Comcast, Big Ten reach pay-TV deal

Posted: June 19, 2008

The nation's biggest cable company and the Big Ten Network announced a deal today that will put the new college-sports channel in millions of Comcast Corp. homes in Pennsylvania and other states.

The new 24-hour network, which broadcasts 400 live games a year, will launch on Comcast on Aug. 15, in time for Penn State football. Comcast customers in Southeastern Pennsylvania must have digital service to see the games. Comcast could not say today how customers in South Jersey would be able to see the channel. It could be available on a digital package or sport tier, but a decision had not been made yet.

Replays, condensed games and highlights for the Nittany Lions, Buckeyes, Boilermakers, Hoosiers, Wolverines and other Big Ten squads will be available on video on demand and Comcast's Internet portal, Comcast.net, the organizations said.

The compromise deal ends a bruising and public dispute between the Big Ten and Comcast that focused on the soaring cost of sports entertainment for pay-TV customers, and on Comcast's power to make or break a new entertainment network with its huge reach into the homes of almost 25 million subscribers.

The Big Ten already has a signed carriage deal with the leading satellite-TV provider DirecTV, but it needed to nail the deal with the giant Comcast to compel other cable companies to jump on board.

Comcast and other cable companies say sports programmers are jamming through double-digit rate increases each year. The carriers have to swallow those costs, which erodes profit margins, or pass them on to consumers.

Comcast feared that a deal with the Big Ten would open the door for other college conferences to launch 24-hour sports channels, which would further drive up costs.

The Big Ten countered that Comcast wouldn't sign a deal because the Philadelphia company didn't own at least part of the new network, and it was treating the new network differently than Comcast's own sports networks, Versus and the Golf Channel, which have limited audiences and low ratings.

The two organizations toned down their rhetoric to work on a deal in recent months, as pressure rose to reach agreement before the next college football season.

"We are very pleased," Madison Bond, Comcast's executive vice president of content acquisition, said in a statement.

The Big Ten Network's president, Mark Silverman, said the new network now would be available to more than two-thirds of the homes in the eight Big Ten states. "It's an exciting day for us," he said. "I'm building for the long haul, and what this does is allow us to have a viable business."

Comcast will pay monthly about 70 cents per subscriber to carry the Big Ten Network - about $42 million a year. The deal is for seven to 10 years, sources say.

The Big Ten Network accepted a 35 percent discount on the $1.10 per-subscriber fee it first proposed to Comcast, sources close to the negotiations said.

"We thought it was a fair price on fair terms," Bond said in a phone interview.

Comcast customers won't see their bills increase in August to pay for the new network. But the cost of the Big Ten Network likely will be passed on to consumers in December or January, when their new cable rates come out.

At 70 cents, the Big Ten Network is a reasonably priced regional sport network when compared with other sports networks, according to data from SNL Kagan, a media and communications research company.

ESPN is the most expensive channel in the cable lineup and cost operators $3.26 per subscriber each month in 2007, according to figures from SNL Kagan.

On a regional level, the per-subscriber cost for Comcast SportsNet Philadelphia, which carries the Phillies, 76ers and Flyers, was $1.97 a month in 2007; the per-subscriber cost for the YES network, which broadcasts the New York Yankees and the New Jersey Nets, was $2.15 a month.

In its largest concession to the Big Ten, Comcast agreed to carry the new network on a broad-interest channel package in the states with Big Ten colleges, instead of its more targeted and expensive sports-only package that costs an additional $5 a month.

Comcast will give exposure to the new network by previewing it during upcoming college football and basketball seasons on its affordable enhanced basic package in the Big Ten states. After basketball season, Comcast will relocate the channel to the digital package.

Comcast will not preview the Big Ten Network in the Philadelphia area and will carry it right away in the digital package. This has upset Penn State graduates such as Travis Kokoska, 36, who said he believe the Philadelphia area should not be treated differently from other parts of the Big Ten region. There are about 70,000 Penn State alums in the Philadelphia area, according to the Penn State Alumni Association.

"In the Philadelphia area, it should be a basic channel," Kokoska said.

Comcast has five million pay-TV customers in seven Big Ten states - Michigan, Wisconsin, Illinois, Ohio, Indiana, Pennsylvania and Minnesota. It has no cable systems in Iowa, the eighth.

"Comcast used their leverage to get a good deal," said Derek Baine, senior analyst at SNL Kagan. "The Big Ten gets carriage on a big operator like Comcast, which is difficult," he said.

Comcast also may have felt pressure to reach a deal for competitive reasons, Baine said. The Big Ten Network is "on DirecTV and EchoStar. You have to keep up with the Joneses or you'll lose customers to satellite," he said.


Contact staff writer Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com.

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