Fox Sports: Comcast Deal Unfair
Tom De Martini
Comcast’s gambit to significantly expand its regional sports programming by purchasing Washington, D.C.-based Home Team Sports (HTS) and Midwest SportsChannel (MSC) from New York-based Viacom hit a major snag July 21.
Affiliated Regional Communications, the holding company for Fox Sports Net, filed a breach of contract suit in a Delaware Chancery Court against the two parties. Fox Sports Net, a one-third partner with Viacom in HTS, claims its “tag-along” rights are violated in the pending sale.
The tag-along rights, say Fox officials, put the network on par with whatever majority partner Viacom obtains in any sale of assets. That, Fox officials argue, is not the case here.
“With HTS and MSC, we have carriage commitments to Fox programming through 2007,” says Tom Tyrer, head of corporate communications for Fox Sports Net. “Viacom traded two-thirds of its share in HTS for certain carriage fights of its programming through Comcast. By no means have we decided that we do or do not want to sell.”
Fox’s specific objection is that carriage fights do not possess a stated dollar figure. Therefore, the network says it has no idea what it would gain in a sale. “There’s not an empirical value on carriage,” Tyrer says. “It is invaluable, and you cannot put a price tag on it. We don’t know if we want to sell because we don’t know what assets are involved here.”
In the suit, the stated value of the carriage arrangement is approximately $150 to $160 million. The suit also states that Fox Sports Net offered Viacom $250 million to buy its two-thirds share of HTS outright and was rebuffed. HTS holds broadcast fights to the Baltimore Orioles, the Washington Capitals and the Washington Wizards.
The deal, consummated in mid-July, states that Comcast must carry Viacom’s MTV, VH-1, Nickelodeon, TV Land, Country Music Television and The Nashville Network programming on all its systems.
It also requires Comcast to drop networks it currently broadcasts and replace them with yet-unknown Viacom programming. Jenni Moyer, director-public relations at Comcast, says the company received the lawsuit July 24 and would have no comment on it.
“Having lost its bid (for HTS), Fox is now attempting through its suit to convert its right to sell into a right to buy,” a Viacom spokesman says.
The Comcast Network and its MSO would own cable systems in Philadelphia, Baltimore and Washington in addition to the broadcast rights for those cities’ professional sports teams. Comcast already owns the Philadelphia 76ers (NBA) and Flyers (NHL) outfight.
Industry speculation is the purchase of MSC from Viacom, which operates in Minneapolis and Milwaukee and carries broadcast rights for professional clubs in those cities, was obtained by Comcast for bargaining chips in other deals.
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