Cabler Comcast eyes local Fox sports nets

Co. negotiating with Cablevision for controlling stake

This article was corrected June 11, 2003.

NEW YORK — Comcast, the biggest cable operator in the U.S., may be shopping for programming assets, starting with sports, to gain control over the ballooning prices it pays to carry many of its cable networks.

Programming sources say Comcast is negotiating with Cablevision to acquire its controlling stake in the Fox regional sports networks. Deal could be worth around $130 million, payable in Cablevision shares that Comcast already owns.

Deal, which would divest Cablevision of the five regional sports cable channels that it owns with Fox, could be another piece of a long-term corporate exit strategy for the Dolan family enterprise.

Company, headed by CEO Brian Roberts, is known to be quietly soliciting offers for its AMC, Independent Film Channel and WE: Women’s Entertainment cable nets. For example, Charles Dolan has pledged the three webs as part of Edgar Bronfman Jr.’s bid for Vivendi Universal Entertainment.

Analysts value AMC at about $2 billion, while the far smaller IFC could fetch upward of $300 million and WE could pull in $100 million.

Grab for Gotham

Cablevision’s lucrative New York-area cable systems, reaching 3 million subscribers, many of them in upscale suburbs, are a logical takeover target for Time Warner Cable as it reduces the $26 billion in debt it’s shouldering.

Comcast carries some $694 million in Cablevision stock on its books, though the shares are pledged as collateral against two bonds due next year.

The Philadelphia-based Comcast has its eye on some of the five regional cable sports nets that comprise Regional Programming Partners, the 60-40 joint venture between News Corp. and Cablevision’s Rainbow Media Holdings. RPP has channels in the San Francisco Bay area, Chicago, New England, Ohio and Florida. MSG Network and Fox Sports N.Y. are held under a separate corporate banner and would likely stay with Cablevision.

Under one possible scenario, Fox and Comcast would divvy up the properties after a buyout, with Comcast taking control of the networks situated in Chicago, New England and San Francisco, areas where it owns cable systems. The Fox sports net in Florida would boost the Comcast-owned Cable Sports Southeast, a 3.9 million subscriber college-sports net serving the region.

Cablevision declined to comment on a deal, though the company, through the programming partnership, owes News Corp. an estimated $150 million as part of a “sidecar” put option on News Corp.’s directly held 50% stake in two Fox Sports Net channels in Chicago and San Francisco.

Fox fits

The sports nets would be a good strategic fit with Comcast’s SportsNet channels for Philadelphia, the Mid-Atlantic (including Baltimore-Washington) and Southeast regions. The channels rely heavily on local pro sports, particularly the Philadelphia 76ers and NHL Flyers, which are also owned by Comcast.

Investor sources say Comcast has toyed with the idea of making sports program investments for some time. Company has publicly condemned the high license fees regional sports nets charge cable operators. But the regionals pass the complaints on to the teams, which keep raising their rights fees to the nets, pleading out-of-control expenses like players’ salaries.

Comcast wants to restructure a host of off-balance-sheet cable partnerships — which it inherited when it bought AT&T Broadband — through various means, including asset swaps. Many of these equity holdings include stakes in myriad cable systems held by Time Warner Cable, Adelphia, Charter and Insight Communications, though the outstanding Cablevision stock could also be considered in this category.

Fox separately owns 12 regional sports nets that would not be part of the Comcast-Cablevision negotiations.

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