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Fox Sports 1 Still Seeks Half the Subscribers It Pledged

Aug. 13 (Bloomberg) -- Twenty-First Century Fox Inc. has yet to strike deals to get Fox Sports 1 in the channel lineup of three of the biggest U.S. pay-TV companies, days before the challenger to ESPN is scheduled to debut.

DirecTV, Dish Network Corp. and Time Warner Cable Inc. have a total of about 46 million subscribers -- about half the number Fox has promised investors it will reach with the new channel. Negotiations, confirmed by spokesmen for the pay-TV companies, are over fee increases Fox is seeking in exchange for replacing motor-sports channel Speed with the new network.

The talks continue even as the top executives of the pay-TV carriers publicly lament the rising cost of sports programming. Cable and satellite operators pay about 31 cents a month per subscriber for Speed, according to research firm SNL Kagan. Fox Sports 1 will probably earn about 80 cents per subscriber per month in 2014, Kagan estimates.

“Somebody, sometime may decide that sports isn’t something they have to have,” Dish Chairman Charlie Ergen said last week. “They can have a materially lower price per customer. While they’ll lose customers initially, they will gain customers long term.”

Darris Gringeri, a DirecTV spokesman; Bob Toevs, a Dish spokesman; and Maureen Huff, a Time Warner Cable spokeswoman, all said negotiations for a carriage deal are in progress.

The new 24-hour sports channel “will be available in up to 90 million homes at launch,” Fox Sports co-President and co-Chief Operating Officer Randy Freer said at last week’s Investor Day.

Speed Stuck

If the pay-TV operators don’t strike a deal for Fox Sports 1 by Aug. 17, New York-based Fox will continue to air previously recorded Speed programming until an agreement is reached or the distributor’s contract with Speed runs out.

“We are working to have wide distribution at launch,” Lou D’Ermilio, a Fox Sports spokesman, said in an interview. He declined to comment on specific negotiations.

Comcast Corp., Cox Communications Inc., Verizon Communications Inc.’s FiOS, AT&T Inc.’s U-verse, Cablevision Systems Corp., Charter Communications Inc. and Suddenlink Communications have reached deals to carry Fox Sports 1, representing about 45 million subscribers.

Fox Sports 1 will include sports-centric shows, including one hosted by Regis Philbin, and will show live sports including college football, college basketball, Major League Baseball and soccer’s 2018 and 2022 World Cups.

ESPN, owned by Walt Disney Co., has distribution in 98 million households. The network charges pay-TV operators about $5.50 a month per subscriber, according to Kagan.

Time Warner Cable is engaged in a separate standoff with CBS Corp. over fees to carry its affiliates in New York, Los Angeles and Dallas. The cable company, based in New York, began blacking out CBS in those markets on Aug. 2.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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