A handful of cable operators refusing to pay for NBC's supplemental cable coverage of the Olympics are now in the odd position of carrying ads urging viewers to ask for it.
The ads are coming from NBC local broadcast affiliates in markets served by MSOs that haven't done the deal.
"They say, 'If you'd like to see the Olympics on MSNBC, call your local cable operator,'" according to a viewer in Dover, Del., a market served by Comcast, one of the few remaining holdouts.
The deal Comcast is resisting is the $1-per-subscriber-per-year surcharge for additional Olympics coverage on MSNBC and CNBC for the five sets of games going out through 2008.
This year, both cable networks will carry a total of 279 hours of Olympics programming in addition to NBC's 162.5 hours of coverage.
The two cable networks will run a dual feed during the games: one with the games for the surcharge-paying cable world, the other with regular programming.
NBC has succeeded in selling the supplemental cable coverage to about 90% of the market. Comcast, Cablevision, CableOne and the National Cable Television Cooperative (NCTC) are holding out.
The cost to CableOne would be about $740,000 a year, and Tom Might, chairman of Cable One in Phoenix, said, "It's just too much money for two weeks of programming out of the year."
But he said he's still negotiating with NBC.
For Comcast, the surcharge alone could reach $64 million by the end of NBC's eight-year Olympics package, but there's more than money involved, according to a cable operator familiar with NBC deal points.
"It's not just the surcharge but the other terms and conditions, which include dramatic license increases for CNBC and MSNBC through 2008," the cable executive said.
MSOs pay, on average, about 18 cents per subscriber for CNBC and 13 cents for MSNBC, according to Paul Kagan Associates' numbers.
The increases would bump CNBC by about 10% per year, to around 30 cents in 2008, and MSNBC by about 12%, to around 25 cents by 2008.
NBC is also asking for minimum distribution, up to 60% of a cable operator's subscriber base, for MSNBC and CNBC2 and ValueVision, its version of the Home Shopping Network.
"What does ValueVision have to do with the Olympics?" the cable executive asked. "When you look at the average license fees and throw in these other things, it's just too much. Comcast and Cablevision are refusing to pay, but also they don't think MSNBC and CNBC should be carrying sports."
A spokeswoman at Comcast said only that the MSO was still negotiating with NBC. Cablevision declined to comment, but several sources close to the company predicted it will pick up the Olympics cable package within days. That deal is more likely also because Cablevision and NBC are 75/25 co-owners of Rainbow Media Holdings.
Frank Hughes, senior vice president of programming for the NCTC, said his organization is also still negotiating the Olympics package with NBC for some of its members.
NBC signed on many individual co-op members during retransmission negotiations. The network had insisted on negotiating retrans with individual companies instead of with the 300-member cooperative.
For the rest, Hughes observed, "the economics of the deal are very, very rich. They've signed up most of the industry, and that's fine, but we can't sign up something we're not comfortable with. Some members may choose to sit on the sidelines and see what happens."
David Zaslav, president of NBC Cable, is confident that he'll have deals covering all 80 million cable households by the time the trumpets blare at the opening ceremony in Sydney, Australia, in September.
There is no specific deadline for operators to take the package, according to an NBC source, who was unable to say whether it would be restructured if a cable operator passed on the Sydney games but wanted in for the other Olympic games in subsequent years.
"We are really pleased that, with 60 days left to go before the Olympics, more than 90% of cable operators and virtually every other technology distributor have signed up for the package of NBC services, which include CNBC, MSNBC, CNBC2, ValueVision and the five Olympics," he said.
"We don't see [the surcharge] as a premium; we see it as a package."
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