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New NFL TV deals could hurt smaller cable networks

December 24, 2011|By Joe Flint, Los Angeles Times

There has been a lot of talk lately about how the rising costs of the television rights to professional sports — particularly the National Football League — will affect consumers.

After all, if the networks that carry football will all be paying roughly $1 billion per season (almost $2 billion for ESPN), then those costs will be passed along. They will ask cable and satellite operators to pay more for those channels. Those distributors will then turn to their subscribers and expect them to chip in as well.

"There is no question bills will go up," Adam Chase, a lawyer at the Washington firm Dow Lohnes who specializes in sports media, said in a recent interview.

Cable networks that don't carry sports or have huge audiences may also be hurt by the new NFL deals.

In a new report, Morgan Stanley analyst Benjamin Swinburne predicts that cable channels that don't air sports will see their annual distribution fees decline. It's possible that cable operators will try to cut their costs there in order to make up for the higher sports prices.

Many wonder whether the rising cost of sports programming will lead to sports channels being distributed in separate packages.

Swinburne doesn't see that happening.

"To be frank, we see no easy path towards tiering or a la carte, short of a government mandate," he wrote in the report.

The challenge for cable and satellite pay TV distributors, though, will be negotiating with companies that own sports and entertainment channels. In New York, Time Warner Cable Inc. is locked in a battle with Madison Square Garden Co., which owns two regional sports channels and a music channel called Fuse.

Time Warner Cable wants to sign new deals for the sports channels but not Fuse. Madison Square Garden wants a new contract that includes Fuse.

joe.flint@latimes.com

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