June 16, 2008

Big10 Network coming to Comcast??

After two years of very public bickering, it appears that Comcast and the Big 10 Network may have reached a deal to bring the network to... you know... actual people in the Big 10 market.

"For all intents and purposes, it's done," one source close to the negotiations said Sunday.

Technically, it's not done. But sources expect the deal will be completed and unveiled this week.

The deal will nearly double the number of homes that can access the BTN, from 30 million to 55 million. In the eight-state Big Ten footprint, the number will surge from 6.5 million to about 13 million.

That still leaves out about 5.5 million homes in the Midwest, but officials hope the Comcast deal will provide a framework for negotiations with prominent cable carriers Time Warner, Mediacom and Charter.

The Big 10 Network -- who apparently will lose their game of chicken with Comcast -- is now willing to accept an offer of 70-80 cents per household, down from the $1.14 per household that had been such a sticking point for two years.

Comcast, which had been losing customers to DirecTV, the Dish Network and RCN Cable, will have video-on-demand features that will allow customers to access their favorite team's greatest games and replays of condensed, "snap-to-snap" games, according to sources.

The BTN completed the deal without caving on its central demand: that the channel be placed on expanded basic, rather than a sports tier, in the eight-state footprint. Only Philadelphia will be excluded.

Comcast can eventually move the channel to a more exclusive digital level of service in some systems.

UPDATE: The following has been added to this original post as a point of clarification for some who may incorrectly believe that this deal can -- in any way -- represent a win for the Big 10 Network.

For clarification, the Big 10 Network doesn't *add* 55 million homes by inking Comcast, rather they bring their total to roughly 55 million. In other words, the B10N is adding 25M homes.

Again, in last year's linked post, the B10N was hell-bent on $1.14 per household. Period. No if's and's or but's accepted.

Under the B10N's WE WILL NOT BUDGE stance, the Comcast subscribers would have been valued at $28.5 million (25M * $1.14). Instead, the B10N is signing a deal -- as linked from the Chicago Tribune -- at roughly $0.70 - $0.80 cents. Even using the Tribune's most generous estimate ($0.80 per household), that's a contract worth just $20 million.

Now... I don't know about you but where I come from, having left $8.5 million dollars per year on the table isn't just losing on a deal, it's getting your sweet pale @ss handed to you by a beast.

Factor in that Comcast will be at its own discretion to provide B10N on upsell only plans (digital cable, etc), that's not a lot of "win" on the Big 10 Network side of the table.

What will be interesting now is to see how much of a ripple effect this pricing agreement will have downmarket. While Comcast certainly commands a larger discount by virtue of its marketshare footprint, I think the B10N will have some significant difficulty getting their $1+ price to hold when the DirecTV/Dish and other local provider agreements come due.

So... long story short... that's how the Big 10 Network lost their game of chicken.

Comments:

Big10 Network coming to Comcast??
After two years of very public bickering, it appears that Comcast and the Big 10 Network may have reached a deal to bring the network to... you know... actual people in the Big 10 market.

"For all intents and purposes, it's done," one source close to the negotiations said Sunday. Technically, it's not done. But sources expect the deal will be completed and unveiled this week. The deal will nearly double the number of homes that can access the BTN, from 30 million to 55 million. In the eight-state Big Ten footprint, the number will surge from 6.5 million to about 13 million. That still leaves out about 5.5 million homes in the Midwest, but officials hope the Comcast deal will provide a framework for negotiations with prominent cable carriers Time Warner, Mediacom and Charter.

The Big 10 Network -- who apparently will lose their game of chicken with Comcast -- is now willing to accept an offer of 70-80 cents per household, down from the $1.14 per household that had been such a sticking point for two years.

Comcast, which had been losing customers to DirecTV, the Dish Network and RCN Cable, will have video-on-demand features that will allow customers to access their favorite team's greatest games and replays of condensed, "snap-to-snap" games, according to sources. The BTN completed the deal without caving on its central demand: that the channel be placed on expanded basic, rather than a sports tier, in the eight-state footprint. Only Philadelphia will be excluded. Comcast can eventually move the channel to a more exclusive digital level of service in some systems.

UPDATE: The following has been added to this original post as a point of clarification for some who may incorrectly believe that this deal can -- in any way -- represent a win for the Big 10 Network.

For clarification, the Big 10 Network doesn't *add* 55 million homes by inking Comcast, rather they bring their total to roughly 55 million. In other words, the B10N is adding 25M homes. Again, in last year's linked post, the B10N was hell-bent on $1.14 per household. Period. No if's and's or but's accepted. Under the B10N's WE WILL NOT BUDGE stance, the Comcast subscribers would have been valued at $28.5 million (25M * $1.14). Instead, the B10N is signing a deal -- as linked from the Chicago Tribune -- at roughly $0.70 - $0.80 cents. Even using the Tribune's most generous estimate ($0.80 per household), that's a contract worth just $20 million. Now... I don't know about you but where I come from, having left $8.5 million dollars per year on the table isn't just losing on a deal, it's getting your sweet pale @ss handed to you by a beast. Factor in that Comcast will be at its own discretion to provide B10N on upsell only plans (digital cable, etc), that's not a lot of "win" on the Big 10 Network side of the table. What will be interesting now is to see how much of a ripple effect this pricing agreement will have downmarket. While Comcast certainly commands a larger discount by virtue of its marketshare footprint, I think the B10N will have some significant difficulty getting their $1+ price to hold when the DirecTV/Dish and other local provider agreements come due. So... long story short... that's how the Big 10 Network lost their game of chicken.