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Cablers resist Verizon

Phone co.'s not over rainbow

Verizon is engineering deals with just about every cable net in the business for its still-developing video service, but there are two conspicuous holdouts so far.

Comcast, which owns E! Entertainment, Outdoor Life and the Golf Channel, and Cablevision’s Rainbow Media, which owns AMC, WE and IFC, are reluctant to sign over their content to a potential rival. These conscientious objectors are concerned that their cable systems (Comcast reaches 21.5 million subs, Cablevision 3 million) will lose customers to the Verizon service.

Verizon on Monday sealed a deal with CBS to carry the Eye’s owned-and-operated TV stations for a monthly fee of 50¢ per subscriber. It already had similar deals with ABC, NBC and Fox.

The lure of Verizon will depend in part on the menu of networks it puts forward. Potential TV customers would probably be willing to take a Verizon service even without E! and AMC if its offer provided other benefits, like a lower monthly fee than that of cable operators or satcasters.

Crucially, Comcast also owns regional sports nets in key areas like Philadelphia and Washington that would have to be part of a Verizon package or face a thumbs-down by local sports fans.

Similarly, Cablevision owns the MSG Network and Fox Sports New York, which Verizon would have to carry to get sports aficionados in the Greater Gotham area to cancel their cable or satellite subscriptions and opt for Verizon’s service.

Two other cable network groups that have similar ties to cable ops or satcasters have, however, clinched deals with Verizon: the Time Warner nets (including TNT, TBS, Cartoon and CNN) and the nationally distributed Fox Cable networks (including Fox News, FX and National Geographic).

Time Warner Cable will face competition from Verizon, and Fox Cable’s DirecTV sibling could lose subscribers to Verizon. But TW is under a regulatory microscope as its joint deal with Comcast to take over the 5.2 million Adelphia subscribers grinds toward a conclusion. Neither TW nor Comcast wants Washington to have any reason to suspect them of anticompetitive behavior toward Verizon.

Rupert Murdoch promised the feds that, in exchange for government approval for News Corp.’s takeover of DirecTV, he would not withhold Fox’s cable nets from marketplace competitors like Verizon.

Right now, Verizon has a miniscule number of subs in parts of seven states. Programming chief Terry Denson is hopeful that he’ll eventually be able to come up with a deal for networks owned by Comcast and Cablevision, including the sports regionals.

The last thing Verizon wants to do is go whining to the government about unfair treatment by Comcast and Cablevision.

And hope may not be misplaced: Comcast did end up making its SportsNet Philadelphia available to RCN, a local rival that delivers cable nets to subscribers wirelessly. That was a deal Comcast didn’t legally have to make as the regional is not satellite-distributed. Comcast could end up feeling similarly about Verizon and do a deal.