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Cable channels are valuable real estate regardless of the tenant

Analysis

January 23, 2013|By Joe Flint
  • FX, home of "Sons of Anarchy," may get a sister channel.
FX, home of "Sons of Anarchy," may get a sister channel. (FX )

To most TV viewers, cable networks are programming outlets.

To their owners, however, channels are real estate to be held onto regardless of what the tenants have done to the property.

That's the case with the Fox Soccer Channel. News Corp.'s Fox is considering turning the channel into an entertainment network similar to the company's FX channel. The names being kicked around include FX2 and FXX.

There are several reasons Fox is thinking about rebranding the channel, which is currently in nearly 50 million homes. For starters, its ratings are not great. On top of that, Fox Soccer recently lost rights to one of its marquee offerings -- the English Premiere League -- to Comcast's NBC Sports Network. Another sports channel, beIN Sports, has also stepped up with deep pockets for soccer.

Although Fox doesn't see a bright future for its channel, it does not want to close up shop and give up those 50 million homes and the nearly 20 cents a subscriber it gets each month from the cable and satellite operators that carry the channel. Shutting it down is not an option.

Now Fox has to persuade the cable and satellite distributors to let it give the channel a makeover. Typically, if a programmer wants to dramatically change the content on a channel, the pay-TV operator has the right to drop the service or at least renegotiate the distribution agreement.

News Corp. will seek to use its leverage as a programmer -- its properties include the Fox network, FX, Fox News, more than 20 regional sports networks and dozens of local TV stations -- to try to persuade cable and satellite operators to go along with its plans.

Here's the thing, though. Just as there are too many sports channels, there is hardly a shortage of entertainment outlets. If the folks in programming at News Corp. think they can create enough great content for a whole new channel, then how about just putting more original fare on FX?

After all, while FX is home to critical favorites such as "Justified" and "Sons of Anarchy," the majority of its programming is still movies and reruns. Fill that network up before trying to start another one.

Fox Soccer is not the only channel that News Corp. is overhauling. Its Speed Network will become Fox Sports 1 and Fuel, according to Sports Business Journal, will become Fox Sports 2. Both those channels are being developed to compete with Walt Disney's Co.'s ESPN franchise.

Locally, now that Fox's Prime Ticket channel will probably lose the Dodgers after the upcoming season, a case could be made for folding that channel into Fox Sports West, the company's other regional sports network here.

Instead, Fox Sports is likely to move some content from Fox Sports West to Prime Ticket to pad that network's lineup and keep those subscription fees coming.

It is up to distributors to try to draw a line in the sand and say no to channel squatters. But for now the leverage rests with big programmers. Ultimately, it is the customer who is getting stuck in bad real estate deals.

ALSO:

Rising cable TV sports costs could have consumers crying foul

Dodger's new TV deal could mean another sports channel in L.A.

News Corp. may convert Fox Soccer into entertainment channel

Follow Joe Flint on Twitter @JBFlint.

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