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Sunday, January 1, 2012
MSG-Time Warner breakdown sign of times

By Kristi Dosh

MSG Network’s announcement Saturday night that its programming -- including live coverage of the Knicks, Rangers, Sabres, Islanders and New Jersey Devils -- will be removed from Time Warner Cable is just the latest example of what’s become a seemingly regular battle between broadcasters and carriers.

The issue in each case: carriage fees -- the amount of money carriers or cable operators pay to networks to carry their programming. When those go up, cable bills usually rise, too, so cable companies try to hold ground to avoid angering subscribers.

The current rate for MSG and MSG Plus is about $4.65 per subscriber per month, according to media researcher SNL Kagan. A recent Wall Street Journal article called that rate higher than “almost any other regional sports network” and noted it had risen 70 percent in five years. By comparison, ESPN cost operators on average $4.69 per month in 2011.

Time Warner said MSG is seeking a 53 percent fee increase, much higher than a 6.5 percent increase the cable operator said it has been willing to pay. MSG disputes it asked for the 53 percent increase but has yet to make public what it has sought.

Time Warner said the problem is deeper than simply the rate for MSG, though. Time Warner spokeswoman Maureen Huff said a deal nearly happened at a 6.5 percent increase until MSG learned that Time Warner planned to drop the MSG-owned music channel FUSE. Time Warner said the network sought to double its rate if FUSE were dropped. MSG disputed that -- a spokesman called the allegations surrounding the FUSE issue “categorically untrue.”

Another item in dispute is whether Time Warner offered to continue carrying MSG through the current NBA and NHL seasons at a 6.5 percent increase. Time Warner said MSG declined the offer but MSG disputed the offer was made or declined.

The impasse affects some 2.8 million subscribers in the New York and New Jersey areas. Nearly 400 live games a year are broadcast on MSG.

“The decision to remove their programming from our lineup rests entirely with MSG,” said Time Warner spokesman Alexander Dudley. “By making that decision well in advance of the deadline, MSG has again shown that they are more interested in holding New York sports fans hostage than in negotiating a deal. Rather than engage in a war of words, they should come back to the table and get a deal done.”

MSG on Saturday night detailed the network’s value in its press release about the negotiations, pointing out that ratings for the Knicks were up more than 100 percent last season, the Rangers had a double-digit increase in viewers, and that the Sabres were the highest-rated American team in the NHL.

A number of communications from MSG have referenced Time Warner’s deal with the Los Angeles Lakers, reportedly worth $5 billion. MSG noted that deal again Saturday night and said “we expected that they would be eager to continue to deliver top New York sports programming to their customers, who are unfortunately caught in the middle of this dispute.”

But the comparison isn’t entirely apples-to-apples given Time Warner will be developing two regional sports networks, one in English and one in Spanish, with the Lakers as part of the new deal.