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Knicks Fans: Hoopless, Hopeless in New Year

Time Warner-MSG scrap puts damper on New York sports

Melo Out: Time Warner Cable-MSG battle has Knicks fans crying foul. Photo credit: Jeff Gross/Getty Images

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Time Warner Cable subscribers in New York are on the verge of losing MSG, the regional sports network that serves up a steady diet of Knicks, Rangers, Islanders and New Jersey Devils games.

MSG’s carriage deal with the cable operator is set to expire as the ball drops in Times Square, and despite the approaching deadline, sources say that negotiations essentially have ceased.

“Unfortunately, we have not had any recent, meaningful discussions with Time Warner Cable,” MSG said in a statement. “They have rejected every one of our fair proposals for nearly two years and are unwilling to value our programming in the same manner as other distributors or even engage in good faith negotiations on behalf of their customers.”

Sources said a buzzer-beater deal to keep MSG lit up in New York is unlikely. “Knicks fans will almost certainly miss out on the Raptors game [Jan. 2],” said one executive with insight into the situation.

For its part, Time Warner Cable said the decision to pull the plug on the RSN rests wholly on MSG’s shoulders. “We will not remove MSG from our New York cable systems,” said Mike Angus, senior vice president, content acquisition for Time Warner Cable, in a statement. “That ball is in MSG’s court, so these channels will come off only if MSG pulls the plug.”

Angus said the operator offered to continue to carry MSG through the end of the 2011-12 NBA and NHL seasons, at a 6.5 percent increase—the rate offered by the RSN earlier this summer.

According to Time Warner Cable, MSG is now asking for a 53 percent increase in its carriage fee, an assertion the network characterized as factually inaccurate. Per SNL Kagan estimates, operators pay $4.91 per sub per month for the right to carry the RSN’s feeds—$2.63 for MSG and $2.28 for MSG Plus.

The costs associated with delivering sports programming have made RSNs some of the priciest channels on the cable dial. In New York, YES Network (Yankees/New Jersey Nets) costs operators $2.99 per sub per month, while SportsNet New York (Mets) carries a fee of $2.55.

On average, the cost of carrying a nationally distributed basic cable network is 26 cents per sub per month. Sports king ESPN is the most expensive channel on the dial, with an average affiliate fee of $4.69.

The carriage fee brawl comes on the heels of Time Warner Cable’s blockbuster 20-year deal to create a pair of RSNs for the Los Angeles Lakers. While terms of the agreement were not disclosed, the Lakers are expected to rake in some $3 billion in rights fees, which works out to around $2.5 million per game through 2033.

“Based on Time Warner Cable’s recent activity in the sports marketplace, [it appears that it] places a high value on sports programming and recognizes the importance of programming such as ours to its customers,” said Mike Bair, president, MSG Media. “It’s difficult to understand why Time Warner Cable refuses to place a value on our networks consistent with that recognized by other distributors.”

MSG reaches 2.8 million subs in New York state, of which approximately 1.8 million reside in the greater New York metropolitan area. The service is also available in Time Warner’s Rochester, Syracuse, Albany and Buffalo, N.Y., footprints.

Home to the Sabres and within spitting distance of Canada, Buffalo is a particularly hockey-mad burgh. MSG last week bought a full-page ad in The Buffalo News sports section bearing the headline, “Time Warner Cable Might Cancel Your Sabres Games.” Along with a photo of Sabres goalie Ryan Miller, the ad directed readers to KeepMySabres.com, an MSG-backed website providing information on how to switch to the satellite service DirecTV or Verizon’s FiOS TV. (The No. 2 DBS provider, Dish Network, dropped MSG in late 2010.)

The Sabres put up big numbers in its home market. On the night before Thanksgiving, the Buffalo-Boston tilt drew a regional 12.1 rating/20 share on MSG. Ratings for Sabres telecasts are up 14 percent from a year ago. The new-look Knicks are also drawing a crowd. The Dec. 28 Golden State game notched a 3.2 HH rating on MSG, triple the 2010-11 average for West Coast games.

In New York, MSG has run crawls alerting viewers to the impending blackout. Time Warner has fired back with a series of spots on its news channel, NY1, and in local buys on ESPN.

Two weeks ago, Time Warner pulled MSG’s music channel, Fuse, from its lineup. MSG officials had hoped to bundle Fuse and the RSNs together in a single package, but the cable provider wouldn’t bite.

Fuse in 2011 averaged just 47,000 total viewers in prime, making it one of the least-viewed cable networks on the dial. Per Nielsen, only Fox Soccer (45,000), VH1 Classic (44,000) and Fuel TV (15,000) had a harder time drawing an audience. In the 18-49 demo, Fuse fell 17 percent to 25,000.

With an average affiliate fee of just 6 cents per sub per month, Fuse is hardly a drain on an operator’s budget. Prior to getting yanked from Time Warner’s roster, the music net reached some 59 million homes in 2011.