News Corp. Ups Ante in the All-News Game

The competition among the proposed all-news channels is so intense that News Corp. is offering to pay cable systems $10 per subscriber, and in some cases $11, for carrying its new network, according to cable executives.

While it is not unusual for new programming services to give cable operators an incentive for coverage, the price News Corp. is paying far exceeds those offered in the past, when there were fewer channels vying for space.

QVC Inc. paid cable systems $5 per subscribers to carry its Q2 service a few years back. One cable operator said Home Shopping Network was offering $8 a subscriber late last year for additional pickup.

“The cable capacity crunch has raised the value of cable networks only recently,” said Derek Baine, an analyst at Paul Kagan Associates. “A few years back, networks were changing hands at $5 to $10 per sub. Now the going rate is between $10 and $15.”

In fact, he said, certain newcomers are paying even higher prices to secure cable carriage--by converting existing services. Baine said Microsoft Corp. is paying roughly $12.50 per subscriber for “raw cable carriage” for the 24-hour news channel it is starting with NBC. The software company agreed to pay NBC $220 million for half an interest in America’s Talking, the NBC cable network the partners will convert to news on July 15.

Based on 35 million subscribers of America’s Talking by the end of 1997, Microsoft is paying $12.50 per subscriber.

Similarly, Liberty Media Corp. is buying into Fox Inc.’s fX network, which has 25 million subscribers, at a price of $200 million, or $16 per subscriber. Liberty and Fox are reprogramming the network with sports.

“You can either buy your way in or build from scratch, which is harder, given the capacity crunch,” Baine said.

News Corp. confirmed that negotiations are underway but would not comment on the specific offer, which was first reported Monday in the Wall Street Journal and by Multichannel News.

The company is looking for a leg up on MSNBC and ABC, both of which have far greater experience in news. MSNBC is starting with 20 million subscribers. ABC has struck a deal with Comcast Corp. for carriage in exchange for half an interest in a soap opera channel that will air ABC daytime soaps during prime time.

Baine suggested that any of the wannabe news channels could also buy a struggling network such as Nostalgia Television, with 9 million subscribers, and convert its format.