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NFL, Cable Dispute May Limit Audience for Network's First Game

By Aaron Kuriloff

Nov. 22 (Bloomberg) -- The National Football League probably won't resolve its pricing disputes with three of the biggest U.S. cable carriers in time to have the first live game on its network seen by most cable customers in New York and Los Angeles, a network spokesman said.

Talks with Cablevision Systems Corp., Time Warner Inc. and Charter Communications Inc., which have a combined 21.6 million subscribers, probably won't yield an agreement by game time tomorrow night, said Seth Palansky, a spokesman for the NFL Network.

The game between the Kansas City Chiefs (6-4) and the Denver Broncos (7-3) is the first of eight live games scheduled for the three-year-old NFL Network. The league, which probably gave up $400 million in network television rights fees to keep the games, has the power to fight the cable companies, said Barry Frank, a senior vice president at International Management Group, a Cleveland-based sports, entertainment and media company.

``The beauty of the NFL is that they have enough money to stand strong,'' Frank said at a sports industry seminar in New York last week. ``It's not like some new networks.''

Two other games tomorrow in the NFL, the most-watched U.S. sport, will be carried as usual on over-the-air television -- Miami at Detroit on CBS and Tampa Bay-Dallas on New Corp.'s Fox.

The NFL has reached agreements with 173 cable carriers, Palansky said. Excluded are Cablevision, with about 3.1 million subscribers in New York, the nation's No. 1 market; Time Warner, with about 1.4 million in New York, 1.9 million in Los Angeles, the No. 2 market, and another 10.2 million in 33 states; and Charter Communications, with 6 million subscribers in 40 states.

Cable, Satellite

The NFL Network reaches 41 million of the 90 million U.S. cable subscribers, and until now has filled its time with programs such as interviews, training camp reports, features, preseason games and taped replays of regular-season contests. The league is scheduled to earn $3.73 billion this year in television rights fees from CBS, Fox, Walt Disney Co.'s ABC and ESPN, General Electric Co.'s NBC; and DirecTV Group Inc.

The NFL Network wants to be included in basic cable packages with channels such as ESPN or CNN, where it can reach the broadest possible audience. Basic-package channels charge a fee for each subscriber. Wider distribution also brings higher advertising rates.

Price Tripled

Maureen Huff, a spokeswoman for Time Warner, said the NFL Network's price for each subscriber more than tripled between 2005 and 2006, making it one of the five most expensive on basic cable at a time when it ranks 35th in popularity. The NFL is asking $137 million a year from Time-Warner, according to the company Web site.

Time Warner wants to place the NFL Network in a sports package, or tier, where its audience would include only those fans willing to pay extra, she said.

``They know we believe that this belongs on a sports tier,'' Huff said. ``As of today, they are not willing to negotiate that with us.''

Anita Lamont, a spokeswoman for Charter, said her company also wanted the NFL Network packaged with other sports channels. Cablevision declined to comment beyond a prepared statement that said the system already carried 50 regular-season NFL games and all playoff games.

In October, the NFL sued Comcast Corp., saying that when the company moved the NFL Network to a sports package in newly acquired systems it violated the terms of its contract with the league. Comcast's digital sports tier cost $5 a month, according to the company's Web site.

High Ratings

Palansky said that nine of the top 10-rated shows on cable stations this year have been NFL games, and 90 of the top-100 all-time, adding that the league had offered cable companies advertising time, including game-time spots, as part of its negotiations.

The U.S. Senate Judiciary committee brought representatives of Time Warner and the NFL to Washington for a 90-minute hearing last week, with Chairman Arlen Specter, a Pennsylvania Republican, asking if the NFL Network's games raised antitrust issues and how they might affect cable and satellite rates.

Frank said that cable providers eventually will split the difference with the league on the price for each subscriber, or ``sub.''

``This is a dance and it's only about the sub fee,'' Frank told a SportsBusiness Journal seminar on Nov. 15. ``The NFL Network is asking 80 cents a sub. They're prepared to offer about 25 cents a sub and eventually they'll end up at 40-45 cents a sub.''

To contact the reporter in this story: Aaron Kuriloff in New York at akuriloff@bloomberg.net

Last Updated: November 22, 2006 12:56 EST

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