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Cable dispute means most fans can't watch games

3/22/2004 - Minnesota Twins

MINNEAPOLIS -- It's two weeks from the season opener and it
appears that most of the Minnesota Twins fans in the Twin Cities
won't be able to stay home this season and watch their team play
more than 100 games on television.

The 105 games scheduled for cable and satellite broadcast won't
be available to most Twin Cities residents because Twins-owned
Victory Sports One Network, which owns rights to the team's games,
has failed to secure deals with any of the major operators.

"We are not going to sit here and tell you that this is
unexpected," said Jim Pohlad, son of team owner Carl Pohlad.
"This is how these things go. We understood that at the beginning.
Just that it's not going to be pleasant."

So far, it hasn't been. Victory is not on the two largest cable
systems in the metropolitan area -- Comcast, which has 340,000
subscribers, and Time Warner, which has 210,000 -- or on the biggest
system outside the metro -- Charter, which has 270,000 subscribers.
Agreements also haven't been reached with Mediacom, which has
100,000 subscribers, and two satellite providers, DirecTV and Dish
Network.

The only certainty for subscribers to these services is that
they will be able to watch the 27 regular-season games on KSTC-TV
in the Twin Cities along with any national telecasts on the Fox and
ESPN networks.

Victory President Kevin Cattoor has had conversations with all
sides, but about the only thing that appears to be heating up is
fans' anxiety.

"If the Twins aren't on, I'm not going to be happy," said Tom
Swanson, coach of a traveling baseball team in Maple Grove and a
frequent Twins viewer. "I hold the Pohlads responsible. They are
asking too much money."

Cable operators agree, saying they won't pay Victory's
per-subscriber asking price of $2.20 to $2.30. They say that's too
much for a cable outlet with such limited programming. And, in
fact, they propose putting the Twins telecast on a digital tier
where viewers would have to choose to buy Victory's programming.
Otherwise, they argue, rates will have to be raised.

The Twins and Victory, on the other hand, say the games need to
be attached to the expanded basic service, as was the case with the
team's previous partner, Fox Sports Net (FSN) North.

Putting Twins games on digital cable, Cattoor said, will cost
from $5 to $8 per household and send the team's viewership "down
the tank."

"There won't be (a) substantial enough audience to really
support the business," he said.

Victory, launched in October, took over the Twins' rights after
last season, when the team's contract with FSN expired. FSN is part
of the expanded basic package on all the major operators and is in
1.8 million homes in Minnesota, the Dakotas and northern Iowa.

But the Twins, pointing to what they considered a less than fair
market income of about $6 million a year from FSN, decided to start
their own regional sports network in an attempt to increase
revenues.

"We are trying to build value -- provide additional funds
to be able to make a more competitive team and build value in the
franchise," Jim Pohlad said.

So far, Victory has 30 cable deals serving more than 200
communities. It is in about 100,000 homes in the Upper Midwest,
Cattoor said.

"The companies not doing the deals are those that are
nationally owned," he said. "When the decision is local, it has
been to put Victory Sports on because they recognize the value of
Twins baseball and understand the need to serve the customers."

The common response from cable operators is that the Twins are
trying to fix something that wasn't broke -- at least from their
perspective. "Mr. Pohlad and Victory took these games off Fox,"
said John Gibbs, vice president of government and regulatory
affairs for Comcast. "Last year's model worked."

Among their contentions:

  • FSN charged operators about $1.70 per subscriber for
    programming when it still had the Twins, not to mention the
    Timberwolves, Wild and Gophers hockey.

  • The Twins recently received a multiyear offer from Fox that was
    worth about $12 million a season but didn't even look at it,
    because, Cattoor said, Victory was "moving ahead." (Full
    distribution of Victory would mean a much higher figure, on the
    basis of the per-subscriber fee and ad revenues.)

  • The Victory programming is nice; but, with the exception of a
    package of Gophers men's basketball games, the providers don't put
    much stock in Victory's high school or college product, and they
    certainly aren't excited about carrying several hours of ESPN News
    each day.

    There's disagreement about who's to blame for the stalemate.
    Cattoor says, "Essentially, we have had no response from other
    major cable operators and satellite providers since our initial
    offer 13 months ago."

    Said Bill Wright, area vice president of Comcast: "They first
    made contact with this very same offer last February or March. ...
    (Since then) there has been no movement."

    Added Bill Jensen, regional vice president of Mediacom:
    "Victory Sports continues to say publicly that Mediacom and other
    cable operators refuse to negotiate in good faith and aren't
    returning calls. But what is there to negotiate when Victory Sports
    starts out previous negotiations with, 'The rate is $2.20 per
    subscriber; we want to be on an expanded basic tier just like Fox
    Sports Net and ESPN, and we don't want to be on an optional sports
    tier'?"