Bob Sherman must cringe every time he sees one of the many ads New England Sports Network runs on television or places in local newspapers.
“The Sox and Bruins are hot, but if you can’t be there, tune in NESN,” the ad says.
Easier said than done, especially if you’re a cable TV subscriber living in Washington or Hancock County, the southern region of New Hampshire, or part of Connecticut.
Due primarily to increasing fees charged by some cable networks, Sherman, a Boston Red Sox fan who lives in Corea, will be shut out when it comes to watching the 151 Sox games aired live on NESN. Smaller, independent cable companies such as Pine Tree Cablevision have opted to drop NESN from their channel lineup due to what they characterize as wildly spiraling costs.
“Unfortunately, our subscribers cannot view Red Sox games because NESN threw a curveball that from a cost standpoint, we could not handle,” said Walter Kemmerer, president and general manager of PTC. “This is tough to admit, but this has been tough on us. PTC still owes NESN over $26,000 for 2002 fourth quarter programming.
“Since we couldn’t keep up with the last rate increase, it would have been insane for us to continue putting NESN in our basic lineup, especially when those costs have doubled from what they were in 2001 and 2002.”
According to Kemmerer, PTC was forced to increase its monthly basic cable fee by $1.95 last June. In January, it was raised again (by $1.65) due to increased programming costs. In order to keep NESN in PTC’s basic lineup, he says he would have to increase the monthly fee again by $3 per customer. Rather than do that, Kemmerer opted to drop NESN in December, when PTC’s two-year contract with NESN ran out.
“If we were carrying NESN now, that one channel would make up 23 percent of our cost for 41 basic channels,” Kemmerer explained. “I believe that’s absurd. As much as I love sports, it doesn’t make sense from a business perspective.”
Basic channels, premium prices
The 77-year-old Kemmerer, who owns six cable systems in Maine, four in New Hampshire, and 13 in South Carolina, said there was no gradual rate increase by NESN the first two years it was carried on PTC, but then the amount doubled over the next five years.
PTC was able to pass off the increasing costs to subscribers willing to pay extra to watch NESN because NESN – like Home Box Office on most systems today – was made available as a “premium” channel, meaning subscribers had to pay extra ($3.95) to get it. Kemmerer says fewer than five percent of his Down East customers subscribed to NESN.
That changed in 2001, when NESN’s ownership demanded that New England cable companies include it on all their lineup tiers, from basic through deluxe, thereby increasing its number of potential viewers and allowing it to charge more for ads. If cable companies refused, they could not get NESN. It was an all-or-nothing proposition.
“NESN needed to be, for advertising-sales standpoint, a basic cable channel because we were competing against the ESPNs and Fox Sports Nets that were already on as basic channels,” said Peter Plaehn, NESN’s vice-president of marketing.
What made financial sense for NESN did not for PTC.
“For us, that meant NESN went from a small revenue source of $5 per month to a basic programming cost of $5,500 per month and $66,000 per year,” Kemmerer said.
The choice, Kemmerer said, was raising cable rates for all subscribers and risk losing viewers or drop NESN and possibly lose over 10 percent of his customers.
“I found out what being between a rock and a hard place really means,” Kemmerer said. “We estimate we could currently lose at least 500 customers in Maine and New Hampshire, where the same problem exists because of NESN’s discontinuation from our basic service.”
“That is Walter’s decision. He’s made it, but if he wants to try and work it out, we’re more than willing to talk,” Plaehn said. “We’re always willing to talk and see what can be worked out. We have large affiliates and smaller, independent affiliates, and I have customers who have fewer subscribers than Walter has.”
Congress’ cable conundrum
Right now, the only option for Down East viewers who want to watch the Sox is subscribing to DirecTV or Dish Network, two satellite services NESN has contracts with.
There may be possible relief on the horizon. Kemmerer and other members of the American Cable Association, an advocacy group for smaller cable companies, are pushing for the right to remove sports and other expensive channels from their basic lineups and offer them as premium, a la carte, or premium tier channels which customers who wanted them would pay extra for.
“If we did that, we could actually reduce the monthly rate for 90 percent of our customers,” Kemmerer said.
Cable executives testified before the U.S. Senate last week in hopes of spurring legislation that would limit the all-or-nothing negotiating tactics of cable networks which demand their channel be included in basic packages or tiers.
“That’s kind of subjective,” said Plaehn, whose network was one of the last to go from premium to basic. “I mean, who makes the decision which channels will or won’t be basic? What would be the criteria?”
“I think this is such an issue because the public understands this. It makes a difference to them what cable options they have, how accessible their media is, and what types of choices they have,” said Dave Lackey, communications director for U.S. Senator Olympia J. Snowe.
Lackey doesn’t expect to see any solutions arise from the current Federal Communications Commission deliberations on changing media ownership rules, but debate will continue.
Meanwhile, viewers such as Sherman and cable owners such as Kemmerer can only keep writing letters and e-mails or making calls to politicians and network officials … and hope for a resolution someday.
“I hate to see all the stuff in the papers and talk shows saying ‘Here comes the damn cable company raising prices again.’ Well, what else can we do to survive?” Kemmerer asked.
Andrew Neff can be reached at 990-8205, 1-800-310-8600, or firstname.lastname@example.org