FS1 lacking distribution with 3 major carriers (and others)

[ChicosBailBonds]

Not there yet. 3 of the top 4 distributors don't have a deal with FS1.



Published today


Fox has "yet to cut carriage deals with three of the country’s four biggest distributors, raising the possibility that its August launch of Fox Sports 1 will fall short of the 90 million homes the channel is expected to have," according to John Ourand in this week's SPORTSBUSINESS JOURNAL. DirecTV, Dish Network and Time Warner Cable "still are negotiating to carry FS1 on Aug. 17." The fact that "so many deals are open a month before a network launch is not unusual in the cable industry." Though talks have been described as "amicable for the most part, news that some big deals aren’t done runs counter to the widespread belief in the sports industry that FS1 will flip a switch next month and launch to 90 million homes." SNL Kagan data shows that distributors currently "pay around 23 cents per subscriber per month for Speed." Sources said that FS1 is "being offered at 80 cents per subscriber per month at first, with increases that would push the fee to the $1.50 range over the life of a multiyear carriage deal." Distribution execs originally believed that they "would be able to carry FS1 at the same lower rate they pay for Speed until their Speed contracts end." But sources said that Fox has "not made that offer to any distributor that hasn’t signed new carriage deals." One of the main issues Fox is facing "concerns the atmosphere around the high cost of sports rights." Several distributors recently have "become emboldened by keeping sports channels off their systems." But FS1 "expects to be different, positioning itself as an alternative that could help distributors keep the high-priced ESPN in check" (SPORTSBUSINESS JOURNAL, 7/15 issue).

PLANNING A GRAND ENTRANCE: In St. Louis, Dan Caesar wrote Fox is "about to unleash a network to compete with ESPN, and it looks as if Fox won’t be outdone on the self-serving front." If the way Fox is "planning to introduce the network to the masses Tuesday night is any indication, the battle between it and ESPN will be waged as much in the hype department as in the ratings game." That Fox went "out of its way to announce how it will announce the start of Fox Sports 1 is in itself breathless." If Fox is "going to this extreme to merely set the stage, one can only imagine what the hype machine will spew out over the coming months and years" (STLTODAY.com, 7/12). In Ft. Lauderdale, Craig Davis writes FS1 will "signal its arrival with trumpets blaring." Even the "hype is being hyped, with videos about the making of the introductory commercial already available on Fox Sports' YouTube channel." Whether FS1 "emerges as a genuine alternative to ESPN or just another pretender remains to be seen." But it "won't be for lack of resources" (South Florida SUN-SENTINEL, 7/15). In Dallas, Barry Horn reported Fox wanted Cowboys QB Tony Romo "to fly to Los Angeles in mid-June for a video shoot" at L.A. Memorial Coliseum, but he "declined because he didn't want anything to interfere with his rehab following back cyst surgery." Ravens QB Joe Flacco instead "appears in the Romo role." Fox Sports Senior VP & Head of Marketing Robert Gottlieb, when asked if Cowboys Owner Jerry Jones was considered, said, "We decided we wanted to focus on players. We thought about DeMarcus Ware, but he couldn't fit into our tight shooting window" (DALLASNEWS.com, 7/12).

PINNING DOWN THE ISSUES: SI.com's Richard Deitsch notes Gottlieb in an interview with Cynopsis.com "highlighted the strategy and brand message of the upcoming network." Gottleib said, "It's not about steroids, Tim Tebow and other BS that keeps getting crammed down our throats." Deitsch wrote those on the "edit side of Fox Sports 1 have pledged they'll be creating a serious sports news unit for the channel." PED use in athletics "is a serious, important topic and an issue in every major sport Fox covers, so if Fox Sports 1 wants to be a respected editorial player, it would be wise not to think of that topic as BS, and follow the thoughtful path set by ESPN -- as well as its own lead baseball reporter -- on this issue" (SI.com 7/15).

GETTING FACE TIME: In DC, Liz Clarke noted retired tennis player Andy Roddick this week will "launch into rehearsals for 'Fox Sports Live,' a three-hour show that he will co-host" with Charissa Thompson each weeknight from 11:00pm-2:00am ET. Fox Sports Exec VP & Exec Producer Scott Ackerson said of Roddick, "It never seemed like he was trying to BS anybody. That's something I find refreshing." He added, "What Andy is going to bring to the show is somebody who has been in the arena a very short time ago, who is intelligent, never was afraid to say exactly what he thought. ... I don't believe Andy is going to be an athlete's apologist. If I thought that, I wouldn't have wanted him." NBC's Mary Carillo said of Roddick, "He has the heart and mind of a true jock and the smarts to translate that into an audience. All of which is to say, this guy will be a good listen" (WASHINGTON POST, 7/14). 

[GGGG]

Ah.  I thought that since I had Speed that I would simply get FS1.  I guess I was naive to believe that some sort of rate hike wouldn't be involved.

[EnderWiggen]

>Fox has "yet to cut carriage deals with three of the country’s four biggest distributors"

Which distributors does it have a deal with?  Comcast?

[Coleman]

Which distributors does it have a deal with?  Comcast?

That would be my assumption.

[ChicosBailBonds]

Ah.  I thought that since I had Speed that I would simply get FS1.  I guess I was naive to believe that some sort of rate hike wouldn't be involved.

I've been trying to drop those hints for awhile here without actually saying it, but now that it's out there....correct, it's not "an exchange" because of the rate.  What you might actually see is some systems have FS2 and not FS1 at the launch.  Fuel is becoming FS2 and because there is no rate change, that's just a rebrand. FS1 is quite a different story, as is FXX (slotting over from Fox Soccer Channel).

[ChicosBailBonds]

>Fox has "yet to cut carriage deals with three of the country’s four biggest distributors"

Which distributors does it have a deal with?  Comcast?

Correct.  As far as I can tell, no one else other than some really small guys.  No FIOS, no UVerse, etc, etc, that I'm aware of...at least not yet.  This will get done by most, I'm sure, but these things are complex and involve a lot of money.  Factor in that many customers don't care about sports at all but are forced to pay for it (because Fox, ESPN, A&E, MTV, etc, etc) want the eyeballs, and it gets very tricky. 

[Coleman]

Correct.  As far as I can tell, no one else other than some really small guys.  No FIOS, no UVerse, etc, etc, that I'm aware of...at least not yet.  This will get done by most, I'm sure, but these things are complex and involve a lot of money.  Factor in that many customers don't care about sports at all but are forced to pay for it (because Fox, ESPN, A&E, MTV, etc, etc) want the eyeballs, and it gets very tricky.  

Chicos, can you speak to a specific carrier? Namely, RCN in Chicago? RCN would be considered a "small guy" only in a handful of markets...

But they are in a lot of Big East markets: Chicago, Boston, New York, Philly, DC

[The Lens]

Wouldn't it be bigger news if TWC, DIRECT and Dish had come to terms 4-5 weeks out? 

[ChicosBailBonds]

Chicos, can you speak to a specific carrier? Namely, RCN in Chicago? RCN would be considered a "small guy" only in a handful of markets...

They would be a small carrier.  The biggies are Comcast, DIRECTV, DISH, Time Warner, Charter, Cox, Fios, Uverse, Cablevision, Suddenlink, Mediacom.  All those have 1 million plus.  Anyone else is considered small.

Don't know what the story is with those guys.  Sometimes the small guys get the deals done first, sometimes they are last. 

[wyoMUfan]

This blows - i know charter comm. doesn't have a deal in place and I don't think they are in any rush to do so.
Unfortunately I don't think there will be enough of a public outcry for these providers to feel the need to air fox sports 1.

[Pakuni]

This blows - i know charter comm. doesn't have a deal in place and I don't think they are in any rush to do so.
Unfortunately I don't think there will be enough of a public outcry for these providers to feel the need to air fox sports 1.

Do you seriously think Fox is going to invest hundreds of millions of dollars into this venture and then play hardball with the carriers to the point that it isn't distributed?
As Lens correctly noted, it is not big or surprising news that these deals aren't yet in place. These negotiations often go down to the wire.

[ChicosBailBonds]

Do you seriously think Fox is going to invest hundreds of millions of dollars into this venture and then play hardball with the carriers to the point that it isn't distributed?
As Lens correctly noted, it is not big or surprising news that these deals aren't yet in place. These negotiations often go down to the wire.

Don't tell Comcast Houston or Pac 12 Network

Both of them are still not carried by many of the majors and spent millions.  I'm not saying that will repeat itself, but sports costs are so out of hand right now that things are changing.

4 page article about it in today's Wall Street Journal (brief mention of FS1, but overall with TV and sports rates).

http://online.wsj.com/article/SB10001424127887323823004578595571950242766.html?mod=WSJ_hpp_LEFTTopStories#articleTabs%3Dvideo

[Pakuni]

Don't tell Comcast Houston or Pac 12 Network

Both of them are still not carried by many of the majors and spent millions.  I'm not saying that will repeat itself, but sports costs are so out of hand right now that things are changing.

4 page article about it in today's Wall Street Journal (brief mention of FS1, but overall with TV and sports rates).

http://online.wsj.com/article/SB10001424127887323823004578595571950242766.html?mod=WSJ_hpp_LEFTTopStories#articleTabs%3Dvideo

I'm not sure it's fair or accurate to compare what is essentially a regional sports network like the Pac 12 Network to a national undertaking like FS1.

That said, the Pac 12 network is distributed by every significant carrier in its relevant market except for DirecTV, so I'm not sure who these many other majors you speak of are.
Also, the network turned a profit in its first year, so the millions they spent seems to have been invested wisely (at least so far).

[ChicosBailBonds]

Here's the full Sports Business Daily article

FS1 carriage talks sticky a month out

A month before launching its much publicized all-sports network, Fox has yet to cut carriage deals with three of the country’s four biggest distributors, raising the possibility that its August launch of Fox Sports 1 will fall short of the 90 million homes the channel is expected to have.

DirecTV, Dish Network and Time Warner Cable — representing more than 46 million subscribers — still are negotiating to carry FS1 on Aug. 17, which is when Fox will turn its motorsports channel, Speed, into a multisport network.

The fact that so many deals are open a month before a network launch is not unusual in the cable industry. Typically, carriage deals like FS1’s get finalized in the days leading up to or just after a channel’s launch.

Though talks have been described as amicable for the most part, news that some big deals aren’t done runs counter to the widespread belief in the sports industry that FS1 will flip a switch next month and launch to 90 million homes. While neither Fox nor distributors would comment about the state of talks, ticklish carriage negotiations and a new FS1 rate fee are slowing the process.

As with other sports TV deals these days, one of the main snags is over price. Distributors currently pay around 23 cents per subscriber per month for Speed, according to SNL Kagan. Sources say FS1 is being offered at 80 cents per subscriber per month at first, with increases that would push the fee to the $1.50 range over the life of a multiyear carriage deal.

Originally, distribution executives believed they would be able to carry FS1 at the same lower rate they pay for Speed until their Speed contracts end, but sources say Fox has not made that offer to any distributor that hasn’t signed new carriage deals.

Also complicating matters is the presence of other Fox-owned networks in the talks. For example, Fox also is converting Fox Soccer Channel into an entertainment channel called FXX and has to convince distributors to approve that change, too. Other Fox sports channels are part of the discussions, as well.

Take Time Warner Cable, for example. The cable operator does not carry the Fox-owned regional sports network FS San Diego. Time Warner Cable’s deal with YES Network, in which Fox holds an equity stake, ends after this season. Time Warner Cable executives were in Los Angeles last week talking to Fox about all these deals, sources said.

One of the main issues Fox is facing concerns the atmosphere around the high cost of sports rights. Several distributors recently have become emboldened by keeping sports channels off their systems. DirecTV has not reached an agreement for several regional sports networks, like CSN Houston, CSN Portland, Longhorn Network and the Pac-12 Networks. Dish Network has not cut deals with several RSNs, including YES Network and TWC SportsNet.

But FS1 expects to be different, positioning itself as an alternative that could help distributors keep the high-priced ESPN in check. Fox executives have billed the new channel not as a launch but as a rebrand, of Speed, and the new multisport network is seen as the biggest challenge yet to ESPN.

If FS1 launches to less than full distribution, some of the wind could be taken out of its promotional sails at the outset.

One unanswered question is what will happen if a distributor fails to reach an agreement for FS1. Time Warner Cable, DirecTV and Dish Network have contracts that call for carriage of a Fox-produced motorsports channel. If Fox simply goes dark, it could be in violation of those deals, sources said.

It’s not clear what Fox will provide distributors that don’t cut FS1 deals but still have contracts to carry Speed. Distributors say they’ve been told that one option is that Fox will provide a watered-down motorsports channel that would run in place of Speed, possibly even keeping the Speed name. There’s precedence for such a move: When Fox switched Fox Reality Channel into NatGeo Wild last year, it provided a several-hour loop of reality programming for the distributors that did not sign deals for NatGeo Wild.

The increased distribution and affiliate fees are important to Fox. Its executives have said that they expect FS1 to be profitable in the next two or three years, something that can only be achieved once they work out the affiliate deals.

Fox is counting on the strength of FS1’s schedule, which includes 5,000 hours of live-event programming a year, and FS1’s TV Everywhere components to convince distributors to cut deals.

Fox’s president of distribution, Mike Hopkins, is leading the affiliate negotiations for the broadcaster.

[Pakuni]

"The fact that so many deals are open a month before a network launch is not unusual in the cable industry. Typically, carriage deals like FS1’s get finalized in the days leading up to or just after a channel’s launch."

[wyoMUfan]

"The fact that so many deals are open a month before a network launch is not unusual in the cable industry. Typically, carriage deals like FS1’s get finalized in the days leading up to or just after a channel’s launch."

There you have it, too early for despair!

[ATL MU Warrior]

This will most likely be the only time I ever say the following six words.

"I am glad I have Comcast"

I just threw up in my mouth a little.

[ChicosBailBonds]

I'm not sure it's fair or accurate to compare what is essentially a regional sports network like the Pac 12 Network to a national undertaking like FS1.

That said, the Pac 12 network is distributed by every significant carrier in its relevant market except for DirecTV, so I'm not sure who these many other majors you speak of are.
Also, the network turned a profit in its first year, so the millions they spent seems to have been invested wisely (at least so far).

Pac 12 is a national network, same as the Big Ten Network.  Not distributed by AT&T...yet.  Verizon Fios.  Three of the top 7 no deal as of today, though I do anticipate AT&T will get a deal done...they are close and the media has reported a deal is done (it isn't, but close).   

Yes, they are profitable.  Larry is a smart guy.  They are well below their business plan, but they are profitable in year one.

[ChicosBailBonds]

"The fact that so many deals are open a month before a network launch is not unusual in the cable industry. Typically, carriage deals like FS1’s get finalized in the days leading up to or just after a channel’s launch."

 As I said earlier, I expect things to get done, but it's not the slamdunk that many thought it would be...IMO.  The world is changing, and with the ACC Channel coming, the SEC channel coming, Dodgers, etc, the expenditure pie isn't getting bigger.  With some data showing only 4% of viewers actually care about sports yet having to pay many times that amount for the content that few watch, it's an interesting scenario right now.

Incidentally, a few lines later is the money shot from the article.

"As with other sports TV deals these days, one of the main snags is over price. Distributors currently pay around 23 cents per subscriber per month for Speed, according to SNL Kagan. Sources say FS1 is being offered at 80 cents per subscriber per month at first, with increases that would push the fee to the $1.50 range over the life of a multiyear carriage deal.

Originally, distribution executives believed they would be able to carry FS1 at the same lower rate they pay for Speed until their Speed contracts end, but sources say Fox has not made that offer to any distributor that hasn’t signed new carriage deals."

[Pakuni]

Pac 12 is a national network, same as the Big Ten Network.  Not distributed by AT&T...yet.  Verizon Fios.  Three of the top 7 no deal as of today, though I do anticipate AT&T will get a deal done...they are close and the media has reported a deal is done (it isn't, but close).   

They may wish to be a national network, but they're not. Their appeal is regional, and their content is regional. Very few outside the West Coast/Pac 12 markets care about Pac 12 athletics. I mean, by these parameters, the Longhorn Network is national, too.
What these two networks provide is very different in scope from what FS1 will carry in terms of truly national programming, i.e. MLB, NASCAR, NFL, UFC, even UEFA and, down the line, World Cup soccer. They simply aren't comparable networks in terms of content, appeal and reach ... not to mention the weight of the company behind it.

[Benny B]

But FS1 expects to be different, positioning itself as an alternative that could help distributors keep the high-priced ESPN in check. Fox executives have billed the new channel not as a launch but as a rebrand, of Speed, and the new multisport network is seen as the biggest challenge yet to ESPN.

And that is why a deal will undoubtedly be cut, in the 11th hour if necessary.  DTV, Dish and TWC all have a financial interest in bringing the mouse back to reality... if they have to make a deal with the devil Rupert in order to do so, then it's a small egg to break.

[Groin_pull]

As long as the Big 10 Network doesn't weasel its way into the West Coast, I'm all good.

[Pakuni]

As I said earlier, I expect things to get done, but it's not the slamdunk that many thought it would be...IMO.  The world is changing, and with the ACC Channel coming, the SEC channel coming, Dodgers, etc, the expenditure pie isn't getting bigger.  With some data showing only 4% of viewers actually care about sports yet having to pay many times that amount for the content that few watch, it's an interesting scenario right now.

Incidentally, a few lines later is the money shot from the article.

"As with other sports TV deals these days, one of the main snags is over price. Distributors currently pay around 23 cents per subscriber per month for Speed, according to SNL Kagan. Sources say FS1 is being offered at 80 cents per subscriber per month at first, with increases that would push the fee to the $1.50 range over the life of a multiyear carriage deal.

Originally, distribution executives believed they would be able to carry FS1 at the same lower rate they pay for Speed until their Speed contracts end, but sources say Fox has not made that offer to any distributor that hasn’t signed new carriage deals."

So, everyone agrees that a deal is almost certain to be made, and at this point the two sides are negotiating financial terms, which is pretty much the standard MO in the business.
How is this different from nearly every business negotiation ever, and, if it's not different, why all the drama?

[IrwinFletcher]

As long as the deal gets done before the start of the College Football season.

 

Oh wait...

[ChicosBailBonds]

And that is why a deal will undoubtedly be cut, in the 11th hour if necessary.  DTV, Dish and TWC all have a financial interest in bringing the mouse back to reality... if they have to make a deal with the devil Rupert in order to do so, then it's a small egg to break.

ESPN will charge what they charge....there is no reality with them.  They are the 800lb gorilla.