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With the emergence of new star guard Jeremy Lin driving regional cable ratings for New York Knicks games to new heights, and Governor Andrew Cuomo throwing in an assist, the Madison Square Garden Company and Time Warner Cable (NYSE: TWC) announced the end their lengthy carriage dispute.
Resisting what it claims were demands for 53 percent fee increases to carry the MSG Network regional sports channel, Time Warner (NYSE: TWX) pulled the channel and several other MSG outlets off its service Jan. 1. That deprived 2.8 million subscribers of not just Knick home games, but also those of the National Hockey League’s New York Rangers, New Jersey Devils and Buffalo Sabres.
The two sides were firing PR shots and not talking until Lin emerged from the NBA waiver wire to become a breakout force for the Knicks, not only driving up Knicks cable ratings, but also drawing enough attention to the team to make the carriage dispute a political issue.
With Cuomo and New York Attorney General Eric Schneiderman intervening an pressuring both sides back to the negotiating table, a deal was hashed out Friday.
Terms of the agreement were not announced, but Time Warner — which had been looking to draw a line in the sand on escalating carriage fees — likely paid top dollar, analysts say.
“At this point given the phenomenon of the situation that is Jeremy Lin, I don’t think they had much choice,” Brean Murray analyst Todd Mitchell told the New York Times (NYSE: NYT). “I don’t think Time Warner had a lot of bargaining leverage. I don’t know what kind of concessions they could have wrung out of MSG.”
The agreement not only covers the MSG Network, but also the lightly watched music channel FUSE.
SNL Kagan estimated that, prior to the new agreement, MSG Network received $2.63 per subscriber per month from cable operators who carry the network. This compares to $2.99 for the YES Network, the regional cable channel that carries the New York Yankees and New Jersey Nets.