Wait ‘Til Next Year: When Will Comcast and The Big Ten Network Reach an Agreement?

I. Introduction

When the college footballs season kicks off in August, Midwestern
cable customers may finally get the chance to see what all the fuss
over the Big Ten Network (BTN) is about.  After over a year of tense
negotiations, published reports indicate that the BTN and Comcast are
nearing a deal to air the channel on the Midwest's largest cable
provider.[1]  Upon becoming the first conference to announce the
creation of its own cable station, the Big Ten counted on the appeal of
being able to guarantee its fans the ability to see nearly every game
played by conference teams.[2]  When negotiations commenced with
Midwest cable providers, however, Comcast and its competitors balked at
the BTN's high asking price and broad distribution demands.[3]  The
ensuing stalemate prevented most Midwest fans who do not have satellite
cable from viewing the much-anticipated Ohio State-Wisconsin football
game in November.[4]  Additionally, the Wisconsin-Indiana and
Wisconsin-Purdue men's basketball games in February were also
unavailable to most fans within the Big Ten region.[5]

Months of public sparring between the BTN and Comcast seem to have
finally given way to a compromise.  As major sports leagues are
trending toward cable broadcasting, the anticipated agreement between
Comcast and the BTN is sure to impact fans and cable customers
nationwide, while setting a precedent for future contractual
negotiations between cable providers and athletic leagues.

II. The Dispute

When the BTN launched its first broadcast on August 30, 2007, most
of the major cable carriers in the Big Ten region did not carry the
network.[6]  Comcast has nearly six million subscribers in the Midwest,
and is the dominant cable provider in five of the Big Ten's eight
states (Illinois, Indiana, Michigan, Minnesota, and Pennsylvania).[7] 
Charter Communications (Wisconsin), MediaCom (Iowa), and Time Warner
(Ohio) also do not carry the BTN, though Big Ten officials think the
impending agreement with Comcast will pressure the holdouts to follow
suit.[8]  Currently, satellite providers DirecTV and Dish Network,
along with 40 smaller cable companies are the only providers of the BTN
to fans in the Midwest.[9]

The two sides have long disagreed over the price and distribution of
the network.  BTN officials wanted to charge subscribers nearly $1 per
household per month and have the station included on the extended basic
cable package.[10]  Comcast strongly disagreed with the notion that all
subscribers should have to pay for the BTN.[11]  Comcast officials,
citing that Big Ten teams reside in only eight states, called the BTN a
"niche" channel that belongs on its sports tier, which subscribers must
pay an extra $6.95 per month to receive.[12]  A Wisconsin
telecommunications professor agreed with Comcast, calling the BTN
"greedy and anti-consumer."[13]

In the proposed compromise, Comcast has backed off its plans to put
the BTN on the sports tier.[14]  Reportedly, the BTN will be available
on the basic package for more than 90 percent of Comcast subscribers,
while those on the fringes of Big Ten territory will only have it
available on the sports tier.[15]  While some consumers appear to have
switched providers in order to get access to the BTN, it is unknown
whether there was enough movement to pressure Comcast into the
agreement.[16]

III. Legal Precedent

While insiders close to the negotiations think the framework is in
place, most observers feel that it could take weeks or months for
lawyers on both sides to work out the details.[17]  Presumably, both
parties want to avoid legal battles similar to the ongoing litigation
between Comcast and the NFL Network.  In a scenario very similar to
that involving the BTN, the National Football League (NFL) formed its
own cable network and contracted with Comcast for its
distribution.[18]  Subsequently, the NFL Network filed a breach of
contract suit when the cable provider removed the station from the
basic cable package and placed it on the sports tier.[19]  Although the
lower court granted summary judgment to Comcast, the New York Court of
Appeals reversed the decision and ruled the case must go to trial.[20] 
Comcast believed it had the conditional right to switch the NFL
Network's status based on the language of the preliminary agreement and
subsequent contract.[21]  The Court of Appeals, however, examined the
documents and found the language on the matter to be ambiguous.

The feud between the NFL Network and Comcast expanded when the cable
company filed a separate suit against the network in December
2007.[23]  In the new action, Comcast claims that the NFL Network has
breached the contract by allegedly instituting a marketing campaign
aimed at convincing cable subscribers to switch from Comcast to other
providers.[24]  Litigation on this new suit has yet to commence.

IV. Conclusion

In the aftermath of the NFL Network dispute, Comcast has undoubtedly
placed a greater emphasis on negotiating and drafting clearer
contracts.  Of equal importance is the effect that the BTN deal will
have on future talks between cable providers and athletic leagues.  If
and when the current proposal is consummated, other leagues that desire
to start their own cable networks will certainly demand placement on
basic cable.  Even with the BTN agreement as a template, lawyers on
both sides will be expected to spend extra time to expressly assert
detailed constructions of performance and remedies within the
contract.  Thus, even if future negotiations are less hostile, the
process could still be lengthy.

From a consumer's perspective, putting new sports networks on basic
cable will likely result in a rate increase to all subscribers, whether
or not they are sports fans.  While BTN proponents argue that cable
subscribers already pay for many channels they do not watch, the
problem is more acute with sports channels because of the relatively
high prices they command.  At the very least, the prolonged dispute
between Comcast and the BTN will make leagues cognizant that they
cannot expect to impose their terms on cable companies.

The BTN saga has also compelled at least one league to seek an
alternate method of increasing exposure.  This past season, the Horizon
League, an NCAA mid-major conference, formed the Horizon League Network
(HLN).[25]  The HLN broadcasts all conference men's basketball games
free over the internet, and league commissioner Jonathan LeCrone states
that over 500,000 people have viewed the broadcasts as of
mid-February.[26]  LeCrone says that the HLN gives the conference the
ability to offer all of its games to the public at a fraction of the
price the league would pay to put a handful of games on cable
networks.[27]  Additionally, the league maintains the flexibility to
schedule its games simultaneously, whereas the BTN forces the league to
stagger all of its starting times so there are no broadcast conflicts.

Offering a broadband service like the HLN should appeal to smaller
leagues and viewers alike, at least as long as it is being offered for
free.  The success of the HLN gives other leagues a cheaper option to
consider, and may affect the balance of bargaining power between
leagues and cable companies.  If future negotiations mirror the same
level of hostility as felt between Comcast and the BTN, expect
entrepreneurial leagues to explore broadband service as a viable
alternative to a cable channel.

Sources

[1] Teddy Greenstein, Comcast, Big Ten Network Close To Deal, Chi. Trib., March 1, 2008, available at http://www.chicagotribune.com/news/chi-11-btn-chicagomar11,0,732376.story.

[2] Id.

[3] Id.

[4] Ed Sherman, Big Ten Network, Comcast Continue Battle, Chi. Trib., Feb. 8, 2008, available at http://www.chicagotribune.com/sports/chi-08-sherman-big-ten-networkfeb08,1,2085942.story.

[5] Id.

[6] See Greenstein, supra note 1.

[7] Id.

[8] Id.

[9] Associated Pres, Big Ten, Comcast Battle Over New Network's Costs, ESPN, June 21, 2007, http://sports.espn.go/com/ncaa/news/story?id=2912394 (last visited March 22, 2008).

[10] See Greenstein, supra note 1.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] NFL Enter. v. Comcast Cable Commc'n, 851 N.Y.S.2d 551, 553 (Ct. App. 2008).

[19] Id.

[20] Id. at 551-552.

[21] Id. at 552-553.

[22] Id. at 555.

[23] Peter Lauria, Comcast Suit: NFL Network in Breach, N.Y. Post, Dec. 15, 2007, available at http://www.nypost.com/seven/12152007/business/comcast_suit_nfl_network_in_breach_167667.htm.

[24] Id.

[25] Kyle Whelliston, Horizon League Becoming a Bigger Player in Tournament Scene, ESPN, Feb. 12, 2008, http://sports.espn.go.com/ncb/columns/story?columnist=whelliston_kyle&id=3242164 (last visited March 22, 2008).

[26] Id.

[27] Id.

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