Bloomberg News

Time Warner Cable Ends MSG Spat Amid Knicks’ Lin Winning Streak

February 18, 2012

Feb. 18 (Bloomberg) -- Madison Square Garden Co. and Time Warner Cable Inc. reached an agreement on a new contract, ending a seven-week stalemate that kept the operator’s 2.8 million local subscribers from watching the New York Knicks and their Jeremy Lin-led winning streak.

Alex Dudley, a spokesman for New York-based Time Warner Cable, declined to discuss terms in a phone interview yesterday. The system carried the Knicks’ 89-85 loss last night to the New Orleans Hornets, ending New York’s streak at seven.

Lin’s success, dubbed Linsanity, led the two sides to a face-to-face meeting this week. The attention surrounding Lin and the team played a role in pushing the two into an agreement, Chris Marangi, a portfolio manager at Gamco Investors Inc., said in a telephone interview.

“Linsanity helped,” said Marangi, based in Rye, New York, whose funds own about 5 million MSG shares and 500,000 Time Warner Cable shares. “Time Warner Cable realistically couldn’t have dropped MSG -- it’s too important to too many fans in New York to not be carried. Both sides probably gave a little.”

David Joyce, an analyst at New York-based Miller Tabak & Co., also cited Lin’s success as helping to pressure the two sides into an agreement. The Knicks, buoyed by the Harvard University-educated Lin, who wasn’t drafted by a National Basketball Association team, have won seven straight to even their record at 15-15.

Time Warner Cable rose 0.8 percent to $77.66 yesterday in New York. MSG, based in New York, advanced 3.1 percent to $32.85. The stock has gained 12 percent since Feb. 4, when Lin came off the bench to score 25 points against the New Jersey Nets to begin New York’s winning streak.

Disputed Rates

Time Warner Cable, the second-largest U.S. cable provider with about 12 million subscribers, had said MSG was asking for a 53 percent increase in carriage fees, a figure MSG disputed.

Cable and satellite-TV operators pay more than $4.50 a month per subscriber for MSG and MSG Plus, according to researcher SNL Kagan. Time Warner Cable Chief Executive Officer Glenn Britt has publicly supported the idea of putting sports on separate tiers from basic cable to give non-sports fans cheaper bills.

MSG, controlled by New York’s Dolan family and led by Chairman James Dolan, had organized viewing parties during the dispute so that fans could watch the Knicks and Rangers of the National Hockey League. MSG’s lineup also includes games of NHL’s Buffalo Sabres.

‘Annoying Consumers’

Dudley acknowledged the help of New York Governor Andrew Cuomo, New York Attorney General Eric Schneiderman and NBA Commissioner David Stern in the negotiating process.

“They were leaving money on the table and annoying consumers and it is not good to annoy consumers,” Cuomo said today on The Governor David Paterson Show on WOR radio in New York. “I believe Jeremy Lin heightened it. That heightened the pressure because people really wanted to see the program.”

Schneiderman said his office has worked with Time Warner Cable and MSG over the past month to help resolve the dispute.

“We are pleased that both parties have reached an agreement that will finally allow Knicks, Rangers, and Sabres fans to enjoy the rest of this season’s games,” Schneiderman said.

--With assistance from Alex Sherman, Mason Levinson and Niamh Ring in New York and Freeman Klopott in Albany. Editors: Larry Siddons, Niamh Ring

To contact the reporters on this story: Scott Soshnick in New York at ssoshnick@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net

To contact the editors responsible for this story: Michael Sillup at msillup@bloomberg.net; Ville Heiskanen at vheiskanen@bloomberg.net


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