- Sep 8, 2003
(Variety) NEW YORK - Cox Communications has engineered a six-year renewal of the Fox regional sports networks within Cox markets, agreeing to offer the channels to all of its subscribers.
The parties declined to discuss financial details, but Cox pays an average monthly license fee to Fox of about $1.30 a subscriber, a price that will go up by between 7% and 10% a year over the life of the contract. That's a significant difference from the 35% increases in certain markets that Cox said Fox Sports was originally floating two months ago.
But the $1.30 tariff still makes the Fox regionals Cox's second most expensive program service, although well behind No. 1 ESPN, which charges Cox a monthly subscriber feel of $2.61 a subscriber.
Cox is caught up in a bruising public skirmish with ESPN, blowing the whistle on what it claims are exorbitant network prices. ESPN has battled back, arguing, for example, that cable systems reap a dollar bonanza from the two minutes an hour ESPN gives to cable systems for sale to local advertisers.
The contract with ESPN expires in March, and Cox is fighting the 20%-a-year hikes that the network says are necessary to offset the costs of paying billions of dollars a year in rights fees for games of the NFL, the NBA, Major League Baseball and the NHL, as well as countless other sports events.
Shifting to the Fox Sports deal, Cox's new contract will allow it to continue carrying the regionals in systems reaching 3.3 million of the company's total of 6.3-million subscribers. The key Cox markets are Phoenix and Tucson, Ariz.; Oklahoma City, Okla.; New Orleans and Baton Rouge, La.; Omaha, Neb.; San Diego, Calif., and Macon, Ga.
The original contract between Fox Sports and Cox expired Dec. 31. John Hill, an analyst with SoundView, said Wall Street was looking closely at the deal: If Cox had failed to do the renewal, and Fox had pulled its sports regionals from the Cox systems, then the satellite competitors to Cox would've had a field day. DirecTV and Echostar would've bankrolled a marketing blitz in those Cox markets aimed at inducing sports fans to cancel their cable subscriptions and spring for satellite dishes.
Of course, the same aggressive campaign would take place if Cox couldn't reach an agreement with ESPN.
The announcement of the Cox deal came one day after Comcast, the largest cable operator in the U.S., with more than 21 million subscribers, said that it would set up Comcast Sports Net Chicago, a regional network, to carry the games of the four Chicago-based professional sports teams: the White Sox and Cubs of MLB, the Bulls of the NBA and the Blackhawks of the NHL. This network will kick off Oct. 1.
The loss of these teams puts in serious jeopardy the fate of Fox Sports Net Chicago, a joint venture of Fox and Chuck Dolan's Rainbow Sports, which currently schedules these games. A spokesman for Rainbow said Fox Sports Network Chicago "won't throw in the towel" on Oct. 1, relying chiefly on college games and nationally distributed programming created by Fox and Rainbow.