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MSG Networks offers extension to Optimum, with a major catch

The cable TV company would have to agree to "binding arbitration" for the extension to be approved.

The cable TV company would have to agree to "binding arbitration" for the extension to be approved.

An Optimum customer service center located in New Jersey.
An Optimum customer service center located in New Jersey. (Photo by Jonathan Schilling via Wikimedia Commons, Graphic by The Desk)

MSG Networks on Tuesday offered a temporary extension of its prior distribution agreement with Altice USA’s pay TV provider Optimum TV, which would have allowed for the immediate restoration of the regional sports network to Optimum’s cable TV platform in the New York City area, albeit with a major catch.

The extension offered by MSG Networks required an agreement by Altice USA to “dispute through binding arbitration by a neutral, third party,” which would presumably lead to a more-permanent solution.



The details of how the dispute resolution process might play out were not offered by MSG Networks in a short statement issued to reporters on Tuesday, but it likely involves having a third party arbitrator hear both sides on the issue, then come up with a solution that meets somewhere in the middle. MSG Networks and Altice USA would have to accept the solution offered, effectively giving up any negotiating power that might swing a deal more in their favor.

For now, the offer has been rejected by Altice USA, with an Optimum spokesperson telling reporters that the idea of having the dispute decided by a third party arbitrator was “nothing more than a PR stunt.”



“We have hosted their executives in our offices numerous times,” the spokesperson for Optimum said. “In fact, we were close to a deal on Friday — and MSG’s Executive Chairman told us he was walking away from that deal.”

The two sides have been at odds since the start of the year, when Optimum’s distribution agreement to carry the MSG Networks multiplex of channels expired without a new deal in place.



Both sides have offered competing narratives about what led up to the dispute and what happened to prevent it — and, now that the channels are unavailable on Optimum TV, how they’re working to resolve the issue.

The common element of this dispute, as with other disputes, is how much Altice USA and Optimum must pay MSG Networks for the legal right to redistribute the channels to cable TV customers. Those fees have increased exponentially over the last few years; meanwhile, sports broadcasters have launched their own streaming services that offer the same programming directly to fans, and MSG Networks is no different, selling their live channels and sports via the Gotham Sports app in a package called MSG Plus that costs $30 per month.

What makes this dispute so unusual is the back-and-forth public relations stunts that both companies have engaged in since the distribution issue started. In addition to MSG Networks’ offer to arbitrate the matter — an unusual tactic in a programming distribution spat — Optimum issued its own press release last week demanding MSG Networks issue a refund to its cable TV customers with an aggregate value of $125 million. Optimum said the figure was justified by the “estimated $10 per month, per subscriber MSG Networks announced its sports programming is worth.”

Optimum said the figure was settled upon because MSG Networks affirmed the retail value of their channels was $10 per month, which they tripled to $30 per month when they decided to sell the channels directly to sports fans through MSG Plus and the Gotham Sports app.

“In light of its impending bankruptcy, MSG Networks continues to try and extort consumers for their hard-earned dollars while charging die-hard fans triple the costs, despite airing less games due to a $76 billion NBA deal that MSG and its owners will benefit from,” the Optimum spokesperson said.

A spokesperson for MSG Networks refuted the demand as “B.S.,” and said Optimum TV customers were owed $5 in January for losing access to channels that they previously had in December. Unlike other pay TV companies, Optimum has yet to offer bill credits for the missing channels, though it has pointed customers to Fubo as an alternative pay TV service, with a $20 per month discount off the first two months of service.

Customers have little recourse while the dispute drags on. Their few options involve sticking things out with Optimum TV and hope that the situation is resolved at some point in the near future, keep Optimum TV and purchase MSG Plus separately through the Gotham Sports app, or drop Optimum TV and switch to a provider that offers MSG Networks.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting. Connect with Matthew on LinkedIn by clicking or tapping here.
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