- Kristi Dosh, Sports Business
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A theory since Lin’s emergence is that growing discontent from Time Warner Cable customers will force the cable provider and the Madison Square Garden Network to reach a deal in their bitter dispute that has kept fans in much of the New York region from seeing the Knicks on MSG since Jan. 1.
But it likely will come as no surprise to the 4 million or so viewers affected that there’s a debate about whether Lin’s success will benefit one side over the other and thus help force a deal.
“I would say it actually put a lot of pressure back on MSG,” Eric Mangan of Time Warner Cable said on Mike Francesa’s WFAN radio show Wednesday in New York.
Not so fast, said Lee Berke, a media consultant who worked at MSG in the 1990s.
“The thing about [regional sports networks] is that the leverage you have is hometown fans,” he said. “They are mad about their teams. At the start of the season, no one was excited about what the Knicks were doing. Now, it’s a national phenomenon. Couple that with the fact the [New York] Rangers are doing well, and now the Knicks are on fire -- that’s substantial leverage for MSG.”
A spokesman for MSG said the two parties met this week, but he declined to comment on meeting details.
The issue is simple: MSG is seeking an increase in carrier fees -- the amount of money Time Warner will pay it for the rights to show network broadcasts. Time Warner thinks the increase being sought is too high.
Both sides have declined to discuss the rate that was being paid by Time Warner prior to the last contract’s end. Media research company SNL Kagan has 2012 rates for MSG Network and MSG Plus at $2.63 and $2.28, per cable subscriber.
But Berke said those rates are blended, meaning they include inner-market (within 75 miles) and the cheaper outer-market rates. Because Time Warner is inner-market and accounts for almost 30 percent of MSG’s market, he said MSG could be asking for a rate at or above the combined blended rate of $4.91.
That would put MSG higher than any other regional sports network, according to SNL Kagan. The most expensive regional sports network is Comcast SportsNet Washington at $4.02 per subscriber. YES Network, which at $2 to $3 billion is the highest-valued regional sports network, is $2.99. By comparison, ESPN was $4.69 in 2011 -- SNL Kagan expects it to rise to $5.06 this year.
When MSG and MSG Plus are separated, each falls closer to the average for regional sports networks. But having the channels offered up to carriers individually is not going to happen.
“MSG will force the package deal by putting certain games on one and other games on the other channel. They definitely mix them up so you need both channels,” said Berke.
Berke attributes MSG’s longevity -- it’s the oldest regional sports network -- and its location in New York as reasons for the high rates.
MSG’s Mike Bair said the network is asking Time Warner to pay market value. He told Francesa the deal MSG is offering Time Warner is comparable to what other carriers pay MSG, and not higher.
Time Warner has said publicly it would agree to pay a 6.5 percent increase for the MSG channels.
But for now – and despite Lin’s heroics – no deal seems in sight. Berke thinks there’s reason to be optimistic.
“When hometown fans don’t get their hometown sports, politicians get involved,” he said. “When it comes to sports programming, people will change their service based on availability. I think you’re going to start seeing people switching and politicians getting involved. In a relatively brief amount of time, you’re going to see them get closer to a deal.”