Carriage-fee spat spurs Comcast to drop Fox's YES Network
Two of the biggest players in the sports-TV business, Comcast Corp. and 21st Century Fox, are duking it out over Yankees games.
Two of the biggest players in the sports-TV business, Comcast Corp. and 21st Century Fox, are duking it out over Yankees games.
Comcast dropped Fox's YES Network, which televises the Yankees to more than 900,000 homes in New Jersey, Pennsylvania, and Connecticut, at midnight Tuesday, contending that the network was seeking a 33 percent hike in its monthly carriage fees. The company said Yankees fan viewership couldn't justify the additional costs.
YES Network - whose officials said they were stunned by Comcast's action after months of negotiations - rejected Wednesday the idea that costs were the negotiating stumbling block, saying that other cable operators with more subscribers in the New York market agreed with the price.
YES Network and Comcast disagreed over contract language that would have protected Comcast against future competitors in the YES Network market, a source close to the network said. The source declined to comment on the language but said Comcast was seeking a permanent advantage.
The two sides have been negotiating new terms for a carriage agreement for about a year. The former contract expired in February, and Comcast and YES Network extended the talks through the Yankees' season.
Beyond the public rhetoric, industry observers on Wednesday saw broader forces at work. With sports-TV costs exploding and people cutting the cord because of higher monthly cable bills, Comcast appears to be drawing a line in the sand with YES Network. The network also televises Brooklyn Nets basketball games.
Comcast distributes YES Network, which is 80 percent owned by 21st Century Fox and 20 percent owned by the Yankees, to subscribers in northern and central New Jersey, southern Connecticut, and the Scranton area.
If Comcast can succeed with YES Network, the hardball tactics could have a "chilling effect" on smaller regional sports networks negotiating with Comcast, observers said.
The Comcast-YES Network spat also comes against a backdrop of financial pressures at ESPN, the national sports network that has reported subscriber losses and employee cutbacks.
ESPN and regional sports networks are the most expensive cable channels in the bundles that pay-TV operators sell to consumers, even though most people don't regularly watch the sports networks.
YES Network costs $4.89 a month and is the nation's most expensive regional sports network, Comcast spokesman John Demming said Wednesday, citing figures from research firm SNL Kagan.
Comcast itself owns about a dozen regional sports networks, including Comcast SportsNet Philadelphia, through its NBCUniversal subsidiary.
"Every year, there are more and more people saying, 'I don't need this stuff,' " Stephen F. Ross, law professor and director of the Sports Law, Policy and Research Institute at Pennsylvania State University, said of sports networks.
"There are a lot of people who have cut the cord, and there are a lot of people who are close to cutting the cord," he said.
Added Ross, "If you win this battle, you win every battle. That's why you pick the Yankees."
At least initially, there will be minimal pain for Comcast. Baseball season is over, and the Yankees won't play again until spring. The Brooklyn Nets have gotten off to a 1-9 record.
In its statement, Comcast said that "well over 90 percent of our 900,000-plus customers who receive YES Network didn't watch the equivalent of even one quarter" of 130 televised Yankees games on the network this year.
YES Network countered that it was the nation's most-watched regional sports network in 11 of the last 12 years.
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