The Comcast/NFL Legal Battle: Should There Be Ratings Criteria For Cable Operator/Cable Network Deals?

The court battle between Comcast and the NFL Network can be filtered down into some ambiguous territory: What future programming might be popular with consumers?

From the NFL Network's point of view, it's simple: Put us on everywhere and we'll get big ratings -- even if we are only airing a handful of live football games over the course of 365 days a year. And, you -- the cable operator - will make money selling advertising locally.

From Comcast's point of view, it's simple: The NFL's price is too high for a handful of live games, which is the real lure for consumers. So instead of letting the network on our widely prized distribution programming service, we will have consumers pay a little extra for your network -- if they want it.

The NFL has an interesting counter-argument to that: Comcast's own sports networks are much like the NFL Network -- in terms of the amount of original programming that consumers really want to see.  The difference is that Comcast's own channels -- Versus and Golf Channel -- run their own broadly distributed cable programming packages, not the limited-distribution, extra-fee digital "tiered" programming packages where Comcast has put the NFL Network.

By way of comparison -- of sorts -- an NFL Network attorney said 15% of the programming on Versus and Golf Channel is infomercials, with only 5% being original programming.  (It's hard to believe those numbers are accurate, given Versus airs live NHL hockey games, mixed arts fighting bouts, bull riding, and professional cycling. For its part, Golf Channel does air plenty of golf tournaments.)

But that isn't the real future concern. Larry Gerbrandt, a longtime cable industry analyst arguing for Comcast, notes that ratings are not a determining factor in the license fees paid for cable channels. Gerbrandt says, however, cable systems do want popular cable channels.

I should hope so. The catch-22 for programmers is that they can't be popular until a big cable operator or a broadcast network or a TV syndication company gives it the thumbs-up. Still, once a TV program is a hit, license fees can be adjusted.  

Recently, MediaDailyNews did a story on which cable networks are most inefficient (charging the most per rating point) for cable operators. Sports channels came out as the worst performers. This included not just the NFL Network, but also Comcast sports channels Versus and the Golf Channel, which are more widely distributed channels.

Going forward, should ratings performance be tied more closely to programming license fee deals? New digital/Internet video businesses -- including the likes of iTunes -- say this is what the future is all about: pay per delivery.

Right now, for the likes of the NFL and Comcast, it's about paying for the loose promise of delivery



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