- The Washington Times - Thursday, October 23, 2003

The long-running battle between ESPN and Cox Communications over soaring cable bills turned white-hot yesterday.

ESPN President George Bodenheimer appeared Downtown at the National Press Club to counter Cox’s threats to move ESPN off its basic cable service or drop it entirely.

Cox, upset with ESPN’s demand for a 20 percent fee increase to carry the network, says rising player salaries and sports rights costs are largely to blame for increasing retail cable costs.

Mr. Bodenheimer, armed with a contracted research study on cable economics by District-based Cap Analysis, called Cox’s complaints “gross mischaracterizations,” and blamed rising cable bills primarily on cable operator overhead and investments in new services like high-speed Internet, digital cable and video-on-demand.

“Cox’s effort to blame ESPN for its retail pricing decisions is just plain wrong,” Mr. Bodenheimer said. “For Cox, this is contract negotiation rhetoric directed solely at improving its already healthy, growing 35 percent margin business.”

Cox countered by starting a new Web site, www.makethemplayfair.com, filled with data on Cox’s frustration with both ESPN and Fox Sports Net. The site encourages visitors to write the networks seeking either lower rates for Cox or the ability to subscribe to those networks on an a la carte basis.

Fox Sports Net, ESPN’s rival, is similarly seeking a 35 percent rate increase from Cox to carry its regional sports networks. Cox says the two networks comprise 32 percent of its total programming costs for standard cable service, but just 8 percent of viewership.

“The rapid and unrestrained rise of sports programming costs is threatening the value of cable television for American consumers,” Cox said in a statement. “Clearly, ESPN’s 20 percent increases are disproportionate to the economic reality of the world today.”

Average nationwide cable bills have increased about 20 percent in the last two years to $40.11.

In an unexpected development, the National Cable & Telecommunications Association, of which both Cox and ESPN are members, yesterday sided largely with Cox and called ESPN’s economic study an “oversimplification.”

The study pinned just 22 percent of $12.5 billion in cost increases to cable operators between 1999 and 2002 to programming.

“When sports programming fees have increased significantly year-to-year due to soaring player salaries and TV rights, it’s impossible to ignore these costs as a contributing factor in cable price increases,” Robert Sachs, NCTA chief executive, said in a statement.

Cox is the fourth-largest U.S. cable operator with 6.3 million subscribers. Moving ESPN to some type of premium tier, or dropping the network altogether, would likely mean a loss of hundreds of thousands of viewers to ESPN.

The Walt Disney Co.-owned ESPN is a proven consumer draw and currently holds rights deals with each of the four major U.S. team sports.

The current distribution agreement between ESPN and Cox expires in April 2004.

If a new agreement is not reached, Mr. Bodenheimer threatened to market heavily the network’s availability on rival services such as satellite TV.

Cox says it pays $2.61 per customer to ESPN to carry the network, the highest price for any standard cable channel and twice the ESPN rate five years ago.

ESPN claims that figure is $1.50 per customer when including ad revenue Cox reaps during ESPN programming.

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