The launching of the Big Ten Network is an issue that I have been following but I don't think I have had much or anything to say about it in this space. Today's New York Times contains an article detailing the apparently acrimonious negotiations
between Comcast and the BTN. These cable deals often go down to the wire, but it's not unusual, be it the NFL Network, Fox News, or whatever, for a couple of the huge cable companies to hold off. I recall that when Fox News launched in 1996, Time Warner, which supplied cable to much of New York City, did not carry FNC for some length of time. I don't know enough about the cable industry to know whether this is the usual posturing or whether it could result in large parts of the Big Ten territory not having access to the Big Ten Network. The BTN is seeking to vary the cost per subscriber by geography:
[BTN president] Silverman said the network had balanced the interest in Big Ten sports inside and outside its region by seeking a monthly subscriber fee of $1.10 to be carried as an expanded basic channel to 18.5 million cable subscribers in the conference’s states, but 10 cents a subscriber everywhere else.
I don't know enough about the economics of the cable industry to know how reasonable that is. I haven't been able to find a comprehensive list of per-subscriber fees for cable channels, but here's this from a 2004 article by the Project for Excellence in Journalism:
Unlike the broadcast networks, cable channels acquire part of their revenue from subscribers. This is based on a subscriber fee negotiated between each cable channel and the cable providers. These fees are normally set up under long-term contracts of five to ten years. The most popular cable entertainment networks (such as Nickelodeon and TNT) charge roughly 50 cents to $1 per subscriber per month. CNN's subscriber fee has remained stable, at around 33 to 37 cents, since 1997.
Accordingly, it looks like the Big Ten Network, if the described price structure is what cable companies actually are paying for it, gets star treatment in Big Ten states but gets c-list treatment in other parts of the country. Here's another excerpt, from Variety's Multichannel News, concerning Fox News's most recent renegotiation of its subscriber fee
Tim Carry, senior vice president of affiliate relations at Fox News, confirmed the pricing for the cable news leader. "We’re starting out with a dollar [per subscriber] for Fox News,’’ he said. Should Fox News get its price, only ESPN and regional sports networks would command higher rates in ad-supported cable. (emphasis added).
This quote provides some support for the Big Ten Network's position. In far-flung parts of the country, the network won't have much value other than to hardcore sports fans and scattered Big Ten alumni. Within Big Ten country, the channel will be more analogous to a regional sports network, and the channel likely will earn very high ratings for a cable network on certain occasions. For instance, I would guess that if the BTN were to carry an Indiana-Purdue basketball game, the rating in Indiana for that game would be far higher than any one-night rating for, say, the Travel Channel, in the same geographical area. The issue, I suppose, is whether the ratings would be any good on other occasions and how it evens out. My guess, and again, I'm just guessing at nearly all of this, is that the real value of the BTN for cable companies in Big Ten states is not so much the value of having the channel, but defense against the risk of losing a boatload of subscribers. I happen to be a DirecTV subscriber for sports-related reasons (baseball's insane blackout rules prevent me from buying Cub games on MLB Extra Innings because the Cubs have local rights to Indianapolis, even though the non-WGN Cub games are not available in Indy on an over-the-air or cable network. I watch them by ordering the Sports Pack, which gives me access to CSN Chicago). If I were not already a DirecTV subscriber, and my cable company declined to carry the Big Ten Network, I would drop cable immediately. Again, it's really hard to know, but I would have to think that there are tens of thousands of households in the eight-state Big Ten region that would do the same.
This post isn't very well-formed, but since it's the offseason, I will continue to try to track down some info on cable economics. Certainly, if Comcast and the BTN continue their impasse, this will be a big story here in central Indiana. Comcast provides cable to nearly all of the part of Marion County that is outside the old (pre-Unigov
) city limits of Indianapolis. Stay tuned.
For pure comedic value, I loved this statement from David Cohen, a vice-president of Comcast:
"We’d like to make the network available to those who want to watch it and not force customers who have no interest in the content to have to pay for it."
Ah, yes. If cable companies stand for anything, it is their profound respect for the rights consumers to avoid paying for channels that they don't want. My parents are Comcast subscribers. Perhaps I should ask if they want me to call Mr. Cohen on their behalf and tell him, respectfully, that they would rather not pay for all of those home shopping networks and televangelist networks and ten different versions of the Discovery Channel and the CNN financial channel. I'm sure Mr. Cohen would understand, because Comcast isn't in the business of making people pay for channels that they don't want, right?