NEW YORK — Rupert Murdoch and John Malone’s group of regional sports networks will announce this week that they’re ponying up $850 million for a 40% stake in the nine Cablevision Systems-owned Sportschannel regionals, including the Madison Square Garden network, according to insiders.
This deal, which would create a partnership with the resources to compete with ESPN, almost guarantees that the Fox Sports Network (the umbrella title of Murdoch/Malone’s regional holdings in sports) will engineer aggressive bids for two major sports packages that are coming up for renewal: The National Football League Sunday-night cable-network games (now shared by TNT and ESPN, whose contracts run out after next season) and the National Basketball Assn. cable lineup of about three games a week, plus extensive playoffs (which Turner’s TBS and TNT own through the 1997-98 season).
If Fox wins the bidding for either the NFL, the NBA or both, these games could turn up on the underachieving FX cable network to drive its subscriber base, which is only at about 31 million subscribers compared to TNT’s 71 million. The model for FX is TNT, which, in the last year or so, has vaulted to the No. 1-rated cable network in primetime through a mix of NFL and NBA games, weekly wrestling matches, theatrical movies, off-network TV series and high-visibility original movies.
The deal to add the Sportschannel regionals to the lineup of 14 regional sports networks owned by Fox Sports follows on the heels of the transaction completed earlier this month in which Malone’s Tele-Communications Inc. swapped 10 cable systems in the New York-New Jersey area to Cablevision Systems Corp. for a 33% equity stake in CSC. CSC already owns cable systems reaching 1.7 million subscribers in the greater N.Y. area.
Although neither Fox nor CSC would comment on the Sportschannel deal, Cablevision’s stock jumped on Friday $4.12 a share, to $53.
ESPN monopoly at an end?
Fox will now have the resources to create a separate national cable sports network that would end ESPN’s monopoly. ESPN pockets more advertising revenue and subscriber fees than any other cable network. Its projected ad revenue for 1997 is $440 million and projected 1997 affiliate fees are $537 million, according to Paul Kagan Associates. ESPN is also No. 1 in operating cash flow, forecasting $320 million for 1997.
But other sources say an alternate Fox scenario would be to use national sports programming not only to beef up the schedule of the FX network but to fill out the lineups of the regional networks, which need lots of programming in the hours when they’re not covering the local teams.