AT&T U-verse, Comcast at loggerheads over Houston sports

AT&T (NYSE: T) is walking a razor line between providing content that some subscribers might want--local sports, including the Houston Astros baseball team--and what Comcast (Nasdaq: CMCSA) wants to charge for the privilege of viewing its regional sports network.

For now, at least, the telco has determined the price is too much for U-verse subscribers to bear. In a story that has played out in other markets--including Philadelphia, San Diego and soon Los Angeles--cable operators lock up exclusive rights to the local professional sports teams and then sell off the privilege of watching those games to competing service providers. In Houston, the price might be too high--especially when it comes to the Astros, the second worst team in all of baseball right now--and the NBA Rockets, a winning, but hardly must-see-TV player.

Comcast, though, can't be drawn and quartered as the price bully in this instance, at least as far as the baseball team pricing is concerned.

"The major stumbling block to getting the TV deal done has been the Astros, the party that purportedly set the $3.40 price point that has been the issue," reported the Houston Press.

For that money, service providers in other markets such as the New York Metro area get something the Astros can't deliver: "an in-demand team that draws big viewership numbers; a winning team with a history of high viewership; a team with a huge national following; and a partnership with Fox Sports Net," the story continued.

In Houston, it added, "there is no in-demand team that historically delivers huge numbers."

The Astros are laggards and the Rockets "offered up a nice season, but when they don't pack the arena on a nightly basis, it's hard to argue that they're must see TV," the story added.

Jeff Weber, president of content and ad sales at AT&T Home Solutions, pretty much laid out this reasoning at the Nomura Global Media Summit in New York City, without actually pinpointing the Houston market.

"People are going to make tough decisions around content," Weber said. "Particularly the sports pricing is what is driving a lot of that pressure. The data will tell you (that) you don't need to carry it or you really ought to carry it."

In Houston, the data around a losing baseball team without a huge fan base is telling AT&T it doesn't need to carry it … at least for the asking price.

"We are not going to pay prices … we are not carrying certain regional sports networks in one of our biggest markets … and we knew we didn't need to because the data was crystal clear about how intense those viewers were," he said.

The hard data, Weber said, told AT&T that the benefit to the few rabid fans did not outweigh the benefit to the larger base of subscribers who were lukewarm, at best, to the idea of paying more for the sports channel.

"We looked at not just viewership," he said. "We looked at how many of our customers watched zero of those games, one, two, all the way through 150 games for the baseball and 80 games for the basketball team."

The carrier took those viewership numbers and compared it against other teams and "it was very clear the intensity in that particular market was low and therefore we didn't need to pay the rates that were being asked and we're not."

While this might seem a bad move from a PR perspective, AT&T has actually received some grudging respect for its decision.

"It's easy to make AT&T the bad guy. But the numbers support the decision it made. There's apparently no mass defection of U-verse users to Comcast or else U-verse might have been a bit more conciliatory, and until peo09ple start leaving U-verse in troves for Comcast, U-verse will have no reason to revisit this position," the Houston Press story concluded.

For more:
- the Houston Press has this story
- and AT&T has this webcast

Related articles:
Weber says AT&T will pay programmers less for U-verse distribution if they go over the top
AT&T U-verse TV gets top video company honors from Frost & Sullivan

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