ESPN continued its recent run of long-term affiliate carriage agreements, reaching a multiyear deal with the National Cable Television Cooperative last week.
Terms weren’t disclosed, but sources close to both sides said the agreement runs through 2014, two years longer than ESPN’s recently announced carriage pacts with big MSOs Cox Communications Inc. and Charter Communications Inc.
NCTC CEO Michael Pandzik said the co-op’s deal — which potentially affects systems with 15 million subscribers — was “in the ballpark” of Cox and Charter’s average 7% annual rate increase over the life of the arrangement.
He said the organization was happy with the agreement, which significantly curtails ESPN’s prior annual license-fee hikes of 20%.
The agreement supersedes an NCTC contract that had three years left to run.
The deal “meets our test and criteria,” Pandzik said. “We believe it was commensurate in its terms and provisions to our combined size, and that’s all we ever really want when we sit down to negotiate.”
ESPN president George Bodenheimer, interviewed last Wednesday after he announced the new pact at The Walt Disney Co.’s annual shareholders meeting, called the agreement a “win-win” for both parties.
“This agreement fits the overall strategic plan of what we’re working on — a moderating of the annual rate increase in exchange for a long term agreement and a commitment to carry our full array of products,” he said.
Cox, Charter and the NCTC all opted for a deal framework ESPN has been offering to “the entire industry,” with volume discounts spelled out, Bodenheimer said.
Pandzik said co-op members face the challenge of finding room on channel-constrained systems for ESPN services such as ESPN Deportes and ESPNews, which are key parts of the deal. “Now we’re down to the hard part of rolling this out to the 1,200 member companies and 7,000 cable systems, which is almost as big a deal as negotiating the agreement.”
ESPN senior vice president of affiliate sales and marketing Sean Bratches said it was “a misnomer that only the MSOs and larger systems have invested in their physical plants to create this proliferation of products and services to serve their consumer. What we’ve heard from the cooperative corporately and its member systems is that these new products and services will be embraced in large measure.”
Carriage of any new networks ESPN might launch in the future would have to be negotiated separately, he said.
Kent Gibbons contributed to this report.
