Sunday April 4, 2004
First things first, I have to say "HAPPY BIRTHDAY" to my brother, Justin.
Q&A with Kevin Cattoor: President of Victory Sports One...
Last night, the Baltimore Orioles handily defeated the Boston Red Sox to open up the "state-side" portion of the Major League Baseball regular season on ESPN. This afternoon, I will take a 1/2 day off from work because that is what I do on Opening Day. I will have my two 27 inch TVs set up in the living room, and I will watch the games airing on ESPN, ESPN 2, WGN and any other games I can watch. But as of right now, I will not be able to watch my "local" team, the Minnesota Twins, play because my cable company, like most others in the Upper Midwest, has yet to sign up with Victory Sports One.
And, you know what? That frustrates me. It is frustrating for me, and I'm sure many, many more Twins fans, on many levels. The frustration led to a e-mail exchange with a couple of people at Victory Sports. I asked the question "What can I do to help get this process get done?" Well, Kevin Cattoor, President of Victory Sports One, e-mailed me and said that I should ask him a number of questions, and he would respond to them. So, I did, and he did. The following is that e-conversation.
(I know I have been accused of taking the side of Victory Sports on this issue because I have written about it fairly frequently. I want to point out that I definitely understand the side of the cable and satellite providers. However, big picture, I want to watch the Twins games, and if I can help that happen, in any way, I will do it.)
The Conversation Begins
1.) The Twins season starts on Monday night, when would an agreement have to be reached in order for people to be able to see the Twins' 7:00 game?
Monday afternoon.
2.) Obviously we know Victory Sports One will telecast the Twins games. I know that it will also televise some WCHA hockey, Gophers Men's Basketball and most Gophers football games, NCC football games and some regional high school games. What other programming can viewers expect to see on Victory Sports?
We also carries up to 30 high school games featuring boys and girls basketball and hockey, 30 WCHA Hockey games featuring St Cloud State and Minnesota State Mankato, Big Ten BB and FB, NCAA tournaments covering hockey, wrestling, soccer, lacrosse, swimming etc. and local shows like the Sports Show. In the last winter season, Victory provided over 125 events from this list. Most all of our event telecasts are replayed too. This is an attractive feature of Victory so fans can watch the games again or at a different time. We think we have a good place for ESPNews. When you see our primetime schedule which is what most viewers watch on our network, ESPNews is aired about 10% in the winter and less than 5% in the summer. Don’t be mislead by operator’s comments re ESPNews. It provides us our source for national news. I think ESPN puts some pretty good programming and it has value to the Victory service.
3.) We know of this type of team-owned network can work by looking at the YES Network (Yankees). They tried the same thing in other cities where it didn't work (Kansas City, for one). What have you learned from the Kansas City situation that makes you think that it will work in another perceived small-market, Minneapolis/St. Paul?
There are major differences between KC and Minnesota.
- First of all, the Royals haven’t had a major presence on cable and satellite. There is not a KC regional network like MSC/FSN. Only 30 Royals games had been carried on FSN Midwest (St. Louis net) and FSN Rocky Mtn (Rockies net).
- Interest in Royals games falls off considerably once you get 70 miles from KC. You run into Cardinal fans to the east and the Rockies to the west.
- The Royals really do not have a regional network like FSN or Victory. What they have done is sell about 100 of their games to the cable operators who place the games on channels they designate.
- You can’t say the KC net didn’t work because they never tried to launch a 24x7 net.
4.) Obviously one reason for starting this station is to increase revenues for the Twins. Can Twins fans expect those increased revenues to be used to increase payroll or to retain players?
Yes
5.) I am 100% of the belief that the Twins need a new stadium. In order to get that done, they will need some state money. Could this network’s revenues also go into a pool so that taxpayers would have to pay less for a new stadium?
It’s important that the Twins maximize all revenues. To the extent that we do, that obviously helps the overall Twins financial picture.
6.) Are there other big-picture benefits (those beyond the most important, being able to watch the games!) for the Twins and Twins fans?
Yes. With Victory, we are in a position to market the Twins brand more aggressively. We can do this is number of ways-
- Provide more Twins programming- spring training games, classic games (i.e. 65, 87 and 91 WS games), minor league games (we are telecasting 6 games this summer from our AA and AAA affiliates) and more pre and post game programming around the day’s game.
- We can market ticket sales and corporate partners more aggressively.
- You’ll see more programming about the Twins outside the lines- offseason coverage, community efforts, player profiles etc.
- We can cover more games in the future.
- We will follow the team with exclusive coverage in playoffs.
6.) How many people currently are able to view Victory Sports?
Up to 200 communities serving 100,000 households. So up to 250,000 people.
7.) How would you say current negotiations are going with the big, Cities cable companies or the satellite providers? Is there any talk between the two parties yet or are things still at a standstill?
We are in talks with most all of them. Direct TV has not talked to us. They are affiliated with FSN, so we think they’re not interested in seeing Victory succeed.
8.) I live in a small town on the Canadian border. Are negotiations with the smaller, outstate cable companies any different than the bigger companies? (I think that these are some of the Twins biggest fans and yet they are far more dependent upon the games being on TV.)
They’re very different. The local operators seem to have their customer’s needs more in mind. When they determine that they want to get Victory, deals get done quickly. The national providers are more interested in leveraging their customers to get a better deal from Victory. We can deal with that if they just come to the table and give us counteroffer.
9.) My cable provider just upped my bill $2 a month... for the Food Network and E!! Twins fans like me would be more than willing to pay an extra $2 a month for Victory. I'd probably pay $10 a month to see the Twins games. Can you please explain why Victory is so insistent that it be part of basic cable, and not solely offered as a premium channel?
Twins games and Victory’s other programming needs to be available to the broadest audience possible. That’s best for the Twins’s fans. And Twins games have been on expanded basic for 14 years. Why should we move off when the Wild and Twolves are on expanded basic? The only reason that the operators would like Twins/Victory on a pay service is so they can profit more for product you’re already paying for. When operators commit to the FSN service, they pay a fee that is then incorporated into your monthly rate. Twins are part of that current cost. We learned that in Denver the president of FSN stated that when they lose major sports product on their service, they’re required to reduce their rate to the operators. In Denver, the Avalanche and Nuggets recently started their own network taking games off FSN Rocky Mtn. So according to the FSN president, it appears that they’ll be reducing the FSN rate. Same thing should occur here too. I do not know the contract terms of operators and FSN in this market. But do think that the operators are going to continue to pay for the Twins when FSN doesn’t have them anymore? How the operators absorb the Victory service and cost into their operation is their business, not ours. Victory as a wholesaler of sports programming does not suggest to operators what to do with their rates.
We find it hypocritical for operators to have added all the channels onto your expanded basic service without asking their customers what they want and creating a package of 60-70 channels in which the average subscriber probably watches only ten. And then Victory comes along with the most watched sports programming in the market and they put you the customer into the decision of adding the channel stating that you’re being asked to pay for programming that not everyone watches. You can’t have it both ways.
10.) I think that a lot of people who have been keeping tabs on this situation are curious about the cost. I'm sure you're sick of answering it, but where does your current asking price (I believe it's around $2.20/mth. per subscriber) rank or compare to others sports networks?
Some of us at Victory started MSC in both Minnesota and Wisconsin(Brewers/Bucks/Badgers) We’ve been in the business for over 10 years. We have sense of what the prices for some 20 regional networks in the country are. The price for ESPN has been highly publicized at $2.50. Price for these networks is based upon number of events, viewership of the events, and year round program lineup. Victory has more events (and the events with highest viewership) than any network in the region. Yankees (YES) and Red Sox (NESN) both have their own nets. The Cubs and White Sox are going into Comcast’s network in Chicago in 2005. Houston is pursuing theirs also. In contrast to the stadium where the Twins are one of the last teams to get one, we will be one of the first teams to establish our own network. NESN we understand gets over $2. YES as ruled by the arbitrator gets $1.93.
11.) If you had to venture a guess, do you think that Victory Sports will have a deal with any of the big cable companies by Monday night? And for the most part, once that happens will there be a domino effect?
We hope to have a deal with a couple of them.
No question that as we bring more systems on, our terms become more set in the market and more deals continue to get done.
12.) How long can the Twins/Victory afford to hold out? I mean, can some Twins fans expect to be unable to see Twins games all season?
Possibly. We’re in this for the long term. Yankees went a whole season without carriage on the largest operator in NY. So I think that tells you how important it is for MLB teams to have their own network once you make the commitment. And we have made the commitment. Let’s hope that operators learn from the NY situation. The arbitrator ruled on that situation and it turned out that the Yankees were asking a reasonable deal. Our deal is comparable to the Yankees. They ruled expanded basic carriage and not a pay service. That’s good for Victory and the Twins fans. The YES price is $1.93. YES is a baseball centric network like ours. In fact, while the Yankees generate 50% of the total viewership in the NY market, the Twins generate 85%. So we certainly think our price is fair.
13.) Any final thoughts for the real Twins fans out there? What can they be doing at this point, if they want to watch Twins games on Victory Sports this year?
Cable and satellite subscribers write out the checks to their providers every month. In April, as you pay for your service, you may or may not have Twins Baseball, the most watched sports team in the upper Midwest.
In the region, we estimate that approximately 50 million people watched Twins on FSN last year. This compares to less than 8 million who watched Twolves and Wild. More people watched Twins Baseball last year than those that watched ESPN and ESPN 2 combined in primetime for 365 days a year.
Our vision for Victory is to bring you more local sports telecasts than you ever received before. Victory does provide more local events than any other network in the region. We believe there is a great opportunity to bring fans more college and high school sports. An indication of the following of non pro sports is the recent success of the UM Women’s BB team. When they beat Duke on ESPN, they generated a 16.0 rating (this is a big number). Compare this to the Wild Conference Finals game last year on ESPN which did an 11.7 rating, this supports the fact that pro sports are not as valuable except for Twins and Vikes) in the upper Midwest as amateur sports.
We fully understand fan’s feelings about this. They just want to watch the games. We knew launching Victory wasn’t going to be pleasant. We ask for their patience as we work to get the national providers to the table to negotiate a deal. Unfortunately, we believe that these national providers aggressively leverage their customers against programmers like Victory. Victory is a better way for the Twins and their fans. This is your network that will telecast more local sports than any other network in the market. You’ll be able to trust having your children watch Victory as our programming will be family oriented.
Thanks for your time again, Mr. Cattoor!
You’re welcome.
That is it for the conversation. If you have any thoughts or comments for me, please let me know. Also, if you have further questions that you would like to see me ask Mr. Cattoor, send me an e-mail and I will try to get them answered as well. For instance, after I sent him my questions, I received an e-mail from "Pat", who wrote:
I am so glad you vented about Victory. I'm not optimistic for us as our cable provider is a bigger company than yours and I just don't see it happening. Twins ownership/management is being extremely nearsighted in this thing just from a business standpoint. Do they realize how much ill will they are spreading? If you hear anything optimistic let me know or if you hear of a way to possibly get thru to either the Twins or the cable companies.
I forwarded this question to Mr. Cattoor and go the following response:
Unfortunately, I have been faced with these comments many times. Let me just say, as the Twins will be one of the last teams in baseball to build a new stadium, we believe that we are taking a very long term few with our network. We are the third team in baseball that will have it's own network. There is nothing nearsighted about Victory. It is taking a significant investment to launch with a vision to bring more local sports to your living room. Here's a view on our vision. The UM Women's BB team generated 37% more viewers in it's win against Duke on ESPN than the Wild did in the second game of the conference finals against Anaheim on ESPN last year. Now Victory doesn't carry the UM Women's BB games, but we believe that in addition to the dominant following of Twin's, there is a great opportunity to develop a new market in sports television that you will enjoy.
The Twins organization was voted #4 best run franchise in baseball last year. We ranked #1 in the American League. We think it's because we think long term and know where we need to take risks. Feel free to share this with your friends.