Corporate Battle II: Disney vs. Cox 11-22-03!

A letter from Stan Bratches, ESPN (a form letter found on keepespn.com)

Thank you for your e-mail regarding ESPN, Cox Cable and cable pricing. This is an important subject and you should have the facts.

First, Cox Cable's argument that the cost of ESPN is too high causing your cable bill to increase is incorrect. Cox sets the price you pay for cable. They make plenty of money off the fees you pay them, and Cox's own financial statements show that only about 22 cents of every dollar Cox spends goes to purchase programming. ESPN is only a fraction of that 22 cents. In fact, Cox pays more each month for non-programming operating expenses (e.g., its trucks and office space) and capital expenditures (e.g., replacing and upgrading its cable plant) than it does for all the programming it carries on its basic service. In effect, Cox is charging you for the new services that its new infrastructure provides, like telephone service and cable modems, even if you never subscribe to them.

Second, government and independent studies have concluded that ripping ESPN or other popular services out of basic and putting them on an extra-fee tier will not benefit consumers. Under Cox's tiering scheme, you will have to pay more and you will lose the variety of programming services that you expect from cable television. In addition, Cox knows that you will end up paying them an extra $4 or more each month to rent a set top box to get ESPN and any other tiered service once they are off basic cable. That's $4 more for every TV set in your home.

Finally, independent sources confirm ESPN's widespread popularity. Surveys show that 87% of Americans are sports fans and Nielsen ratings show that over 70% of Cox subscribers watch ESPN each quarter. In October, more people watched ESPN than ever before. Cox wants you to pay more for SportsCenter and the hundreds of pro and college sports events you enjoy as part of your service today; sports like the NFL, MLB, NBA, NHL and college basketball and football. You deserve to have ESPN stay as part of your basic cable package.

By taking ESPN off basic, Cox is only interested in making you pay more for what you get today. A big part of what is amazing about cable is sports. We are going to keep working hard to see that ESPN remains a part of your basic cable package, and that you don't have to pay Cox an extra fee and rent an extra set top box to get it.

Thank you again for writing and raising your concerns. For more information on this subject or to contact us, please log on to www.keepespn.com.

Sincerely, ESPN, Inc.

And here's what I wrote them for the record...

ESPN Executives

ESPN and FOX: You're making my grandmother pay for your high cost of sports, and she doesn't even watch them!

I recognize that cable companies have to pay cable networks for the right to distribute the networks' channels to cable customers.

I also know that the sports networks, particularly Fox Sports and ESPN, have dramatically increased prices, and that this is driving up the price that customers must pay for cable television.

This is all due to the high cost of broadcasting contracts ESPN and FOX pays the MLB, NFL, and the NBA, while the high fees are passed on to the cable company, and finallly, the cable consumer, whether they watch the sports or not.

I believe that at this moment, it is better that ESPN and FOX be moved to a pay TV tier, and your stations be replaced with cheaper and more consistent programming from Game Show Network, TV Land, and Boomerang.

The sports networks, particularly Fox Sports and ESPN, need to get those prices down to zero and stop passing the high cost of sports broadcasts to customers, or sell them on PPV and local TV stations to get revenue instead.

If the sports networks will not do that, then they need to allow my cable company to place expensive sports channels on an optional tier for consumers to choose to buy, or not, to help keep the cost of my cable bill reasonable.

I am also sending this to my elected officials so that they understand that the rapid and unrestrained rise in sports TV network costs is threatening the value of cable television for American consumers.

David Tanny
PO Box 19569
San Diego CA 92119

And here's one from Cox's website makethemplayfair.com:

Thanks for visiting MakeThemPlayFair.com and for sharing your opinion with us.

We are negotiating with the major sports networks to persuade them to charge reasonable prices. If they refuse to moderate their prices, we would want the ability to put them on an optional tier. That way, customers who don't want to pay the high price for them wouldn't have to.

At this time, however, we are contractually prohibited by the sports networks from providing these channels on an optional service tier. But we are working hard to negotiate a fair deal with them.

We'll continue to share major developments on the site, so please check back for updates. Thanks again for taking the time to let us know what you think!

And here's what I wrote them:

Shouldn't you be demanding that ESPN drop the price of their channels on basic instead of raising them? Your ad in the Union-Tribune is deceptive and the implications made by the claims do nothing to reduce the cost of ESPN on the basic tier. Nothing.

Put ESPN and ESPN2 on the digital tier. Move Game Show Network and UCSD 35 full time in their places. End of story.

End of letter.

And now, here's a few postings about what you think of the subject...

Radio-Info: Coast to Coast TV

Posted by: redsoxfan

For all you that have Cox Cable, they want to rip ESPN from your basic cable lineup and have it a channel like HBO, Showtime. What do you think of this? ESPN has a whole website about this they want to fight this and tell those jerks at Cox Cable to leave ESPN right where it is. I see Comcast, Time Warner and the other cable companys are not doing this. So why is Cox Cable doing it? If you want to check this out for yourself here is the link http://www.keepespn.com

Posted by: Ant Farmer

$2.61 for ESPN? This is ridiculous! No cable channel should be more than a dime IMHO. If every cable channel can get away with that, then my bill would easily top $100 a month just for basic cable.

Tell Cox and ESPN to get those prices down down down. If ESPN gets away with runaway passing of the high cost of programming, there's no end in sight for the sister Disney owned networks, as well as other-owned cable networks.

$2.61 a month? That could feed an Ethiopian for a week.

Posted by: Whammy1978

The reason behind Cox wanting to add ESPN as a service like HBO is because the sports networks (not just ESPN, but Fox Sports as well) are getting ready to increase their wholesale charge to cable companies to what will amount to $2.50 per subscriber for ESPN. That cost is passed along to the consumers, and makes your cable cost increase. Because of contracts that ESPN has with the Cable Companies, the channel has to be kept in the basic service, so that means if you watch ESPN or not, you still have to pay for it.

While I enjoy ESPN's programming, and would most likely pay extra for it, I think it takes a set of brass ones to stand up to ESPN and make such a bold move. Cox obviously cares about their customers enough to do this, unlike the "wonderful people" over at Time Warner Cable. If these sports networks would stop paying ridiculous amounts of money on these packages with the NFL, NBA, NHL, and MLB, they wouldn't have to jack up the cost of the service.

www.makethemplayfair.com

Posted by: Joseph_Gallant

In the end, I think ESPN will be forced to cut the amount of the rate increase they were planning to pass on to cable operators.

Posted by: Jay Clark

The only time I watch ESPN or ESPN-2 is when they on occasion show a Yankees Game or a UCONN Huskies game. It would be no big loss to me if they scrambled ESPN and ESPN-2. It would just mean listening to the Yankees game on ESPN-1410 and the UCONN Game on WTIC AM.

Personally I think they should come up with a way that will let you pick and choose the channels you want to watch. There's lots of cable nets I don't watch and my mother doesn't watch: FOX Sports, Country Music TV, EWTN, ACN Jewlery Television, Spike-TV, WRDM-LP (Telemundo), WUVN (Univison), WHPX (PAX), COX-3 (local access station), etc. And there's stuff I want to watch that's either on digital only or not available at all. Not everyone can afford digital. I'd like to be able to get on regular analog cable: Game Show Network, MTV-2, ToonDisney, Boomerang (which is only available in Spanish on COX Digitial Cable), etc.

~Jay Clark~

WXCT AM 990

Visit our unofficial website: http://990thex.tripod.com/

Posted by: CrankyYankee

To keep me as a cable customer, they'll have to start offering "a-la-carte" programming because I am paying-paying-paying for uncountable channels that I never watch. Also, I am one of those "rare breed" that may look @ ESPN only when there is something like a billard special or something like that, and that's usually on ESPN2.

I saw an analogy recently to this situation...

I want to buy a newsmagazine.... I choose "Time"... To buy "Time" I also am forced to purchase "Newsweek", "U.S. News & World Report" and sixteen other "Newsy" 'zines.

That's how we are forced to purchase cable(and satellite)service. What do YOU think?!

Posted by: Mediafrog

I'm somewhat surprised a-la-carte packaging hasn't been introduced already, although I imagine the corporations that own the various channels would fight it tooth and nail. You know that's got to be a nightmare scenario for many cable outlets...If large numbers of customers start dropping unwanted services from their personal lineups, many of those channels may go belly up.

Posted by: studiotwenty

Hey, what do you expect when Disney goes out and spends tons of money for the NBA, NHL, MLB and NFL, not to mention the NCAA. Someones gotta come up with the dough to cover it? It sure won't be from advertising, lol.

From: Do What? (nospam@nospam.com)

Subject: nice try Cox Cable

Newsgroups: rec.sport.football.college

Cox Cable launches http://makethemplayfair.com

"If those networks refuse to charge more reasonable prices, Cox believes cable companies should be allowed to offer them on an optional tier for consumers to choose to buy, or not - but only as a last resort if the networks refuse to act responsibly in their pricing."

although doubtful, lets assume they go the optional sport tier route:

Sports-Fan: "Hey, I thought the high cable bills before all this hoopla was due to the sports channels. Now you are telling me that I have to pay an additional fee for something that I was already paying for?"

Non-Sports customer: "Hey, I thought that the reason for my high bill was because of the sports channels.... but now that they are on an optional package that I haven't purchased, why has my cable bill not gone down if that was truly the reason for the high price?"

Cox reply to both calls: "bwahahaha! Sucka!!!!!!! $$$$$$"

Something about sports has ticked off Cox. ESPN costing $2.61 per subscriber.... ok, launch your website if you please.... But what is so expensive about $0.25 (NFL Networks' asking price) that they refuse to pay?

From: Evil (evilninjax@yahoo.com)

Subject: Cox Cable v. ESPN

Newsgroups: rec.sport.football.college

Looks like Cox Cable may drop ESPN. I've been a diehard sports fan, but over the years, MLB and NBA have done their absolute best to reduce my interest in their sports. ditto NCAA basketball (even March Madness isn't all that interesting anymore). The only thing i watch on ESPN is College Football. That is still my saturday appointment tv. Sunday night football, headed by assclowns Mike Patrick and Paul McGuire, makes me unable to watch unless the Raiders are playing.

SportsCenter is unwatchable now and Countdown is just a 1 1/2hr assault on my senses. I'd rather just read cnnsi.com or something.

i hope that Cox drops ESPN. We'll see what happens to player salaries at THAT point. ALthough, i wonder if the rates would LOWER? Nah, prolly just stay the same...