• by David Goetzl  @dgoetzl, September 7, 2010

If content is the MVP in this Age of Fragmentation, Tracy Dolgin has little to worry about -- literally -- as president-CEO of the YES Network, the regional cable channel part-owned by the New York Yankees. He also faces few of the worries consuming other TV executives. With the Yankees' rabid fan base of millions, the network collects hefty payments from cable and other distributors. Sports is also likely consumed live, watering down threats of commercial-skipping. Dolgin's career working in cable and broadcast at Fox gives him a behind-the-plate vantage from which to evaluate much of the TV sports landscape -- and the business as a whole, notably the potential for people to cord-cut and drop a cable subscription with more content on new platforms.

Your network is partly owned by the team, so rights to the Yankees are never going to be an issue. But in your previous role at Fox Sports Net, you negotiated to acquire broadcast rights to various teams. Will fees escalate to a breaking point, where broadcast networks in particular can't afford them anymore?
On the network side, there's no reason to believe rights are going to go up any more than they have historically. And if you're a smart person, you won't pay more than you can theoretically make money off in some way.

By the way, without sports on [regional sports networks], this cord-cutting phenomenon would be enormously more of a problem than you see now. For entertainment programming, people would either go to the Hulus of the world or wait for the product to come out on DVD or iTunes.

I think sports is sort of the last bastion to prevent cord-cutting.

You have a daughter in college. Students are watching shows free on their laptops. When this group ages up to become the bulk of the 18-to-49 demo, are ratings going to be an issue if there's an expectation of free content? Could that lead to more cord-cutting?
There's no question cord-cutting is a concern and obviously the younger demos -- especially the female younger demos -- are going to be the leaders in that. As a network that has a very nice business working with distributors, we need to do everything we can to prevent it. Which means if we're going to allow our product to be on new media, we need to make sure that we do it on an authenticated basis, where we need to prove the person already subscribes to cable. Cord-cutting, in my opinion, is always going to be on the margins. I don't know what percentage it is, but it's on the margins because a lot of these people who are doing it, when they get older will want cable for things like sports and news. We are not going to allow our product to be seen without authentication.

A couple of years ago Nielsen tried to track out-of-home viewing -- in bars, hotel rooms, gyms, etc. That's a prime and growing consumption area for sports and a chance to increase ratings. ESPN supported it, but Nielsen abandoned it.
It's a disappointment, because when we did a tracking study that looked at what percent of, say, YES viewing was out-of-home, on the low side we were talking about 17 percent. I don't just talk about bars and restaurants, I talk about second homes like in the Hamptons. I talk about workplace. I hope Nielsen gets its act together, and eventually is able to capture this kind of stuff.

You've tried some online streaming of games, but reports are it didn't bring a lot of subscribers. Let's say you offer a package for $9.99 a month, people can receive Yankee games on a smartphone, do you believe people will watch?
No one in their right mind with a television set available would ever choose to watch on a small screen. However, there are times where you're in a place where there is no television available and you would not be watching anyway. So, I think it would be incremental viewing.

Will 3-D be a huge growth engine for YES and other sports networks?
We were the first to do a baseball game along with the Seattle regional sports network that is DirecTV-owned. I had no expectations going into it. I thought it was going to be a gimmick -- a few oh-my-God shots -- and having those glasses was going to be more annoying than the value added. I was shocked how good it was. The game itself basically moved you toward an immersive experience that reminded me much more of the ballpark. So I was extremely heartened that sports would work on 3-D after this experiment. I think for selective programs, including sports, video games and certain movies, people will buy a 3-D set and watch on an occasional basis. That's why I think at the end of the day it's going to work.