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Tuesday, November 21, 2006

NFL Network's Hardball Cable Costs Cause Viewing Audience Shortage - AP

Cable Operators Balking at NFL Network
By SETH SUTEL, AP Business Writer
Tuesday, November 21, 2006 04 27 PM

(11-21) 16:27 PST New York (AP) --

On Thanksgiving, the NFL will air the first of eight live pro football games on its own network. But it won't be available to many viewers across the country because the league hasn't reached carriage agreements with several major cable operators.

The eight games — beginning with Thursday's matchup of the Denver Broncos and the Kansas City Chiefs — will be available on local broadcasters, satellite TV and a number of other cable systems that do carry the NFL Network. But that totals only about 40 million of the nation's 111.4 million households with TVs.

Most notable among the cable companies that haven't reached deals with the National Football League are No. 2 operator Time Warner Cable, which is a unit of the media conglomerate Time Warner Inc.; Cablevision Systems Corp., a New York-area provider; and Charter Communications Inc. Time Warner, for its part, says it's highly unlikely a deal will be reached in time for the first game.

Comcast Corp., the largest cable company in the country, has carried the network for two years, but as part of a digital package ordered by only about 7 million out of its 24 million subscribers. Time Warner says it's balking at a demand from NFL that the network be carried on the most widely available basic service lineup.

The issue is cost. Spokesman Mark Harrad says Time Warner would have to pay $140 million a year to provide the channel to all 13.5 million of its subscribers in 33 states, placing it in the top five most expensive cable networks. He said the company would prefer to carry the network as part of a premium service — not at the rate of 70 cents per customer per month the network is reportedly seeking.

"If we put all expensive sports programming on the standard tier of service, that would increase our rates to all of our customers, even those who didn't particularly care about football or these games," said Harrad.

NFL Network spokesman Seth Palansky counters that a number of other cable companies as well as the two main satellite providers are "happily" carrying the network, which is jointly owned by the league's 32 team owners.

"It's the most valuable programming a cable company can offer, and a cable company not carrying live NFL games is like a grocery store not carrying milk," Palansky said.

The NFL already makes a bundle from broadcasting agreements, money that is shared equally by all team owners. General Electric Co.'s NBC started broadcasting Sunday night games this year under a six-year, $600 million per year deal with the league, while Walt Disney Co.'s ESPN is paying $1.1 billion per year for Monday night football over eight years. Last year the NFL reached six-year, $8 billion extensions with Fox and CBS for Sunday afternoon games.

NFL team owners are betting their own network will offer other opportunities for building revenue in the future, including streaming programming over the Internet, through Apple Computer Inc.'s iTunes and cell phones, Palansky said.

Palansky declined to release financial data for the network, including its revenues and losses to date, but the NFL said at the time of its launch three years ago that it expected to have $100 million in startup costs.

About two-thirds of the NFL network's 40 million households come from satellite TV subscribers who get either the Dish network from EchoStar Communications Corp. or DirecTV from The DirecTV Group Inc. By contrast, Disney's ESPN network is available in 92 million homes.

Until now, however, the network hasn't carried any NFL games live. Instead, it ran other football-related programming like news, interviews, game highlights and replays, plus games from NFL Europe.

The NFL is hoping that the appeal of the live games, which are scheduled for Thursdays and Saturdays, will help expand the network's audience. Bryant Gumbel and Cris Collinsworth will be the game announcers.

John Mansell, senior analyst at Kagan Research, a media research and analysis firm, says the dispute between the NFL and the cable companies is about "positioning, and money."

"Cable operators love the NFL, but they want to carry it on a digital tier, where they can use it as a destination for sports programming," Mansell said. "If it's going to be expensive, they want to receive compensation for it" from customers who pay premium fees.

The cable companies are in a tough spot on this dispute. If hard-core fans can't see the games they want, the complaints could start pouring in — something Time Warner says hasn't happened yet. On the other hand, no one's going to like it if the cable companies pass along the costs by raising rates.

Comcast, meanwhile, is being sued by the NFL Network after trying to switch over newly acquired cable systems to the arrangement already in place for existing subscribers.

Comcast executive vice president David Cohen said in a statement that the NFL is trying to "force cable companies to charge many consumers for programming they don't want. Sports programming fees are out of control in general and the NFL programming is very expensive."

Harrad of Time Warner says that cable companies may have already lost the most die-hard NFL fans years ago anyway when the NFL created a major package of games called NFL Sunday Ticket and sold it exclusively to DirecTV, which is controlled by Rupert Murdoch's News Corp.

The full package costs $249 per year for access to up to 14 out-of-market regular season games every Sunday. In November of 2004, DirecTV announced a five-year, $3.5 billion agreement with the NFL to extend and expand their exclusive rights to carry NFL Sunday Ticket through the 2010 season.

In the end, it remains to be seen whether either side will blink. Time Warner says it doesn't expect a resolution prior to the first game. Meantime, the NFL Network's Web site is encouraging fans to request their cable operators carry the network.

Sports programmers and cable operators have clashed before, industry analysts note, as the costs for carrying sports continues to climb. Mansell notes that compromises are usually reached, however, and if there is a dispute, it's unusual for it to last beyond one year.

In the meantime, says Howard Horowitz of Horowitz Associates Inc., a market research and consulting firm: "the consumer will usually be asked by each side to blame the other side."

49ers York And SF Mayor Newsom And Stadium Problem - Cecilia M. Vega For SF Chronicle

This is a very good and detailed explaination of the behavior of the principal actors in the 49ers Stadium deal.

Why talks on 49ers stadium fell apart
City and team misunderstood each other's positions

Cecilia M. Vega, Chronicle Staff Writer
Tuesday, November 21, 2006


The same faces gathered in the same room at San Francisco City Hall, just as they had done every week for almost a year, to come up with a proposal for a new 49ers stadium.

The conversation Oct. 30 centered on when to show the world exactly what a stadium, retail and housing development at Candlestick Point costing $1.4 billion to $2 billion would look like and the best time to put the project on the ballot and ask voters to approve it.

What most if not all of the people in that room didn't know -- not the city officials, not the real estate developers brought on board by the 49ers, possibly not even 49ers representatives themselves -- was that the meeting would be their last.

Nine days later, the team announced that plans for a new San Francisco stadium were off. The 49ers were moving to Santa Clara.

Exactly how the talks fell apart remains as much a mystery to fans as to many of those involved.

But in interviews with sources close to the talks and others who know the people involved, two themes emerged.

The two people pivotal to the talks -- Mayor Gavin Newsom and 49ers co-owner John York, men with strikingly different personalities -- never formed the kind of relationship that breeds success.

York, at times, felt blindsided by the mayor's public pronouncements and snubbed by his failure to return phone calls.

Newsom's team and developers working with the 49ers found York obsessed with minor details at the expense of the big picture and inexperienced when it came to overseeing a high-stakes deal.

Beyond that, the interviews suggest that the two sides mis-communicated and misunderstood each other's position in the talks. The result was that when city officials thought they were on the verge of an agreement, the 49ers were becoming exasperated with a process they found tedious and politicized.

"We were completely taken aback," Newsom said the day after learning the team planned to leave San Francisco.

"We were baffled and surprised that they were baffled and surprised," 49ers spokeswoman Lisa Lang said last week.

City leaders still hope that the team will stay and that a plan to build a stadium in San Francisco can be salvaged. A Board of Supervisors hearing to explore the proposal for Candlestick is slated for today in City Hall.

The effort to rebuild the aging city-owned stadium at Candlestick Point is more than a decade old. In 1997, city voters backed a $100 million bond issue for a stadium-mall, but that project never came to fruition.

After years of false starts and turmoil within the family that owns the 49ers, the push for a new stadium gained momentum last fall. Eleven months ago, a coalition of city officials, the development company Lennar Corp. and the 49ers began weekly meetings to try to hammer out a plan.

But problems emerged early.

In April, The Chronicle broke a story that San Francisco officials had been lobbying Sacramento to pass state legislation that would allow a judge to decide whether the team and city could -- without returning to the ballot -- proceed with a stadium plan different from the one voters approved in 1997.

The mayor reacted by saying he never had any intention of denying voters a say on a new stadium -- a statement that stunned the 49ers, who already had fought and narrowly won a multimillion-dollar campaign and had no intention of going through another one.

Making matters worse, team co-owner York first learned that the 49ers would have to go before the voters again by reading about it in the newspaper, rather than hearing it from city officials.

"The assumption was that we would not have to go back before the voters," Lang said. "That was certainly a big surprise to read about that in the paper."

Another person in the talks said the mayor's response certainly frustrated the team, but the 49ers never gave any indication it was a deal-breaker.

"That got them miffed," said the source, who like many involved asked to remain anonymous so as not to disrupt future discussions. "But it wasn't the end of the world."

Though neither York nor Newsom was present, representatives from the mayor's office, the 49ers and Lennar continued meeting nearly every week.

Economic and political pressures were mounting.

The 49ers play in the oldest unremodeled stadium in the NFL, according to York. The team, desperate for a venue comparable to those generating much more money for other franchises, has set 2012 as its deadline to play in a new stadium.

In 2004, Newsom set next year as his deadline to have a new stadium in the works.

"I'm not going to wait until the last year of the 49ers' lease to start something," he told The Chronicle, referring to the agreement under which the team plays at Candlestick, which expires in 2008.

Newsom also had political reasons for wanting a deal with the 49ers before next year. He will be up for re-election, and having the stadium proposal settled, as well as a plan to bring thousands of new housing units and retail establishments to the impoverished Candlestick area, would be a campaign boost.

By July, everything seemed in order. The 49ers went public with their preliminary plans for a new San Francisco stadium to test the climate among voters and fans.

Team officials excitedly showed computer renderings of what the 68,000-seat arena would look like.

Still, Lang, the 49ers spokeswoman, cautioned at the time that if the proposal fell through in San Francisco, Santa Clara was the backup.

At the same time, Newsom was pushing ahead to bring the 2016 Olympic Games to San Francisco and to hold the Opening and Closing ceremonies at the new 49ers stadium.

By September, a partnership was in the works between the team and the committee working to bring the Olympics to town to make hosting the Games at Candlestick possible.

But during a City Hall meeting Sept. 11, Lang said the team's chief financial officer explicitly told city officials and developers that the 49ers had major reservations about the project, particularly when it came to a proposed parking structure, which the team felt would have cost fans too much time to get in and out of and would have inhibited the age-old ritual of pregame tailgating.

And by Sept. 14, York had sent a letter to Newsom saying the city should not base the centerpiece of its Olympic plans on a stadium project that had not been finalized.

The mayor and his team appear to have not taken the warning seriously, some sources say. But representatives for York also continued to show up for City Hall meetings, signaling that everything was on track, others contend. City officials said that by Sept. 18, the team had even agreed to work further on parking challenges in the proposal.

"Yes, issues came up," a city official said. "But that's the nature of the development process. Issues come up, and you solve them."

The miscommunication trickled down to the most basic issues -- like whether the two sides were even really engaged in negotiations all along.

The 49ers now say they believed their participation in the talks, even as recently as the meeting Oct. 30, was simply about wading through the details of a complex real estate venture to see what worked best for the team. To them, the city and developers were jumping the gun.

"It was not a negotiation," Lang insisted, saying there was no signed agreement or contract between the parties. "We were in the midst of a long feasibility study."

Many in the talks on behalf of the city and developer Lennar Corp. found that assertion puzzling, given the amount of time spent on detailed discussions.

"What is this, the twilight zone?" one asked, rhetorically.

Versions vary about what happened behind closed doors.

"The tone of the meetings all the way along was pretty excited," one source said, meaning many involved in the talks thought that they were movingly along smoothly and that all parties were content.

"There were meetings when people were yelling at each other," another source said.

Adding to the confusion was city officials' insistence on having tight control over the meetings and on Washington-style secrecy, according to those involved in the talks. They often insisted that communication be spoken, rather than written, in case the media requested copies under government open-records laws.

When some documents were generated reflecting the direction of the discussions, they couldn't be removed from City Hall, sources said.

The resistance to put anything down in black and white could have contributed to a perception by the 49ers that doing business in San Francisco is a difficult, sometimes tedious, process.

It wasn't just economic and political issues associated with the project that made the talks complicated. The people who had the final say on each side were complicated, too.

York and Newsom couldn't have more opposite personalities or more different approaches to the business deal. York was so concerned with details that he reportedly reviewed carpet samples. Newsom was so removed from the project that sources said he failed to return important phone calls, an assertion the mayor denies.

York and his wife, Denise DeBartolo York, took control of the franchise in 2000 after a bitter, public battle with Denise's brother, Eddie DeBartolo Jr.

Many who know John York, a pathologist by trade, say he is not skilled enough in business to manage a $600 million-$800 million stadium proposal -- much less hundreds of millions of dollars worth more of housing and retail construction.

"He drags his feet along and can't decide on details," said one person involved in the negotiations.

Instead of being engaged in the larger issues in the deal, York busied himself with fabric samples for seats and carpet swatches for luxury boxes, the source said.

"He was a pathologist. He studied how people died," the source said. "The trouble is, this was a live stadium development, and John's too deathly afraid to make a mistake."

York may have been the lead decisionmaker for the team outside of City Hall, but he wasn't present regularly during the discussions. His 25-year-old son, Jed; the team's chief financial officer, Larry MacNeil; and Lang, the team's vice president of communications, were. And insiders said the 49ers group lacked the real estate and political experience necessary to understand the complicated deal.

But many also blamed Newsom for not reaching out enough to the Yorks over the course of the talks.

The mayor did not return several calls York made in the spring to address concerns he had with the proposal, sources involved in the talks said. Eventually Newsom assigned his chief of staff, Steve Kawa, to sit in on all the meetings and be a point man in meetings with York.

"John has a lot of respect for Kawa," a person involved in the talks said, "but he would have liked to continue to have connections with the mayor."

The relationships -- or lack thereof -- may have further damaged an already troubled deal.

"He should have made sure it was rolling along properly, schmoozing with John some," said another source who knows both men.

Newsom, however, said he did have "plenty of dinners and dozens of phone calls" over the years with York. But there were no dinners as the deal progressed this year, others countered.

"I gotta run a city," Newsom said. "I can't give up all my time and say I'm going to spend it with you. I'm not going to spend all my time giving up on everything else."

The talks -- carried out by surrogates -- persisted right up until the last meeting Oct. 30.

Those involved debated whether to place the new stadium proposal on the ballot in June or in March, the month before the city would learn whether it was a possible contender in the 2016 Olympic Games.

The thought was that if voters approved a new stadium measure, it would practically secure San Francisco's chances of being picked by U.S. Olympic officials to host the games.

To Newsom's staffers and the developers in the room that day, the talk was a sign they were close to finishing this long-anticipated project. To the representatives from the 49ers, though, it was yet another meeting in a long series of discussions that seemed headed down the wrong path.

One person on hand said there was no mention of the 49ers' intention to leave town that day.

"I left that meeting," the source said, "like a kid going to a Christmas party. I'm thinking this is about to finally happen."

Others said they also left the meeting feeling that a public announcement about the proposed stadium at Candlestick was imminent.

The location to unveil the plan had already been selected -- the impoverished Bayview community that stood to gain the most from the new development. The press release was ready to go.

Then, on Nov. 8, York phoned Newsom to deliver the news the 49ers were headed to Santa Clara; the call ended abruptly. The next day the team held a news conference and made the announcement official.

Since that announcement, elected officials at City Hall and from San Francisco in the state Legislature and Congress have threatened legal and legislative action to keep the 49ers in the city in which they were founded.

Newsom and York, or his son, Jed, have on three occasions sat down face to face -- a departure from the meetings of underlings that had been routine for months.

On Monday, there was no sign that progress had been made in persuading the team's owners to reconsider.

Jed York sent an e-mail to undisclosed recipients noting that he had received a death threat after the announcement of the 49ers' plan to leave the city.

"Keeping the 49ers in the Bay Area is essential," he wrote. "We have looked at many sites, but the one in Santa Clara is the best option to date."

S.O.G. (Same Old New York Giants)

The New York Giants have sunk to a new low with their 26-10 Loss to the Jacksonville last night. As I sat there watching i continued to be amazed at how porus the giants defense was, how horrid the offense was. This was a chance to heal some wounds opened by The Chicago Bears in last week's game.

I know from the first few moments of the game that it would be a long night. I could see losing to the Bears, who could be one of the teams playing in Miami In Super Bowl XLI(or 41 for those who not read Roman) but Jacksonville? a team that was headed to the outhouse instead of the big house until a few weeks ago?

Could it have been Head Coach Jack Del Rio's Rebook-made suit with the fancy newfangled snaps? More likely it was Tiki Barber's season low 27 yards rushing, or QB Eli Manning's 2 Interceptions. In any case, the New York Giants are in Deep Trouble, and sinking fast.

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