He may have outplayed NBA superstar Kobe Bryant in the Garden Friday night, but the pressure keeps mounting on New York Knicks guard Jeremy Lin. Now, the pro-basketball Cinderella Story is being counted on to end the entrenched carriage war between the Madison Square Garden Company and Time Warner Cable (NYSE: TWC).
Since Jan. 1, about 2.8 million Time Warner (NYSE: TWX) subscribers have been unable to see regional sports telecasts of not only Knicks home games, but also those for local NHL teams the New York Rangers, New Jersey Devils and Buffalo Sabres. Time Warner has been in a lengthy dispute with MSG, which owns the regional cable rights to those teams.
Enter Lin, the Harvard-educated son of first-generation Taiwanese immigrants who has emerged as a playmaking star for the moribund Knicks in the last two weeks, after having been cut by two other NBA teams. With Lin leading the Knicks to a five-game winning streak, local news outlets have openly pondered whether he could produce enough buzz to, perhaps, finally trigger revolt among Time Warner’s somewhat indifferent New York subscriber base that could force Time Warner’s hand.
And on Twitter, several bloggers are agitating for a pay-per-view option for home Knick games. “Knicks get hot, demand spikes for MSG, let us pay a premium for spot access and everybody Lins,” LinkedIn (NYSE: LNKD) CEO Jeff Weiner suggested. Traffic to the Turner Sports-operated New York Knicks homepage is up 500 percent recently.
An MSG representative told us Monday that pay per view is “not in our plans right now.” But the company has added fuel to the carriage dispute discussion by touting its 70 percent year-to-year ratings increases for Knicks games on the MSG Network featuring Lin– a bump that has come without Time Warner homes.
So far, however, Time Warner Cable officials have shown no sign of capitulation. “Unfortunately, MSG is still demanding a 53 percent increase,” read a Time Warner statement Monday, re-asserting the company’s position that MSG reneged on an agreement last year for 6.5 percent fee increases. “Our hope is that they will go back to their pre-December demands and close a reasonable deal. It’s important to remember that they declined our request for an extension in December, thus preventing our customers from viewing games on MSG. Fortunately, fans still have access to some games via other networks.
Time Warner Cable points out the national visibility on cable of Knicks games. Sure, local fans missed Lin leading the Knicks over the Minnesota Timberwolves Saturday, but they were able to catch Friday night’s contest against the Lakers on ESPN (NYSE: DIS), and five of the team’s next nine games are on either ESPN, ABC, TNT or YES, the regional sports outlet for the New Jersey Nets.
There’s also the fact that cable alternatives like satellite and telecom services are not options in some local areas. For example, DirecTV (NYSE: DTV) is not an option for many surrounded by tall buildings in Manhattan.
It’s true that there’s been a rash of cave-ins recently by cable and satellite service providers. In another carriage conflict last October, for example, Fox (NSDQ: NWS) Networks used its effective “KeepMyNets” PR campaign to hold DirecTV’s feet to the fire. That campaign included commercials in which Kurt Sutter, outspoken creator of hit FX drama Sons of Anarchy, urged DirecTV-subscribing fans of his show to petition their satellite company. It worked — not only was Fox able to secure hefty fee increases for bigger channels like FX, it improved the position for obscure outlets like Fuel TV, too.
But while Sutter and American Horror Story creator Ryan Murphy (who also participated in the KeepMyNets campaign) were able to build public pressure before DirecTV was able to pull Fox Network channels, Lin faces a more entrenched opponent.
Time Warner is coming off a fourth quarter during which it reported income and revenue that both outpaced investor forecasts. And facing what it has characterized as unreasonable demands from Knicks boss and MSG executive chairman James Dolan to not only increase sports carriage fees by 53 percent, but also start running the little-seen music channel FUSE, Time Warner officials have privately said they’re drawing a line in the sand in regard to what have become spiraling network renewal fees in the MSO business.
They believe the impact of these negotiations will have a ripple effect on future carriage talks. Of course, Time Warner has itself to blame for the escalating carriage fees, with its 20-year, $3 billion regional sports deal with the Lakers setting records and providing Dolan and MSG with a rallying cry. With the Knicks not having won a championship in 40 years and the Lakers enjoying the rabid Southern California following that comes with 11 titles won over that span, Time Warner has argued the apples-and-oranges nature of that comparison.