Cablevision, Verizon Team on Content
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 11/16/2006
Verizon announced a multi-year pact earlier today with Cablevision's Rainbow Media Holdings unit for the rights to distribute Rainbow's movie, sports, music, and video-on-demand (VOD) programming networks. The telco plans to carry all of the newfound cable programming on its growing video service, FiOS TV, which competes directly with Cablevision's own video offerings in the Bronx, Brooklyn, Long Island, Westchester County NY, southwestern Connecticut, and northern New Jersey.
Specifically, the Verizon-Rainbow deal covers such national cable networks as AMC, WE tv, IFC, and fuse, as well as regional sports channels MSG Network, FSN New York, FSN New England, and FSN New England's high-definition fare. It also encompasses such on-demand channels as Mag Rack and sportskool but not regional news channel News 12.
Predictably, both Verizon and Rainbow officials praised the pact in the formal announcement today. But they didn't disclose any terms of the agreement, including the exact number of years involved.
Since launching a TV service in the New York suburbs earlier this year, Verizon has been gunning for Cablevision's video and broadband subscribers with its FTTP FiOS network, forcing the MSO to boost its data speeds to the fastest in the cable industry. At the same time, Cablevision has been wooing Verizon phone customers with steep discounts on the cable operator's Optimum Voice VOIP service.
Although Cablevision and Verizon are as close to mortal enemies as two companies in rival industries can be, they both needed to reach a programming distribution agreement in the end.
Verizon, always hungry for new TV programming, needed a deal because the Rainbow channels are particularly popular in the New York area. The phone company, which owns distribution rights to most other cable programming, has been trying for many months to crack the tough Cablevision façade and gain access to the Rainbow slate.
For its part, Cablevision needed a deal because Rainbow's financials have not been terribly impressive lately. In the third quarter ending Sept. 30, for example, the programming unit reported operating income of $15.2 million, down 23.1 percent from $19.8 million in the year-earlier period, despite a 3.1 percent rise in net revenues to $217.0 million.
Cablevision officials have also dropped hints about selling Rainbow or finding "strategic" partners to share the financial load of the programming unit in recent years. But, in their quarterly earnings call with analysts last week, they declined to shed any new light on their plans.
— Alan Breznick, Site Editor, Cable Digital News