Local Tv Sports Fans To See A Change, In Cost Sportschannel And Prism Are Going, Going. . . . A New Basic Cable Channel Takes Over.

Posted: July 27, 1997

Prism is dead. So is SportsChannel Philadelphia.

The premium cable-television channel and its basic cable counterpart will vanish in the fall.

And the Phillies, Flyers and 76ers games they featured will start appearing in October on a new basic cable channel, Comcast SportsNet, which millions of cable subscribers across the region are going to end up paying for - whether they like sports or not.

That is the outcome of a cable turf war that began 16 months ago, when cable giant Comcast Corp. paid $240 million and picked up $170 million in debt for a majority interest in the Flyers, the Sixers, CoreStates Center and the CoreStates Spectrum.

Comcast's approach - eliminating the premium-priced channel and shifting the three teams to a basic cable channel - is bound to win friends among Prism viewers, who paid between $12 and $15 a month to see sports and movies.

But Comcast is asking local cable companies to pay a high fee for its new basic channel. And when that programming cost is passed on to subscribers, 2.5 million cable customers from Harrisburg to Atlantic City, Allentown to Wilmington could wind up paying more.

Comcast is asking local cable companies for $1.50 a month per subscriber to carry Comcast SportsNet, making it one of the most expensive - if not the most expensive - basic cable channel in the United States.

``That's probably about as high as it goes for a nonpremium service,'' said John Mansell, a cable analyst for Paul Kagan Associates, a media-research firm.

Cable companies say they expect to pass on to their subscribers as much of the added cost as they can.

At $1.50 per subscriber, Comcast SportsNet is much costlier than SportsChannel, which billed cable operators between 25 and 35 cents per month per subscriber - but which carried only half as many games. (Prism had the others.)

Comcast's channel also is more expensive than the most popular nationwide channels, such as ESPN and CNN, which cost cable companies about 75 cents per month per subscriber.

Even among regional sports channels, which are the priciest basic cable fare, it beats the New York area's MSG Network, which runs the Yankees, Knicks and Rangers for $1.25 per subscriber per month, and SportsChannel Chicago, which features the Bulls, Blackhawks and White Sox for about $1.40 per month.

By going to a basic sports channel rather than a premium one, Comcast has flipped around the way that Philadelphia fans will pay for watching their teams. Instead of going with a high-priced premium service bought by a few hundred thousand people - many of whom bought or dropped it depending on how the teams were doing - Comcast is offering a basic cable channel paid for and potentially seen by millions of viewers.

``Everyone's going to pay for sports teams that 30 percent of the market watches,'' said a Philadelphia-area cable operator who asked not to be identified.

But what a vocal and important group that is.

``Sports is the main driver in cable when it comes to getting new customers, driving rates, advertising and sales,'' said Michael Bair, executive vice president of Rainbow Sports, a division of the majority owner of Prism and SportsChannel. ``Always has been, always will be. [Sports fans] represent huge viewing, huge advertising potential. They tend to be heavy users. It's a very important audience.''

Comcast is negotiating with cable operators about carrying the channel, but there is little doubt they will.

``There's no way you couldn't carry them, even if the teams were in the basement,'' said a cable operator who declined to be identified.

Jack Williams, president of Comcast SportsNet, declined to discuss the price of the channel but said it would have more local programming than any other regional sports channel in the country. He said the channel would run between seven and eight hours of live sports programming, apart from games, including a four-hour morning news block.

``No one is doing anything close to what we're doing here,'' he said.

Cable analysts say charging everyone for a sports channel is no different from charging them for MTV or the Eternal Word Television Network.

``Cable is all about variety,'' said Michael Wirth, a specialist in media economics who directs the school of communications at the University of Denver. ``There's sports on there for somebody like me who enjoys sports; there's the Home & Garden channel on there for people with that segmented interest.''

He said the audience for the sports channel was larger than the number of Prism subscribers, 340,000, might suggest because many people might pay an extra $1 or so a month to watch their home teams even if they would not pay $12.

The cable turf war ended last week after Comcast reached agreements in a complicated series of deals with Rainbow and its partner in Prism and SportsChannel, the Fox/Liberty Networks. Under their agreements, Prism will close Sept. 30 and be replaced on many cable systems by Starz, a premium movie channel owned by Liberty Media. SportsChannel will go dark Sept. 30. Its designated successor is Comcast SportsNet.

Comcast also agreed to run two hourlong daily news shows from Fox Sports and to use a new service created by Rainbow and Fox/Liberty to book national advertising for its network.

Some Phillies, Sixers and Flyers games are expected to remain on broadcast television. The Eagles games are covered by a national contract involving the National Football League and Fox.

Williams, the head of Comcast SportsNet, would not discuss expected revenues and profits, but industry sources and simple math suggest that the channel hopes to generate $45 million in fees from cable companies and their subscribers - about 50 percent more than the roughly $30 million Prism and SportsChannel earned from subscribers - and up to $10 million in advertising.

Prism had 340,000 subscribers paying about $12 a month, half of which went to the local cable company. SportsChannel, which ran in 2.2 million homes, charged cable companies between 25 and 35 cents a month for each.

The new channel ``gives you much brighter possibilities on the advertising side of the ledger,'' the University of Denver's Wirth said. ``It will be the most watched programming on any of the cable channels in Philadelphia when you have a local sports team . . . doing well.''

Along with higher revenues, SportsNet may have lower expenses than Prism. It will not have to pay the $6 million to $10 million a year in movie rights Prism paid.

And as two-thirds owner of the SportsNet channel and two-thirds owner of the Flyers and the Sixers, Comcast will pay millions of dollars in TV rights that will flow right back into its own properties - the teams. Cable rights to Sixers, Flyers and Phillies games totaled about $20 million for Prism and SportsChannel.

In the end, Prism and SportsChannel earned about $2 million to $3 million a year, a Prism source said. A look at the numbers suggests Comcast will do much better.

Bair, of Rainbow Sports, said Comcast's joint ownership of the Sixers, Flyers and the sports channel resemble the situation in several cities. In New York, Rainbow's parent company, Cablevision Systems, owns MSG Network and two of its featured teams, the Knicks and Rangers.

``What they're doing there [in Philadelphia] is really the wave of the future,'' Bair said. ``In the next 10 years, you will see most teams and venues in this country owned by media companies.''

Aligning themselves with a media company may be the best way for teams to raise enough money to deal with skyrocketing salaries, he said.

Williams, of Comcast SportsNet, said cable subscribers have to remember that Comcast has invested millions in the teams and in developing original programming.

``It's not like we're creating something here that will just create a barrel of money,'' he said. ``We're spending a lot here for something that everybody will be very happy with - the cable subscribers, the teams, the cable operators. What we hope is it's a win-win situation for everybody.

``And,'' he added, ``we don't have any objection to making a profit, either.''

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