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TNT's increase of 7% per year irks Cablers

Cable operators are strapping on their battle armor, preparing to try to beat back the robust increases Ted Turner is asking them to pony up for another five years of TNT.

Various sources say that, despite losing the rights to half the Sunday-night cable package of National Football League games, TNT has drawn up an aggressive rate card that calls for increases that average 7% a year over the five-year life of the contract, which kicks in Jan. 1.

What that means in dollar terms is that the rates to a cable operator with 1 million subscribers that now pays TNT $6.5 million a year, will rise as follows: $6.84 million in 1999, $7.32 million in 2000, $7.92 million in 2001, $8.54 million in 2002 and $9.36 million in 2003.

Breach of trust?

The antagonists are waging their war mostly out of the glare of the media spotlight, but Jedd Palmer, senior VP of programming for Media One, the third largest cable operator in the United States, says: “These increases are completely out of line. They represent a breach of trust with the cable operator” because TNT tacked on a monthly “NFL surcharge” of 12¢ a subscriber when the network first signed up for Sunday-night pro football games eight years ago.

Palmer is convinced that TNT should deduct that surcharge from the cable operator’s bill. TNT says no way, claiming that the surcharge is now embedded in an overall license fee.

Another programming executive for a large, multi-system cable operator foresees arduous and nasty negotiations with TNT between now and December. “We’re not going to go gently into the good night paying these increases, which are not acceptable,” he said.

‘Fair and modest’

A TNT spokesman declined to comment on the negotiations. But a source familiar with TNT’s thinking says the increases are “fair and modest,” citing TNT’s consistently strong primetime ratings, the humungous payment of $890 million that TNT and its sister network TBS paid the National Basketball Assn. for exclusive national-cable rights to the games for the next four years, the advent of reruns of “ER” beginning this fall and a lineup of original movies and theatrical movies getting their first broadcast window.

But Palmer rejects TNT’s argument that cable operators should help the network pay for pro basketball, whose license fee has more than doubled (TNT and TBS paid only $350 million for the cable rights four years ago). “The NBA is not crucial to us because our cable systems pick up regional sports networks that carry the games in markets with NBA teams,” Palmer says.

Hoops less a lure

By contrast, he says that NFL regular-season games are exclusive to the broadcast and cable networks that have bought the rights.

Another cable-operator programmer shrugs off the benefits of “ER” reruns, saying, “TNT is serving up stale bread and asking us to pay fresh-bread prices.”

Many operators are not confident that TNT will come down off its aggressive rate-card demands. One of the pessimists says he has already exchanged threats with an affiliate sales rep of TNT: When the operator insisted he wouldn’t pay the increases, the TNT rep said Turner will pull the network off the operator’s systems and then take out ads urging TNT-deprived subscribers to cancel their cable subscriptions and buy a satellite dish so they can get TNT on DirecTV or Primestar or Echostar.

Umbrella solution

Before it comes to such a confrontation, though, this cable-operator executive says he’ll propose that the two sides add up the license fees the operator pays for all the Turner networks — TNT, TBS, CNN, Headline News, Cartoon Network and Turner Classic Movies — and settle on one umbrella rate increase.

It would then be up to Turner to allocate that increase across the six networks.

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