TV negotiations hampering Fox Sports 1, broadcaster of Utah vs. Utah State football game
David Duprey, AP
When the University of Utah and Utah State take the field on Aug. 27 in Rice-Eccles Stadium, the contest may feature an antagonizing challenge football fans in the state of Utah have seen many times before: finding a friend whose TV package actually carries the game.
Then again, it may not.
Mark it down as a definite TBD.
The 2013 "Battle of the Brothers," the national kickoff to the 2013 college football season, is scheduled to be the very first college football game ever broadcast on Fox Sports 1, a soon-to-be christened network aiming to be the latest and most significant challenger to juggernaut ESPN's dominance. It is supposedly set to launch into 90 million homes across the nation on Aug. 17, 2013.
Not so fast. Fox and three of the nation's four major cable and satellite distributors are hung up in negotiations with only a month before the channel is set to launch. Time Warner Cable, DirecTV and Dish Network, representing 45 million viewers nationwide, have all put Fox Sports 1 on hold. The only major distributor in Utah to pick up so far is Comcast.
It's not like Utahns have never had to deal with such a problem before. BYU and Utah fans certainly remember the headaches the now-defunct The Mtn. Network caused. Even today, fans of Utah athletics can't see all of Utah's contests if they subscribe to DirecTV — the satellite provider doesn't carry the Pac-12 Networks.
What's the difference this time around? By comparison, The Mtn. was small potatoes, a conference-owned, regional cable channel with no presence in a market larger than Denver.
This is Fox, a behemoth national media conglomerate whose parent company, News Corp., grew so large that it split into two different companies, one composed of primarily publishing properties that retained the News Corp. name, the other of broadcast and film properties that were renamed 21st Century Fox Inc.
Fox owns a programming network that distributes television programming to affiliate terrestrial broadcasters nationwide — KSTU is Utah's local affiliate — several regional cable properties and several national cable channels, among which are FX, FX Movie Channel, Fox Business Network, Fox News Channel, Fox Deportes, Fox Soccer Channel, National Geographic Channel, Nat Geo Wild, Speed and Fuel TV.
If the last two on that list don't look familiar, don't be surprised. Speed and Fuel TV are undergoing a complete transformation in order to become Fox Sports 1 and Fox Sports 2, respectively.
Because Speed and Fuel TV are already widely distributed at an inexpensive price — 22 cents per customer per month, according to SNL Kagan — it is anticipated that the revamped, sports-oriented version of the networks would be instantly available on Aug. 17, 2013, in 90 million homes for much less than self-proclaimed Worldwide Leader in Sports ESPN charges per customer per month, and they charge a whallop.
ESPN pioneered the cable distribution model by becoming the first cable network to charge a carrier a small fee per customer per month. That fee has ballooned over the years. According to data provided by SNL Kagan, ESPN charges between $4.75 and $5 per customer per month, and current projections are that the figure will grow to $6.95 by the end of 2016.
As Fox has begun to shop the rates for the new network, they have been very competitive. Some reports peg the opening figure at 80 cents. According to SNL Kagan, Fox aims to raise the fee to more than $1 per customer per month — five times Speed's fee — by the end of 2015. That means $1.7 billion in revenue, more than $500 million in cash flow and a 30 percent profit margin.
Can anyone blame Time Warner, DirecTV and Dish for blinking? Raising the price to $1 from 22 cents represents a price increase of 354 percent, and these companies still pay for ESPN.
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