- Sep 8, 2003
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ESPN, the popular cable sports network owned by Walt Disney Co., is tired of being blamed for rising cable television bills, and today it plans to fight back against its most vocal critic, Cox Communications Inc.
In a study to be released during a morning speech at the National Press Club, George W. Bodenheimer -- president of ABC Sports, which oversees ESPN -- will argue that rising rates have been caused by the cable industry's costly digital upgrade more than by higher programming costs, as Cox maintains.
The study, based on data from the Federal Communications Commission and media analysts , says that cable bills have risen largely because of the more than $75 billion the cable industry has plowed into infrastructure updates in recent years, converting analog systems to digital -- which adds more channels -- and adding high-speed Internet and some phone service.
The study shows that in 2002 the cable industry paid $18.2 billion in capital costs, $19.7 billion in loan interest for the capital costs and $10.2 billion for basic programming costs, which includes the purchase of channels such as ESPN. It said that "while the costs of producing and acquiring programming are rising for cable networks and cable operators alike, basic cable programming costs account for only about 20 percent of the cost increases faced by cable operators in recent years."
ESPN's response comes amid rising concern about escalating cable bills. A highly anticipated report on cable rates by the General Accounting Office, requested by Sen. John McCain (R-Ariz.), is set to be released soon. Industry analysts say that rising cable rates have driven many consumers to buy home satellite systems, such as DirecTV and Dish Network, which now account for 20 percent of the pay-television market.
Over the past few weeks, Cox executives have railed against sports programming costs, saying ESPN and Fox Sports charge Cox and other cable companies -- such as Comcast Corp. and Time Warner Cable Inc. -- too much to carry the ESPN channels, among the highest-rated on television. ESPN charges Cox $2.61 per subscriber per month to carry the sports channels. By comparison, Cox said, the seven most watched channels on its system charge $2.55 per subscriber combined.
James O. Robbins, Cox chief executive, has threatened to drop the sports channels from his cable systems, taking NFL, NHL, NBA and college games away from his 6 million subscribers. The contention comes as Cox and ESPN are negotiating a new contract. ESPN says Cox is using the programming costs as a dealmaking tool.