fox Sports dates to the summer of 2002 when Fox Sports Net carried the company's first non-pay-per-view event on basic cable television, pulling in a large audience.

For FX, the sport will help to lure more young male viewers to the channel, which has built its reputation as a leader in edgy programming with "The Shield," "Rescue Me" and the quirky fan-favorite comedy "It's Always Sunny in Philadelphia." 

"We can now stand toe-to-toe with anyone in our competitive set," John Landgraf, general manager of the FX Networks, said during the news conference. In the past, such rivals as USA Network and TNT have rounded out their offerings and boosted their ratings with sports. 

"The UFC," Landgraf said, "is finally going to put us on a level playing field with our competitors."

-- Meg James

Photo of UFC's Junior Dos Santos (left) of Brazil and Shane Carwin of Colorado during a June British Columbia fight weigh-in.  Credit: Darryl Dyck / Associated Press

Want to know how Farmers Field's sponsorships will work? Just look at AEG's deal with Delta

Staples Center

AEG Live may be knee-deep in discussions for its proposed football stadium in downtown Los Angeles, but that hasn't kept the company from business as usual elsewhere.

The company on Thursday announced it has snagged Delta Airlines as one of 10 "founding partners" of Staples Center, alongside Toyota, Wells Fargo, American Express Coca-Cola and others.

What does that mean? Though exact terms of the multiyear deal were not announced, sponsors in general receive a panoply of prominent signage in and around the center that is seen by thousands of event-goers and millions of television viewers (when games at the arena are broadcast).

In exchange, each sponsor pays between $3 million and $5 million a year for what is essentially ad space. (AEG also gives preferential treatment to sponsors by making them exclusive vendors for the venues, serving Coca-Cola products at its concessions, for example.)

Multiply that by 10 sponsors, and the 11-year-old Staples Center can ring up between $30 million to $50 million a year.

Why is this interesting? AEG will likely to apply the same model to Farmers Field, the $1-billion stadium that the company is proposing to build on what is now the site of the West Hall of the Los Angeles Convention Center.

Because AEG is a privately held company that does not have to report its revenue and profits to the public, much talk has been devoted to speculation about how AEG will finance the stadium. Angelenos got part of the answer on Feb. 2, when AEG announced a $700-million multiyear deal with Farmers Insurance to name the stadium after the company.

But wait. There will be more. And the Delta sponsorship provides a potential blueprint for others to come.

-- Alex Pham 

Photo: Staples Center, which opened in October 1999. Credit: AEG Live

 

Tennis Channel advances in its discrimination case against Comcast

The Federal Communications Commission on Tuesday afternoon granted the Tennis Channel's request to review its case that cable giant Comcast Corp. discriminated against the independent sports network.

Tennis Comcast makes its own sports channels, including the Golf Channel and Versus, available to all of its customers. But the Santa Monica-based and privately-owned Tennis Channel maintains that Comcast unfairly put it at a disadvantage by offering it as part of a more costly package of sports channels, limiting distribution, which costs consumer more and has fewer subscribers.

In its 17-page order, the FCC said that "there are substantial and material questions of fact as to whether Comcast has engaged in conduct that violates the program carriage provisions ... and the Commission’s rules. We therefore initiate this hearing proceeding."

The review comes at an awkward time for Comcast, which is depending upon the FCC to approve its proposed merger with NBC Universal. Critics contend that a Comcast-controlled NBC Universal would give too much power to the Philadelphia-based company, which it could use to favor its own cable networks at the expense of competitors.

The Tennis Channel applauded the ruling.

"We look forward to presenting our full case, and we are confident that when the matter is finally resolved, Comcast will have been found definitively to have illegally discriminated against Tennis Channel and in favor of its owned sports services," the channel said in a statement. 

For its part, Comcast said Tennis Channel agreed to be placed on the sports tier when Comcast helped launch the channel five years ago. It also said that many large cable operators, not just Comcast, offer the Tennis Channel in a more-exclusive tier.

“We look forward to refuting this groundless complaint in a full evidentiary hearing before an Administrative Law Judge at the FCC," Sena Fitzmaurice, a spokeswoman for Comcast, said in a statement. "Comcast currently makes the Tennis Channel available to nearly every home we serve. Far from discriminating against Tennis Channel, we are fully honoring the terms of our agreement with Tennis Channel and plan to continue carrying the network for our customers and tennis fans.”

 — Meg James

Fox and Dish Network take negotiations into late innings

Fox and satellite service Dish Network were closing in on a midnight Thursday deadline to strike a new agreement that would keep FX, National Geographic Channel and a host of regional sports networks on the air.  As of Thursday evening, the two sides were still chipping away on a new contract and it was unclear whether News Corp.'s Fox would pull its channels from the programming packages of Dish's more than 14 million customers.

The Fox broadcast network is not included in the current tussle, although it will become the centerpiece of a separate dispute between the two companies over a contract set to expire Oct. 31. Not coincidentally, that date falls during Major League Baseball's World Series, which Fox televises.

For now, the stakes are lower. The Los Angeles Dodgers and Los Angeles Angels are scheduled to finish their seasons this weekend with games broadcast by the Fox regional sports channels, Prime Ticket and Fox Sports West.  Dish subscribers would miss out if Fox pulls the channels.  Dish subscribers would also have to skip "The Dog Whisperer" on Friday on the National Geographic Channel, and "Sons of Anarchy" on Tuesday on FX, if the dispute dragged into next week.  

Angelspic

Contentious contract negotiations have become a trend in the television industry as programmers struggle to hike fees to try to cover the rising costs of programming. 

Cable and satellite television providers are trying to hang tough to mollify their customers, who are tired of ever-rising cable bills and now have other pay TV options. 

Already this year, Walt Disney Co. pulled its programming from New York cable giant Cablevision for several hours on the day the Academy Awards were broadcast, and the Hallmark Channel has been off AT&T U-Verse for nearly a month.

Fox and  Cablevision also are headed for an Oct. 15 showdown -- which could cause plenty of angst for fans of the playoff-bound New York Yankees.  If no agreement is reached, Cablevision would lose the right to carry the Fox broadcast network as well as two tiny channels, National Geographic Wild and the Fox Business Network.

The Fox News Channel is not part of either of these disputes.

-- Meg James

Photo by Jay L. Clendenin, Los Angeles Times

The Morning Fix: Emmy loves broadcast. Disney may really have sold Miramax! ESPN-LeBron backlash

After the coffee. Before avoiding all the reviews of "Inception."

Is it really over? Walt Disney Co. has struck a deal to sell Miramax to an investor group led by construction executive Ron Tutor with backing from Colony Capital, a private equity firm, and James Robinson, chief executive of production company Morgan Creek. If this deal actually closes, it will bring to an end to months of high-stakes negotiations and a battle among three potential suitors, including Miramax founders Bob and Harvey Weinstein. Former Disney executive Richard Nanula, now with Colony, is expected to oversee operations at Miramax for its new owners. More on what may be the final chapter from the Los Angeles Times and the Wrap.

Explaining Emmy. When hundreds are nominated for awards, it can make finding a trend difficult. But try we must, and with some new shows on broadcast television -- "Glee," "Modern Family," and "The Good Wife" -- doing very well, the verdict seems to be that network television is back. Well, certainly it was a good season, but it's not like HBO, Showtime, AMC and other cable channels were overlooked by Emmy voters. I'm still wondering how the voters could snub Khandi Alexander of HBO's "Treme." And why do they keep ignoring FX's "Rescue Me." Analysis on the nominations from the Los Angeles Times, New York Times, Variety and Hollywood Reporter.

Fleeing Sun Valley. Friday is when the media stalkers exit Allen & Co.'s Sun Valley mogul gathering after three days of chasing executives and being escorted by security to the bathroom. So here are the wrap-up stories from the New York Times and Wall Street Journal that, quite frankly, could have been written before the conference started. No digs at my media pals intended; I've been there and know the drill. You do the best you can with what few morsels you can get. At least the Idaho setting is beautiful and there are some good restaurants in town.

The 10% factor. The Hollywood Reporter's Matthew Belloni takes a look at the verdict against Walt Disney Co. in its battle over profits from the game show "Who Wants to be a Millionaire?" with the show's creator, Celador Productions, and the role that agents played in the relationship between the two companies. William Morris agents were put in an awkward position throughout the trial, and the verdict may have some rethinking the way packaging fees for shows are doled out to agencies.

ESPN and LeBron: The Aftermath. ESPN's deal with LeBron James, in which the basketball superstar got to handpick his interviewer and sell the network's ad time (for charity) in return for telling the cable channel where he was signing, has been heavily criticized in the media. Here's our Thursday story and a take from Friday's New York Times. Ex-ESPN analyst Dan Patrick said on his radio show Friday that the Thursday night program was "an infomercial" and that the network covered this "like it's 'American Idol.'" Not everyone is ganging up on Disney's ESPN though. Here's a defense from the Daily Beast. Meanwhile, super-agent Ari Emanuel is taking credit for helping put together the show, which, given the reviews, may not be something to boast about.

Inside the Los Angeles Times: "Eclipse" is expected to rule the weekend again at the box office, but its pacing is trailing its predecessor, "New Moon." More bad news for Mel Gibson.

-- Joe Flint

Follow me on Twitter and I won't abandon you for Miami: Twitter.com/JBFlint

Lakers take Game 1, ABC takes ratings

Walt Disney Co.'s ABC had an easy layup with its coverage of Game 1 of the NBA Finals between the Los Angeles Lakers and Boston Celtics. The game, which the Lakers took with relative ease, drew 14.1 million viewers, according to Nielsen.

That is the biggest audience for an opening game since the 2004 finals, featuring the Lakers and Detroit Pistons. Game 1 of that series had an audience of 15.35 million people. 

Want more hoops ratings? Last year's Game 1, between the Lakers and Orlando Magic, averaged 13.0 million. And if you're just obsessed with this stuff, the 2008 Game 1, between the Lakers and Celtics, averaged 13.4 million viewers.

-- Joe Flint

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