how much is the cox deal with the hornets worth annually? when was it agreed upon? when does it expire
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I will answer your direct questions in your reply to my comment first.
No not only do I not think CST overcharges for their channel, I know they don’t. If they did, they would not be carried by dozens of other video service providers in the area. In fact, the only TWO that they are not carried on in this state is Direct TV and Charter. See the link below for a full list of their full affiliates list for a greater understanding of the scope of people willing to sign a contract with their company.
So if they have companies large, small, and some downright tiny willing to sign a contract they can’t be asking a ridiculously out of market value for the channel. This is a case of the two video services providers having their own issues with adding the channel. Most likely, it has to do with channel capacity, channel placement, and corporate structures not caring about the New Orleans market. (as in Charter Corporate not Charter Louisiana and DirectTV Corporate) Adding a channel to your lineup is not as easy as walking in a room and plugging a wire into a port labeled “channel 29”. I would suspect, read this as I know more than most, is that it is really about not desiring to add a channel for a region only. Charter and Cox Communications work with each other in partnerships all the time, they are not at each other’s throats in a way that one would say I am not adding that channel because the other owns the company.
I know that Direct TV doesn’t want to add it because of the large amount of capital outlay to get the feed back to their closest satellite aggregation and uplink area. Direct TV and Dish Network are both owned by News Corp. of Fox fame. They bought Direct TV first about a decade ago, then bought Dish Network when they were about to go bankrupt about 5 years ago. As they have already done the outlay for one of their divisions they might not be so inclined to do it for the other. They are getting your money one way or the other, so why try as hard. Thinking Direct TV and Dish Network “compete” against each other fully is like thinking Sirrius and XM “compete”.
So MAYBE, just maybe, when you consider the entire scope of the situation, maybe Charter and DirectTV is just using the bugga-boo of video services costing the customer more per month to keep people off of their backs for their own desire not to add a channel for other reasons.
As far as the point about the council member talking about pulling the franchise in St. Tammany goes, that doesn’t surprise me. A Louisiana politician talking out of his butt, making claims they would never follow through on just to get their names in the papers… That would NEVER happen in this state.
This gets me to how you were off base. You can’t say they might pull their franchises and let them duke it out for customers. This is inherently ignorant as to how the franchise agreement works, and the results of pulling the franchise.
First, they are non-excusive rights granted to an entity to provide communications services in the franchises jurisdictional area. Notice that “non-exclusive” part? That means that the franchise holder does not hold any right to be the sole franchise holder or provider in a given area. So yes, you too can go and apply for a franchise and then figure out how to raise the tens of millions of dollars to provide services also. This gets me to your use of the term monopoly. Cable companies are not monopolies. Period. For more, please read the definition linked, as it is pretty simple concept. As Direct TV, Dish Network, Bell, Eatel, Verizon Wireless, etc. all offer video, voice, and data, in the service areas that every cable company cover, there is zero possibility of them controlling a commodity or service. For every service they offer, there is at least two competitors in their area. Yes before satellite services there was an argument, we are talking 20 years ago now, but even then you could have received the satellite services like ESPN and the such on your own so that is why that wasn’t a monopoly then either. Most people can’t think past the idea that the cable companies have sole use of their own wire, well guess what, if you buy something and the government doesn’t pitch in, they have zero say in how you use the thing you bought. So please, will everyone stop using the ignorant and outdated use of the word monopoly when it comes to cable companies, it is a huge pet peeve of mine. So as the franchises are non-exclusive pulling them will not do anything about the competitive nature of offering voice, video, and data in a given area.
Second, there are only two results of pulling or not renewing a franchise agreement. Either the company that loses the agreement must sell the plant to another provider with a franchise before a determined zero date, or they have to pull down every wire in the affected area and shut down. Do you see how trying to force a company like Charter to do either would end up in most likely bankrupting the parish in question with legal bills? The Parish would not do either unless they knew that there was evidence that proved they were not fulfilling their agreement. Not adding CST or any of the complaints about fuzzy service in a few spot areas is going to warrant that kind of a legal maneuver. I wonder what the rest of the council, and most likely the council memeber who made the statement, think about that threat. I bet you that isn’t even the 45th thing on their list of real tactics. Yes, if Charter wasn’t providing their potential customers with access to competitive services, granting access to their airwaves to the public service commission, or some other egregious act against the public interest, or not wanting to charge their subscribers 5% franchise fee (read that as a tax you never voted for), then they might choose to pull a franchise. But otherwise, the real power of the Parish comes when Charter’s franchise is up for renewal. Then they can put in the new agreement that they must carry the channel. Charter will fight it, but eventually they would probably not care as you pointed out the Northshore is their most profitable of their Louisiana markets.
Now to the rest of your blog post.
Problem 1: Northshore
I pretty much covered that above.
As my comment stated, I think the resolution lies with the Hornets. They need to make CST understand how large an issue this is and understand they will have no option other than switch partners at the end of the current agreement if it is not resolved soon. Yes Cox Communications is the larges contributor to the Hornets, but it is pure economics. The Hornets MUST be on in the Northshore, and if CST can’t provide that then they deserve to lose the business. Citizen’s pushing the council to pressure Charter corporate is a good idea, but even the council has little power until a franchise renewal.
Problem 2: Not broadcasting all the games
I agree. But again, blame is on the Hornets. As they approach the re-negotiation of the broadcasting agreement, they have leverage to pressure moves they want like more complete coverage. Maybe, those 15 games they don’t cover isn’t as high a priority as some other concession to the Hornets organization. But in the end, the Hornets are the problem as long as CST is fulfilling their agreement.
Problem 3: inability to pick and choose your channels
If you thought this journal is already long, double it and that would be adding the explanation as to this situation. Thing to remember is that ALL the blame lies on the channel providers like ESPN, FOX, Disney, etc. If there is a huge request for a deeper explanation I will post it in the comments. But as this is not a cable television blog, I will leave it at my previous sentence.
Problem 4: Direct TV no CST and Cox no NFL Sunday Ticket.
Call Direct TV about CST. I explained the main reason above. New Orleans is not large enough to push them to care about your complaints. Period. We should be used to being this country’s red headed step child by now. Give us your oil and natural gas and kindly shut up. Thanks Louisiana, we will call you when we want to party.
NFL Season Ticket is an exclusive channel offering between the NFL and Direct TV. Call the NFL and ask them why they won’t let any other video providers offer the service. Any cable company, phone company, and even Dish Network would offer it if they allowed it, but they don’t. Oh while your at it, call your congressman and ask them why Direct TV is allowed to have sole control of a commodity and service as impactful to the entertainment world like the NFL. Wouldn’t it be nice if there was some competition as to who you could pick to provide you with your NFL Sunday Ticket. There is your anti-trust fight.
Problem 5: HD
Yep, it would be nice to have it on all games. It cost money to broadcast in HD. From renting the special truck to process the video, to the large difference in cost to uplink the larger bandwidth feed, to other operating cost involved with HD vs. standard definition. Again, this is all on the Hornets organization to make CST understand how and what is important to them moving forward. I think the Hornets organization has taken a “lets not rock the Cox boat too much” attitude up to this point. I think that is changing. Notice the next time you are in the arena. There are sponsorships galore. For those that go to the games, you will recognize a lack of Cox communications ads running on the ring screens etc. The past two seasons, it was them or Oschners on those screens. Now it is around a dozen oil field companies. HMMMMM, I wonder why. (see Chouest) I think this is a symptom of the fact that the new direction is from the top down. No longer is it good enough that the Hornets have money from a few big sponsors. As they don’t seem to be happy with “good enough” in the players, I think they will not be happy with “good enough” in their exposure to the public. All of these signs are good things.
This post was submitted by TopherPrice.
I just read this article & comments after being forwarded to it from the "Eff the Hornets Attenance" blog post. I know this is a month-old post, but I still have to say that this is an awesome entry. I consider myself a bit of a geek, and therefore this type of in-depth information is my kind of stuff. Thank you so much, TopherPrice. Awesome, awesome, awesome. I don't have anything to contribute to the conversation. Just wanted to say THANKS!
Before I read these posts, I knew nothing about this issue. Thanks for the great info guys. Also, my home in Vegas is subscribed to NBA league pass, so I get League Pass Online as well. If I were to come to New Orleans with my laptop from home, would the NBA still blackout Hornets games while I'm down there? I'm wondering if this could be the way to beat the system.
That would not work. It's based on the IP address of one of the computers you end up 'talking to' in the process of getting to the NBA data. So if a New Yorker wants to watch the Knicks on their holiday trip home, they have 2 optiins: Go to MSG or watch it on MSGN (I think this is their CST) through some distribution system without doing something illegal like using certain feeds or using a proxy to get LP (fooling the NBA computer by using additional servers between you and them that will disguise your location).
First of all I would like to say this the most knowledgeable conversation about TV channels I have ever seen. Good job guys. I live in Lafayette and have been wondering for some time when Cox was going to start broadcasting the games in HD. It just makes us look cheap imo. Also a friend of mine got league pass last year as a present from his girlfriend so that he could watch all the games. We didnt think for one second that the games would be blacked out all the way in Lafayette. I just decided to take the issue of home games into my own hands this year and bought half season tickets. I work offshore so full season tickets were not reasonable. That was just a piece of useless information for you. My comment looks so juvenile next to yalls. I feel like I need to go back to high school and stay awake in english class.
The no HD thing is actually that CST is not taping them in HD for the non-HD games. So thus it can't be broadcast in HD. That all really is an economic thing. It turns into what battle does the Hornets organization wish to fight. Will they sacrifice HD for more concessions in the Northshore battle, or is the Northshore things so far from a fix that they push harder for the HD, or Direct TV thing. Those are all the internal battles that we are not privy to, but I am sure the Hornets are now beginning to work their strategy a bit more aggressively. Only time will tell.
Topher, you seem to know a good deal about this. Can you point to some good resources an interested party could use to learn without pestering you? Regardless of all this, Charter is horrible and needs to go. This was true before the Hornets were a twinkle in New Orleans' eye. Horrible. I agree, if it was easy to correct this for the consumers, it'd be done. I haven't had the depth of experience you seem to have had with telecommunications, but I was privy to a fight once. My buddy from high school started an ISP in the area and I got his service in New Orleans. The service, however, was junk. Since I knew the owner and most of the employees, i got tip-top customer service on this front. After months of attacking the problem, the bottom line is: BellSouth has junk copper to my house and it's not worth it to them to fix it for me, and especially not for the company that is leasing the lines and charging me for service. Neither person had both incentive and power do anything about the copper, so i got squeezed out. The end. How this DSL story relates to CST on other providers: The big guys are fighting a fight that affects you, but the effects are not really in the feedback loop. Our howls fall on deaf ears at best, apathetic ears at worst. The only way to deal with this is to mobilize people. The power of the mob is greater than that of a contract. Anyone want to start an online petition thingy? Is that something the blog could get involved with? I'll talk to my rep about the situation to see if Hornets would even `care' about such a thing.
To be honest, I don't really know of what sources I would point you to. My information is from years in the business. And I am telling you things, without agenda, and that if very rare coming from someone inside the industry. Most links and sites are agenda driven. Either protect the company, or protect the channel providers style information. So I don't really know off the top of my head. I will track down a few of the publications I read's website and drop them in the comments. A lot of that stuff is written from a place where you need to have a baseline of information to begin with, but some of the articles are pretty interesting. Gives you a better insight into the technical and political struggles that an industry like the communications one goes through in doing daily business.
Anything you manage to point to is bonus. Thanks for the effort in advance. It sounds like your position is that it's upon the Hornets to clearly and firmly state their needs for CST to get the Hornets the greatest chance of being seen around Lake Pontchartrain, and perhaps be willing to make a sacrifice in terms of dollars from CST to pick up their viewership in the shortest amount of time especially with them winning (e.g. if CST gives it's self to DirecTv, then the Hornets need to `give' the increased viewership to CST, at least initially). Is this accurate?
Good points. It sounds as if you are very well read on this issue. It would have done me well to talk to someone like you before writing the article, but instead I went with a collection of internet readings and my own personal experiences. Also it seems as if you think that I find Cox, or CST, to blame for this. I don't blame any company in the world for looking out for their bottom line. That's their one and only job. What I'm trying to get across is that a problem exists and needs to be fixed in order to maximize what is already a small market. I will add a short reply to a few specific things in which we seem to disagree. 1. You say that cst is available on dozens of local providers, and then you provide a list. I too found that list when writing, and the only two in the area that provide CST are Cox and DishTV (sort of Comcast locally, too). Fios doesn't have CST, and it's unavailable on AppleTV. The dozens you list are elsewhere, and are probably charged a different rate for carrying the Hornets based on a number of factors, location likely being one (I'm assuming this for the time being. If this is wrong then please let me know. I genuinely enjoy getting more informed). The biggest and the fourth biggest service providers in this area have CST. Two and three don't. 2. "This gets me to how you were off base. You canâ€™t say they might pull their franchises and let them duke it out for customers. This is inherently ignorant as to how the franchise agreement works, and the results of pulling the franchise." I don't actually say that they "might" pull their exclusive franchise agreements (which I presumed they had based on the city council meetings) and let them duke it out if an agreement can't be reached. If they are already non-exclusive, then great. Also, I realize the difficulties in breaking a franchise agreement. This was merely an example of a threat that could be made. Granted, it was rather specific, but again just representative of something they could do to get negotiations rolling. *we can talk about the cost that Cox would face going to the Northshore, but let's agree that politics plays a huge part in these things, especially in Louisiana. 3. Lastly, I didn't use the term "monopolies", and feel that you're being a little condescending regarding my usage of it. I crossed it out in the article. Put a big line through it. And yes, I'm well aware of what it means. My point was that for customers who have no alternative in service, it feels like they have a monopoly. If you can't get dish service in New Orleans, like so many people, then you have exactly one choice in a cable provider if you want to watch the Hornets.
Joe, let me begin by saying that I genuinely like your writing. You are probably my favorite contributor to the blog, so believe me when I say I am not trying to attack you. I will go in reverse order of your points just to switch things up. Number 3 has me a bit irritated. Please don't insult my intelligence, and that of the rest of your readers by acting like I pulled the term monopoly out of thin air. You said, and I quote: "Otherwise take away both of their monopolies municipal franchise rights, and let them duke it out for customers the hard way." Just because you struck monopolies through doesn't give you a pass on using it. Are you trying to suggest that you were not trying a backhanded way of using the term monopoly to describe Charter? To say otherwise is an insult to your readers intelligence, or you don't know how to edit your documents and I know that isn't the case. How is one not able to sign up for Dish or Direct TV? I can think of two situations. You have too many trees to get a clear path to the satellite feed, or your apartment complex doesn't allow them. Neither are the doing of your one other alternative for service. That does not make a monopoly, that make for an unfortunate situation. So you can try and back down from your statement by using semantics and act like your intention wasn't to use a term improperly or you can just say, my bad I was wrong to use that term. By your past interactions on this site, I never would have expected such tactics. Point 2: There is no "if" about them being non-exclusive. It is illegal for any municipality to have exclusive franchise rights with ANY entity. That is basic municipal law. It has been that way since I have known about franchise agreements, at least 25 years. As far as Cox going into the Northshore, it is maybe 5% politics. Seriously, it is all economics. That is why you have multiple hybrid fiber coax style companies in only the largest of dense populations like New York City, LA, etc. There just isn't enough money to go in and split the customer base. If Cox were to go in and build a complete plant that mirrors the Charter plant, it would take around 15 years just to recoup the money if they were able to capture 85-100% of Charter's customer base. That is not realistic. The real numbers would be close to 50%, as there is just not crazy discounts they could offer that Charter could not match. There is very little profit margin in these companies, that is why they need so many subscribers to turn a good profit. That is why you see so few small cable companies now, every year the cost per channel goes up, and thus the profit margin goes down. There is just not enough money to be made in such a venture, so the method of expansion is to buy systems not try and overbuild. Charter will not sell the Northshore system as it is the most profitable in the entire region. If they sell that, then they leave all of Louisiana. Not going to happen any time soon. Believe me. Economy is too poor, Cox is not looking to expand until things pick up, and there is a fundamental shift in the way video services are to be delivered on the horizon. Now is not the time to pay a premium price for a cable company, just so you can take over the Northshore. As I stated, the threat of breaking a franchise over this situation is a very, very, very empty one. Now the threat of not voting in the new franchise if they don't add the channel is a very, very, real one. The thing is, I think they are up for renewal in about 8 years. Point 1: Believe me, I know that Charter is the #2 cable company in the state. That doesn't change the fact that they are stonewalling, and it isn't all about price. If you are talking about Verizon Fios, that is because they are half in at the moment. This is another case of the New Orleans region is not large enough for the capital outlay to add a region only channel to a national provider. That is complicated, costly, and a headache for the engineering side. As adding the channel or not having it wouldn't affect their customer base uptake by more than a few percent, it is not worth the trouble. Apple TV is a joke at the moment and really isn't even in the same class of service. Apple TV or any internet based deliverer of video content can't and wont be able to show channels with live programming for years. There are contracts with all the sports leagues for the next decade or so that prohibit any IP based delivery of their channel that is part of a public network (read this as the internet). So until those contracts are up, or the NFL, NBA, the motion picture licensing groups, the TV channels like HBO, ABC, CBS, have a reason to change their rules on allowing realtime/same time slot broadcasting of their content via the internet Apple TV is a glorified XBox or PS3 with the option to pay $.99 to watch a two day old TV show. AppleTV is a joke, why do you think the redesigned it and slashed the price to next to nothing. It is called a Hail Mary pass to buy a bad idea. My personal belief is Netflix will be the company primed to be the next, "cable company" in the future. They will already be in every home, and already be charging people $9 a month for movies. I think the first shoe to drop will be HBO. You will get the ability to have HBO added to your $9 package for say $10 more a month and watch HBO live and HBO in demand. Once that shoe drops I think the other pay channels will fall in line, and then the sports channels will, lastly the local network channels. I say buy netflix now, and cash in in 10 years. Pricing on channels is based on a couple of factors. There is a baseline price per subscriber. Then if you have above a certain number of subs that price is discounted. Then if you put the channel between channel 1 - 30 there can be a discount, then a smaller discount if it is on the expanded basic cable, then generally no discount if it goes on digital. It is all about increasing the number of subs the channel can say their channel is in their home. This allows them to throw larger and larger numbers of available eyes at the advertisers, thus getting them bigger paychecks from the ad time. The reason why I know that the pricing isn't higher than market value for a regional sports channel that is the lead partner for the NFL and NBA team is the scope of the other affiliates. If Dish took them on, then their large volume discounts are in line. If tiny companies like Trust Cable, Spillway, and Allen's TV Cable can put the channel on their line up, then they can not be asking too much. These very small MSO's are the companies that every penny in channel fees matter. So if they didn't feel the channel vs. cost value was in line they would not add the channel. They couldn't afford the P.R. nightmare of raising rates to add a channel if they didn't think it was inline and worth it. These are also the companies who pay CST the highest per sub rate as they don't qualify for volume discounts. So if they can pay full rate, and be fine with it, it can't really be the price. Yes, the Hornets need to force a fix. It is in their best interest. The frustration is that it really is a waiting game. If the Hornets become the sleeper sudden hottest thing in the NBA this year, and the rumor that the CST contract is up for renewal in 2012, I bet it gets fixed before next season. I don't ever see Direct TV carrying CST though. They just don't care enough. They are letting either the local NOLA Fox or CBS fall from their lineup because they don't want to pay the per sub fee they want to charge. They are not going to add another charge per sub regional channel if they wont fork out 1/5 the per sub rate to keep the local news and weather on. I would think CST would most likely have to literally give them the channel for free in order to get them to do the capital outlay to add it to their system. That is not an exaggeration, as I know they have been known to tell companies that is the only way they get in their millions of homes. It is about them deciding what are acceptable pain levels they are willing to deal with in order to not have to pay any more a month to their partners. As I said, they get your Dish Network or Direct TV money, so those that are Hornets diehards will pay Peter, the ones who are NFL fans will pay Paul. Either way their coffers are full of that person's money and they don't lose sleep over your happiness.
Honestly I'd love to one day have a conversation with you about this so I can get a little better grasp on the whole issue. Your post and replies have been tremendously helpful. As for the monopolies remark, yes. I was using the term monopolies to describe Charter and Cox. However, I really do understand that what they have is not a monopoly. At the time I did think that they had exclusive rights to provide cable services in their areas, but I do realize that wouldn't make them a true monopoly. I was shooting an insult at the system by using the term. It wasn't a great choice of words, but honestly I can't watch Hornets games without getting Cox and it pisses me off. Monopoly is a great buzz word, and I fell into the trap (albeit only half way since I crossed it out) of being sensational to make a point. When forming my opinions about a few issues, I really took one remark from what I now realize is an uninformed source, and made a number of assumptions based off of it. When I read that a city councilman had said that they were going to take away the exclusive rights, I sort of ran with it. For that I apologize. As for Apple and Google, I've read that they are both about to make big pushes into the market. Considering Google is doing everything right now, it would seem possible that they could do something big with internet TV. Netflix is awesome, and I totally agree with you on it being part of the future. Not sure why I chose apple and google instead of Netflix, considering I suscribe to it. I guess I was thinking that they are still a few years away from even considering sports packages, while I could see Google or Apple getting there in within a year or two. Oh, and when I saw Allen's Cable on that list I literally had to check to see what year it was from. Again, thanks for the info. This is why I love blogs. One last thing sort of unrelated- Why do you think that dish/directv would choose to put the Hornets on Dish instead of direcTV? Technical issues? Seems like for the New Orleans area that would have been a slam dunk move having them both on one provider.
A bit off topic, but you mentioned sponsorships. At the arena the other night I didn't catch glimpse of Dow chemical. They were all over the place last year. Anybody know what happened to them? They bail?
I think what is going on is the Hornets are pounding the pavement for sponsors for the screens and all available spots in the arena. I am guessing that the largest sponsors like Cox, Dow, and Oschner were afforded a benefit of being on all unsold ad space in the arena. So when the Hornets don't sell say 10 minutes of the ring screens, they throw the Cox or Dow logos up just not to have blank space. This is in done as a concession to the crazy big checks they cut to the Hornets. I think now they are selling those unsold spots and thus the freebies are gone. Now Cox or Dow would have to pay for those slots, and thus it drives up the price for the ad time as there is more demand. It really did make me smile seeing all new sponsors in the ad space. It screamed, we are going to find money and make this work here, not hope it does or wait for the State to help. That screams Gary Chouest and his local connections and knowing his local market.
I think this is also a case of the Saints success helping the Hornets. For one thing, anything with Saints sells. A lot. My Browns milk has a Saints thing on it (I think, I'm at work). Milk. Yeah. The cow stuff. As you point out, Topher, the prices must be going up despite the market expanding. Some sponsors will turn to the Hornets as an alternative. It must be so. On a related front, some people are going to want to get on the ground floor with the Hornets since Saints fever morphs into sports fever when they do well but don't break the fans' banks (see Super Bowl XLIV). I also don't think the new AFL's Battlewings moving to New Orleans after the Saints victory is a coincidence and reconstituting as an incarnation of the New Orleans Voodoo (proud season ticket holder already here). They are capitalizing on that insanity. They will be a secondary tenant at the Arena (Graveyard when it's not the Hive) but the sponsors get more value when the Voodoo fans see their 7up banner and the like. There is a good deal happening on the sponsorship front indeed. It's quite interesting, actually.
Boom. Good write. About Charter: Charter on the Northshore is a low class operation and the Hornets gripe should be on the large pile when the time comes for them to renegotiate. Chances are nothing will happen, as I said in the other article, and the main evidence is that nothing has happened in the last 15. They are totally behind the times and their customer service is junk. Junk. About HD: HD is becoming standard and that will resolve itself in time. About the missing games: I don't get this and I never will. It's dinky-to-hinky to not show all the games, modulo the ones carried nationwide in some format. THE NBA SHOULD NOT ALLOW TEAMS TO ENTER INTO SUCH DEALS. It's unbecoming if nothing else. About League Pass: The relatively few season ticket holders in the world should get League Pass for FREE with no blackouts. I know, they have your ticket money, but they want that hot dog money too. I get it. However, we are doing all we can to support the NBA with ticket sales, and we clearly like the game; do me a solid. However, we are not the base to them; we are saps. You can take that to the bank. My rep likes me and the Hornets have always taken good care of me, but the visiting fans to a man that I've spoken to say we do miles away a better job than their home team at taking care of the folks (gameplay aside). I've seen games in Houston, Oklahoma City, and Phoenix and haven't found anything close. So, while we should be treated as valued partners, we are treated as the marks in a con. Wonderful.