BTN vs. Comcast (Part 1)

The battle between the Big Ten Network and Comcast has raged on for months and fans have been clamoring for answers about why the impasse still exists. Officials from both the BTN and Comcast joined Sam Webb & Andy Evans on the Michigan Insider morning show (M-F, 6-10 am) to provide both sides of the story. BTN President Mark Silverman is up first in this transcript of yesterday's interview.

The following interview took place Wednesday, October 3rd, 2007 on the Michigan Insider morning show on Sportstalk 1050, WTKA. Big Ten Network President Mark Silverman came on first... followed directly by Director of Communications for Comcast Midewest, Patrick Paterno.

Sam Webb: Big Ten Network President, Mark Silverman. Mark how are you doing this morning?

Mark Silverman: “I am doing good. How are you doing this morning?”

Sam Webb: Doing great. So lets dive right into it about the issues that are currently facing you and your negotiations or your lack thereof with Comcast. The major, major issue that we hear come up, on various ads is that the Big Ten Network is insisting upon having the highest per subscriber rate on basic cable… right behind ESPN at $1.10 per subscriber. Is that accurate or is this just a rate that is being suggested for the eight state Big Ten footprint?

Mark Silverman: “You know, it is funny. I have seen the ads and every time I read the ads, I just think Comcast digs themselves a bigger and bigger hole. You know, I do not understand instead of negotiating with us, why they have decided to go in a full scale advertising attack on the network with lies that they know are inaccurate. They know full well. I think they have four or five networks that they own themselves that cost more in our region than the price we are asking for in our region. We have been asking Comcast; it is well under a dollar now for quite a while. They continue to perpetrate a higher number that was never even mentioned to them ever. And, they own Comcast Sports Philadelphia, is more than triple in Philadelphia what we are asking. Comcast Sports Chicago, you know where we are based, it is more than triple what we are asking. They know that and they just continue to say these things because they think that they can get away with them. We are past the point in trying to delve into these wars with Comcast. You know, we have 30 million subscribers. We have 140 cable affiliates that have all agreed to carry the network, so we are focused on productive conversations, creating a great network so fans of the Big Ten can see more programming than every before and that is where we are going to keep focusing on and we are not just going to get wired in the muck with Comcast with a lot of these inaccuracies and they know it is not true. They are looking out for their bottom line and that is their prerogative as a company, but you know to say things like they have been saying, it is just completely inaccurate.”

Sam Webb: We are talking to Big Ten Network President Mark Silverman here on Sportstalk 1050 WTKA. Mark, I guess one of the major questions that subscribers would have is that the suggestion that whatever rate the Big Ten Network is asking for, will somehow be passed along to the subscriber. Now how exactly does that work, because my understanding is that with the recent deals with WOW! and RCN, the network was added without an increase in rate, so how exactly does that work?

Mark Silverman: “Sure. Well you know that cable operators are given opportunities to generate revenue from a program. We are providing advertising time in all our of programming to cable operators that they are then selling to advertising and generating revenue from. We are providing at the same time of turning our network into an HD network, which is costing a substantial amount of money to produce. They then can sell an HD package for extra money. Where they can generate revenue to offset the cost of the network and that is just the nature of the way it works. You know, you do not pay for networks. You pay a bill to a cable operator that decides how much they want to charge you and the fact that we have gotten 140 deals done and none of those other operators are saying that they are going to have to go charge every single consumer for the network, which is not what we believe should happen at all and Comcast keeps saying that, and you know, again they can keep saying it. I believe that Comcast is arguing as if we were 2 months ago and the network has not come on the air yet. You know, I think it is time for them to wake up, it is October. We have some big Michigan games coming up. We have 140 affiliates that have all signed up. I do not understand why they are not even negotiating with us. You know the other piece regarding the price increase, here in Chicago everyone just got a price increase in Comcast. There price just went up 3-4 bucks per month. You know, they are not carrying the network, so what happened? What caused this price increase? Why is this one different? Your cable bills go up. They raise your bills all the time and just blaming it on the network is a complete fallacy in my opinion.”

Sam Webb: Now Mark, it is clear throughout the process the major sticking point, it sounds like from your standpoint is not having the Big Ten Network on a digital sports tier. So I guess one of the questions that our listeners have, is how about the idea of having the Big Ten Network on a digital sports tier outside the 8 state footprint and having it on extended basic cable in the 8 state footprint. Would that be a viable option?

Mark Silverman: “Yes. We are open to that. Outside the 8 states, there is very little that we are not open to. I think that you can see that with our getting a deal done with Wide Open West and getting a deal done with Dish Network and a deal done with RCN; we are getting deals done. All we need to get a deal done is another party who has the same interest, and Wide Open West, they showed an interest. They wanted to work this out and get a deal done. So we were able to do that and the same thing with RCN and the satellite companies. But you need 2 parties, and Comcast is not interested. I do think that a lot of this goes to this new SEC Network that they are looking to launch in the south and I think we are being held hostage by Comcast until that SEC Network gets worked out, because they do not want to show that they were weak and allowed a Big Ten Network on their air so that then the SEC Network could go and partner with somebody other than Comcast. Because Comcast is the one down there wining and dining them to try and go do an SEC Network, but of course they carry on extended basic. So I find the whole thing to be a very frustrating situation. I do not understand why fans in Michigan cannot watch Big Ten programming in their expanded basic lineup, when they get 70 channels. It makes absolutely no sense to me.”

Sam Webb: Now, one of the other questions is, is their a precedent, because a lot of folks say well do whatever you have to do to get it on in the Big Ten region this year. So is there is a precedent for a channel, a startup channel going on a specialized tier and then eventually moving on to the extended basic cable package after they show some sort of viability?

Mark Silverman: “You know I have heard that. You know from what I have seen, I have never seen that happen. Just so everyone understands this issue… Comcast is launching a brand new sports network in Portland. They are launching it in the next few weeks. It is a Portland Trailblazer Network. There are 50 Trailblazer games. They are charging cable operators $2.00 a month for 55 Trailblazer games; it is on expanded basic. Expanded basic is where these type of networks all live. There are probably 15 different networks across the country, maybe more, probably 20 that are all on expanded basic, that have a regionalized sports focus. You know, Comcast likes to say that they are looking out for the best interest of the consumers, but really what they need to add to that is ‘when it is a network that we do not own.’ But when it is a network they own, they are more than comfortable putting it on expanded basic everywhere and I really believe, as you look at this, this network belongs on expanded basic. We are producing 400 live events. We have 40 Michigan and Michigan State basketball games. We are going to end up with 10 Michigan/Michigan State football games. This is a network that of course should be broadly distributed and everyone should be able to see it and everyone is paying enough on their cable bills that it should be something that their cable company puts on their system and goes and generates revenue with the opportunities that we have given them and you know we should be well passed this point at this stage.”

Andy Evans: Mark, it is Andy Evans, thanks for coming on the show this morning. (Mark Silverman, “Hey Andy”). Besides the price that we have already discussed that Comcast is putting out there, I guess just go over some things that people might have misconceptions about you. Because we have heard both sides of the story. I have talked to both of your representatives and a lot of people go back and forth and you run into this issue, what are some of the things that maybe you can dispel that people have missed notions about with the Big Ten Network?

Mark Silverman: “Sure. I think, I guess I really do not want to, but I guess I should respond to some of their advertising. In terms of what is a best game, I would believe and Michigan and Michigan State fans would tell that the best games are the games they are playing, not the game that a national network would put on the air. You know the fact that we are having three Michigan games in a row. We are going to have three out of four weeks, I believe we are going to have Michigan State games on. In terms of what is the best game, for Comcast headquarters in Philadelphia to tell the Big Ten what the best game is, I think they are a little off base. The best game in Indiana is Indiana and Purdue and the best game in Michigan are the Wolverines and Spartans, and we are going to have those games. We are going to have 41 football games this year. We are going to have 140 basketball games and if you are a Big Ten fan this is why the network was created to show more Big Ten programming than ever before. You know last year there were 10 Michigan basketball games that were not even on the air, anywhere. This year every single Michigan game is going to be on and if you have Comcast unfortunately, they are preventing you from seeing it. But if you have a WOW! or RCN or one of the dish companies, satellite companies, it is available to you. So the fact that Comcast has all the best games is wrong. The best games are the games you want, and we have the Big Ten games, which are the games you want. You know the only thing preventing this from happening is Comcast being stubborn and not seeing what 140 other cable companies have all agreed to. And that is really unfortunate and we are trying to do all that we can and you know AT&T U-Verse is out there as a competitor to Comcast has the network. And every single competitor has the network, you know we are trying to negotiate but there is only so much we can do when the other party is not really interested.”

Sam Webb: We are talking to Big Ten Network President Mark Silverman here on the Michigan Insider on Sportstalk 1050 WTKA. Now Mark, I want to play devil’s advocate a little bit and put you in the shoes of Comcast and ask you this. If you make this deal with the Big Ten Network, is it a dangerous precedent to set when say for instance, you've got Mike Illitch out there and he has the Tigers and Red Wings, and you have Steinbrenner and he has the Yankees... lets say that they decide to make a network and now they want to come see you and say, ‘Hey we you know what, we want our own station, we want our own channel, and we want to charge a certain subscriber rate. You did it with the Big Ten Network, why not do it with us?' If they do it with you, are they setting themselves up to have to follow through on deals like this with other parties?

Mark Silverman: “You know Sam it is interesting, I do not disagree with some of that. I think there are interested parties in seeing how this plays out, absolutely and the FCC in particular has made public notion that they are watching this to see what happens. But the piece that is missing is Comcast is the one that is talking to all of them already. So, Comcast is the second leading regional sports network that there is and Comcast is trying to do these networks for themselves. So, I would have a lot more empathy if they were just the cable operator that would be forced to pay all this money. But the reality is that they are trying to launch these networks and they have 10 of them. You know they have all these sports networks, in addition to Versus and Golf Channel and these sports networks in Portland and Chicago and Philadelphia; they are all carried on expanded basic. They are trying to grown their sports network business, which is their right and it is their right to negotiate along with Fox and other competitors to try and go launch these networks, but what strikes me as being a bit acting in an inappropriate way is that if you lose the business and Comcast tried to be a partner of the Big Ten Network and the Big Ten conference decided on Fox as a partner and I think a lot of what you are seeing here is a result of that decision and a lot of that has not exactly been played out. That is where I believe they are acting beyond what there right is as a cable operator that is supposed to be providing a service to the consumer in that area.”

Andy Evans: Mark, I guess to clarify on this. Is Time Warner also not onboard with Big Ten Network?

Mark Silverman: “That is right. In Ohio, we have five of the top six cable operator onboard and Time Warner is also not onboard. If someone wants to sit there and make the link between Time Warner and Comcast, I would not exactly doubt it either. I think that the big cable companies have tended to act in a certain manner and things are always more difficult when you are dealing with them. I think when you look in Ohio and the fact that we have Buckeye Cable onboard in addition to Wide Open West and Insight cable and the satellite companies, again I think that you see a company that is willing to compromise, a company that is willing to negotiate and get deals done. I know we have sent this out and you guys have probably said it already but no other network ever has 30 million subs in its first 30 days. The first network ever to do that and we have done that as a result of being willing to compromise and try to get deals done and it is really difficult for me to sit here and say that we have 30 million subs and then realize and be fully aware that a large part of Michigan and Ohio in particular don’t have the network because their big cable companies are taking in what is my opinion is a very drastic anticonsumer stand.”

Sam Webb: Alright Mark, we can go on and on forever with you, but to wrap it up 2 pressing questions. 1) Is there any plan for streaming? 2) Are you going to reach the revenue sharing goals with the Big Ten schools that you guys set forth at the beginning of this venture?

Mark Silverman: “Yeah, actually we are going to be streaming some basketball games this year. And we will look at football in the future. There will be no football games streamed this fall. We are probably going to stream 8 to 10 games. I want to experiment with a few different types of ideas on how we can stream that and make it an interesting experience for the fan and that will start sometime this fall. I think we are hoping to get a couple of games on the air in November for streaming. Then for the revenue share; you know the schools are getting their share for 20 years. You know, the network is a 20 year deal, and the network will eventually get into all these homes I believe. We are sharing the revenue. We are paying the conference a fee and then the conference then distributes it to all the schools equally, so all the schools are getting their revenue. There is an interest in this network and I know people in your market only hears what Comcast says and I can tell you a good part of the rest of the market here has moved on and people are getting the network and watching the games and they should be able to watch them too.”

Sam Webb: That was Big Ten Network President Mark Silverman coming on to give us his side of the ledger. Hey Mark, we really appreciate it and it has been very informative this morning, thanks a lot.

Mark Silverman: “Thanks you guys, take care, have fun.”

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