Charlie Ergen’s Dish Network could be headed for a split with ESPN over escalating rights fees, The Post has learned.
The battle was given new life yesterday when ESPN announced a $15.2 billion, eight-year rights extension deal with the NFL for “Monday Night Football,” starting in 2014.
Dish is negotiating a new carriage renewal deal with ESPN and is balking at passing along big fee hikes from sports providers to its satellite-TV customers, sources said.
Dish wants ESPN owner Disney to offer the sports network on a separate tier from its basic package so that non-sports fans aren’t penalized.
Already Dish has dropped several regional New York sports channels, including YES Network, MSG channels and SNY. Ergen wouldn’t be the first to fight ESPN; Cox Communications ditched the network back in 2003.
“Instead of knuckling under, he’s saying let’s save the $5 and multiply it by [Dish’s] 14 million subscribers,” said a source.
Cable, satellite and telecom companies are bracing for fee increases in light of ESPN’s new NFL deal.
Disney-ESPN is paying a reported 73 percent increase over its existing deal, which ends in 2013. The new pact includes the right to stream games to mobile devices and gives the network more sports highlights as well as the possibility of a playoff game in the future. Negotiations are ongoing with NFL’s broadcast partners.
One pay-TV distributor complained: “The playbook is set, whether Olympics or Nascar or US Open tennis or the Oscars or the Super Bowl or World Series. Programmers are now feeling very confident that the money they pay in exorbitant rights fees will come directly from the pockets of cable and satellite customers.”
In the past 18 months, ESPN has also paid big fee increases for Wimbledon tennis, Pac-12 and BCS college football, but several sources say the reason for ESPN’s willingness to spend big is because of fresh competition from Comcast’s NBCUniversal, which ponied up $4 billion for Olympic rights.
Disney-ESPN is already the highest-priced network, at $4.69 a month per subscriber, according to research firm Kagan. ESPN’s annual increase is around 8 percent, compared with an industry average of 3 percent, says Kagan’s Derek Baine. One source suggested ESPN was going after a double-digit increase in current negotiations.
One sports TV consultant said: “If this keeps happening, ESPN and the leagues are going to kill the golden goose. It’s going to mandate a la carte,” meaning consumers get to pick the channels they want for additional costs.
Derek Chang, DirecTV’s content chief, said “because all customers are being forced to take the sports, it is driving pricing out of the range of many people.”
Chang wondered at what point sports rights increases will force a change in the current tiered model and force pay-TV providers to offer channels individually.
An ESPN spokeswoman didn’t respond to requests for comment.