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  1. #1
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    Why Mediacom would make a deal on the BTN

    This may be more information than you want to know, but a little cable tv economics...

    First of all, my guess is they are paying less than $1.10 per month if they do get a deal.

    Mediacom is between a rock and a hard place, and the other cable providers will be also. Let's say for example that Mediacom has 1 million subscribers in BTN territory, which is about right I think. If 5% of these customers are die hard sports fans and go to Directv to get the channel, then Mediacom would loose 50,000 subscribers at a conservative value of $3,000 per subscriber, or $150,000,000 in value for the company. Mediacom would also lose the chance to sell internet and phone service to those 50,000 customers. At $80 per month of average revenue those 50,000 customers would cost them $48 million a year in revenue, about half of that is EBITDA, so even if they have to eat the $5 -$6 million in fees they are ahead. But they will for sure pass on the cost.

    BTN Economics-

    It is no coincidence that Directv is carrying the BTN because Directv is owned by Fox, and surprise, surprise, Fox owns 49% of the BTN. Directv would love to have no one else carry the BTN and they pick up all those die hard sports fans that would probably also buy the full sports package they sell. There are probably 20 milion cable subscribers in the BTN target. If Directv picks up 5% of those cable companies customers that do not sign up for the channel, they would gain 1 million customers. The value of every Directv customer is valued by Wall Street at around $4,000 last time I looked and that means they would pick about $4 billion in value.

    Does anyone think that Fox is not going to do everything they can to have Directv pick up as many of those customers as they can? Over time I think they are planning on a bigger than 5% take rate because of the BTN. If all the cable companies cave they still get value out of their interest in the BTN.

    Does anyone think they will not do this in the next few years for all the major conferences? That is why all the big cable companies are fighting this. The guys at Fox are no dummies, and if they have to loose a couple hundred million getting the BTN started, look at the return on the Directv side. Do not be surprised when it is announced for the SEC or BIG 12 channel that the big cable companies end up owning a piece of the pie.

    Anyone who thinks the BTN will fail does not understand all the reasons for doing it. Of course it is just another way to get more money out of the consumer for things that used to be advertiser funded. But hasn't that been the whole model of ESPN since it started?



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    Re: Why Mediacom would make a deal on the BTN

    Mediacomm just announced there is NO deal.


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    Re: Why Mediacom would make a deal on the BTN

    In Cedar Falls we have been putting in a ton of hd boxes for it. I have to listen to hawkeye homers everyday that are so glad we added it on expanded cable and are also carrying it in hd.


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    Re: Why Mediacom would make a deal on the BTN

    Quote Originally Posted by JRE1975 View Post
    Mediacom is between a rock and a hard place, and the other cable providers will be also.
    I don't think that Mediacom, or any other major cable company for that matter, is going to be between a rock and a hard place because of not adding the BTN. To my knowledge, not one major cable company has added BTN. As of this post, all parties involved are denying a deal with Mediacom.

    The NFL Network saga last year has shown that the cable companies can survive quite nicely after they refuse to buckle to the demands of these niche sports networks.


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    Re: Why Mediacom would make a deal on the BTN

    Quote Originally Posted by jbhtexas View Post
    I don't think that Mediacom, or any other major cable company for that matter, is going to be between a rock and a hard place because of not adding the BTN. To my knowledge, not one major cable company has added BTN. As of this post, all parties involved are denying a deal with Mediacom.

    The NFL Network saga last year has shown that the cable companies can survive quite nicely after they refuse to buckle to the demands of these niche sports networks.
    If I remember previous posts correctly, the Gazette did a poll (unscientific, of course) where 85% of those surveyed said they did not want the Big 10 Network to be on the basic tier - it should be on a sports tier. If I'm Mediacom I'm looking at those numbers and sticking to my guns. Not only that, another thread said some of the minor cable companies in Iowa are looking to get out of the deal now. Another reason why if I'm Mediacom I'm sticking to my guns. Basically, if I'm Mediacom, I'm not dealing until Comcast does.


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    Re: Why Mediacom would make a deal on the BTN

    Quote Originally Posted by jdoggivjc View Post
    If I'm Mediacom I'm looking at those numbers and sticking to my guns. Not only that, another thread said some of the minor cable companies in Iowa are looking to get out of the deal now. Another reason why if I'm Mediacom I'm sticking to my guns. Basically, if I'm Mediacom, I'm not dealing until Comcast does.
    Time Warner also has markets in Big Ten land. Last year at this time down here, The NFL network was running an onslaught of commercials on radio and TV "urging" folks to petition Time Warner to add NFL Network. Time Warner did not relent. I doubt that they are going to buckle under to the mighty Big Ten...


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    Not Sure About Your Logic

    First of all, I'm not sure $3000 is a "conservative" revenue loss for each customer that switches.

    Second, if Mediacom caves and has to raise cable rates AGAIN- my guess is they'll lose quite a few customers also. In my case they will not only lose a cable customer, but also an internet customer.

    Mediacom isn't going to cave unless Comcast, Time Warner, etc do so. The cable companies resisted the NFL, they can surely resist a "regional" sports channel that MIGHT provide 10 hrs of programming each week that would appeal to most avid Big 10 sports fans.

    If they cave to the Big 10, they'll have to cave to the NFL and every other BCS conference.



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    Re: Not Sure About Your Logic

    Quote Originally Posted by isucy86 View Post
    First of all, I'm not sure $3000 is a "conservative" revenue loss for each customer that switches.

    Second, if Mediacom caves and has to raise cable rates AGAIN- my guess is they'll lose quite a few customers also. In my case they will not only lose a cable customer, but also an internet customer.

    Mediacom isn't going to cave unless Comcast, Time Warner, etc do so. The cable companies resisted the NFL, they can surely resist a "regional" sports channel that MIGHT provide 10 hrs of programming each week that would appeal to most avid Big 10 sports fans.

    If they cave to the Big 10, they'll have to cave to the NFL and every other BCS conference.

    The $3,000 is the value they lose from the stock market per sub, not the revenue. The $3,000 value per subscriber is about right. The average revenue is probably about $950 per year.

    Mediacom will be the first to cave because almost 2/3 of thier subscribers are in the BTN area. The other bigger companies have a relatively smaller % of thier customers affected by this problem.

    The NFL Network has a relative few games that are exclusively on that network. For the BTN we are talking about a pretty high % of basketball games, and a smaller % of football games that are going to be exclusive to the BTN.

    I do not want them to cave, I was just trying to explain why I will not be surprised if they do.

    You help make my point about them being between a rock and a hard place when you say you will drop them if they cave, and a % of the Iowa fans are saying they will bolt if they do not pick up the BTN.

    The only winner is Fox, and maybe the Big 10/11 sports budgets.



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    Re: Why Mediacom would make a deal on the BTN

    But if the cable companies stand strong, then the BTN will have a very small viewership percentage, fewer advertising $$$, and then be out of buisiness in 3 years. I think its the BTN that has to cave first. They are the ones that need cable more than cable needs them.



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    Re: Why Mediacom would make a deal on the BTN

    TV8 had a clip from a Mediacom rep tonight and he mentioned that there are 4 major colleges in Iowa and didn't feel it was fair to have ISU, UNI and Drake fans have to pay for something they may not want to watch.

    I think it will end up on the sports tier and Mediacom will be paying less than $1.10 per subscriber.

    At one time I heard only one cable company out of 11 in the Big Ten school's hometowns had agreed to have the Big 10 Network. It was Buckeye Cable in Columbus, which is also owned by Fox News Corp. Does anyone know if some others have signed up yet?



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    Re: Why Mediacom would make a deal on the BTN

    It's hard for me to root for Mediacom but this time they're right.



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    Re: Why Mediacom would make a deal on the BTN

    From: "Mediacom Customer Service" <customerservicenc@mediacomcc.com> [ Save address ]
    Date: Thu, 23 Aug 2007 02:31:19 +0000

    Mediacom is still in discussions with the Big Ten Network about carrying their programming on our system and no deals have been made at this time. We have offered to carry it on either our Digital Tier or a Sports Tier so that customers who do not watch sports will not have their rate go up due to the addition of the Network. Our company has been negotiating with the Big 10 Network; and weeks ago we made an offer to carry it on our digital tier where customers who wish to receive this programming can access it. At this time we are still in negotiations with Big Ten Network. Thank you for your time and opinion. I will be sure to forward this information so we can better decide what types of channels to add to our lineup and where we should add them for the benefit of our customers.

    If you need further assistance or have any additional questions please feel free to contact us via e-mail and we will be happy to assist you, but please be sure to include your original email for reference. Or you may contact us through our Customer Service Department at 800-332-0245, open 24 hours a day, seven days a week for your convenience.

    Thank you.

    Mediacom Customer Service
    E-Mail North Central Division
    customerservicenc@mediacomcc.com








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