Tele-Communications Inc., the nation’s largest cable operator, said it will not distribute Showtime’s Mike Tyson pay-per-view fight because the price tag is too high.
Although Showtime Event Television, a unit of Viacom Inc., says it has not issued its rate card, its suggested retail price of $45.95 to $54.95 for the Aug. 19 Tyson vs. unknown Peter McNeeley fight has TCI and other cable operators up in arms.
“We have seen the rate card and rejected it,” said a TCI spokeswoman. “We are continuing to negotiate but it does not look good.”
The price, the TCI spokeswoman said, “is unacceptable to our customers.” TCI owns or has stakes in cable systems that reach more than 12 million homes.
Several other operators, including Time Warner and Continental Cablevision, also are balking at SET’s price. Time Warner has more than 10 million subscribers and Continental has close to 4 million subs.
“It’s ridiculous,” said a Time Warner Cable exec. “My experience says SET will show a little more flexibility as the fight gets closer.”
Operators feel that since it’s Tyson’s first fight since being released from jail, and his opponent is an unknown, the PPV price should be much lower.
In March, SET acquired the rights to Tyson’s fights for three years. It has been estimated that Tyson’s return to the ring could result in a $100 million bonanza for PPV, easily doubling the current record of $49 million for the 1991 George Foreman-Evander Holyfield fight. Currently, there are about 25 million addressable homes for pay-per-view.
In the usual PPV agreement, operators split the purchase revenue with the supplier. But the split here may mean operators get only 30%, which would not encourage them to carry the fight.
“What happens when Tyson’s in a real fight? Will it be $79 and a 25% split?” asked one large cable operator.
Operators can lower the price if they want, but then they have to lower their cut as well. Also, if the price is lowered, operators have to beef up their marketing support of the event as well as the fight’s eventual re-telecast on Showtime’s premium service.
Some industry observers see TCI’s stance as just a continuation of the ongoing battle between TCI president/CEO John Malone and Viacom Inc. chairman Sumner Redstone. The two have been battling over carriage of Viacom product on TCI systems for years. Also, talks to merge Showtime with TCI’s Encore have turned sour in recent months.
But if Time Warner, Continental and TCI stand firm, SET may have to rethink its pricing, which would mean going back to Tyson’s camp and his manager, Don King, to renegotiate.