Cablevision Finally Says YES

It took the help of two former Time Warner executives, but Cablevision and the Yankees Entertainment and Sports Network (YES) finally reached a carriage agreement last week.

After a year without the Yankees channel on Cablevision systems, the MSO's 3 million customers will be able to see the 120 games that YES will offer in this, its second year. But in a complicated calculation, most would-be YES customers will pay for the privilege. Nonetheless, sources say YES and Cablevision believe the deal will expand YES's distribution by 1 million homes.

The short pact (one year, beginning March 31) gives YES and Cablevision time to negotiate a longer-term deal.

Terms of the deal were not fully disclosed, but here are broad outlines:

• In many Cablevision systems, MSG (which Cablevision owns) and Fox Sports NY channels are offered separately for $4.95. In those systems, YES will be added to the package.
• In some systems, such as the one serving the Bronx where the Yankees play, MSG and Fox Sports are offered on the basic service. That will change, and a new tier with MSG, Fox and YES will be offered, also for $4.95. Cablevision is expected to lower the basic rate to reflect pulling MSG and Fox off.
• In some systems, Fox and MSG are part of a premium-tier package with other channels. YES would be added to that premium tier.
• Otherwise, a Cablevision subscriber will be able to buy YES by itself, for $1.95 a month.

Cablevision insisted from nearly the start that it didn't want to fully absorb the $2 a month charge YES wanted cable operators to pay, although Cablevision readily offered to sell YES as a premium channel. At the same time, other cable systems in the New York area did add it to their basic tier.

Now those other systems—principally, Time Warner Cable and Comcast—may try to renegotiate with YES. According to The New York Times but not confirmed by Cablevision, if those spats arise, Cablevision will pay YES for any losses if those other cable operators move YES to a premium channel. "We're still trying to learn more about terms of the deal," said a spokesman for Time Warner Cable.

New York City Mayor Michael Bloomberg pushed for the negotiations and announced the deal alongside YES Network Chairman Leo Hindery and Cablevision President and CEO Jim Dolan. Former Time Warner Cable executive Richard Aurelio and former AOL Time Warner CEO Gerald Levin mediated the dispute.

"[Sports] is an extremely complicated business, and there was plenty of emotion throughout the year," Dolan said. "Without all these folks, we wouldn't have been able to get through it."

During the past season, YES took out hostile ads against Cablevision; DirecTV (which carries YES) offered deprived fans a deal to drop Cablevision altogether (apparently, about 100,000 Yankee fans took the bait).

The source of the bickering was the Yankees' taking back rights to their games, which had aired on MSG, after the 2001 season, severely deflating MSG's value to Cablevision. To some extent, for Cablevision, the YES squabble was payback time, but other MSOs cheered Cablevision for fighting for lower sports-channel fees. Some of them argued last May at the national cable convention that 20% of their customers watch sports channels paid for by the 80% who don't.

Additional reporting by P.J. Bednarski and John M. Higgins