Tracy Dolgin, President & CEO of YES Network

Written by Steve Donohue

Thursday, July 2. 2009 at 12:25 PM EDT Post a comment

Digg   Del.icio.us   Reddit   Email This

no ratings

• Login to Rate

In an interview with Contentinople, Tracy Dolgin, president and CEO of the YES Network, the cable TV channel dedicated to the New York Yankees, explains how YES was able to strike its broadband deal, and how he expects the in-market streaming video package to perform.

Contentinople: Why haven't baseball fans in the New York area been able to watch games online in the past?

Tracy Dolgin: You have this logjam where each side [Major League Baseball (MLB) and teams/regional sports networks] has been blocking the other from exploiting the rights. We would not be allowed to just roll out an in-market streaming product without baseball's permission, while baseball would not be able to without BAM's [MLB Advanced Media] permission, while BAM would not able to do it without our permission. So we've been blocking each other. The net result has been that the rights have not been exploited.

Contentinople: Is it clear who owns the new media rights? Is it the leagues or the teams?

Tracy Dolgin: The league would say they own new media rights, subject to some restrictions. And the teams would say -- and the RSNs [regional sports networks] who have gotten those rights from the teams would say -- "that may be all well and good, but we should own all rights in-market, and you really should leave us alone in-market."

Contentinople: How did this deal come together?

Tracy Dolgin: We've had discussions for years and years and years with Major League Baseball and BAM, trying to break this logjam.

My fundamental belief was, at least for the YES Network, that while I would prefer having 100 percent of the in-market rights and not having to do a deal with BAM, and just doing it myself, that wasn't happening.

There was no deal being done. And I'm a big believer that a fair percentage of something is worth more than 100 percent of nothing, especially if you do it in such a way that we are doing the deals with the distributors.

YES is figuring out what these rights are going to be, and that what we do works 100 percent in concert with our distribution deals with our affiliates and with our advertisers and with everybody involved, so it's really additive as opposed to destroying our underlying business model and our distributor's underlying business model.

The basic premise of the deal is that consumers can only get this product if they already get YES with the distributor, in this case Cablevision. You have to get YES on expanded basic, and you have to be authenticated before you have a chance to buy this package for $49 for the rest of the season on YES.

Every ad that we run for our advertisers will be the same ad that they see within their television broadcast. And the consumers will have an opportunity to pay for it if they really want it, or if our consumers don't really want that, and are happy watching Yankees games on YES on television, they can continue doing that with no cost to themselves.

So it was a deal that worked for all of our various constituent groups, and it also worked for BAM. We had a meeting of the minds. And we're the ones who did the deal with the distributor, so we broke the logjam in that way.

BAM offers a tremendous amount of value to us because they're paying for the costs. Streaming live video for games is very difficult, and authentication is a very difficult, complex, expensive thing to do. And they do it better than anybody.

We're not reinventing the wheel and figuring it out for ourselves. They [BAM] already do this for out-of-market packages, so they have a lot of experience and state-of-the-art technology. So we created a win-win-win-win deal, and we broke the logjam.

Contentinople: Are you also talking to other local distributors like Time Warner Cable, Comcast, and RCN about doing similar deals?

Tracy Dolgin: We're talking to our distributors. We're talking to the biggest ones first. All of our affiliate deals are different. We got the biggest one, which has half of the market, done first, and Cablevision has the benefit of a very robust broadband offering with a fantastic WiMax offering, which this product will work very well over.

I anticipate in a short period of time that we'll get deals done with those other guys. But it's not the simplest thing in the world to do. And you've also got to make sure that you can execute the deal, i.e. the authentication part. We're very comfortable that Cablevision and BAM will be able to authenticate.

Contentinople: With this idea of authentication, have you followed the TV Everywhere project that Time Warner Cable and Comcast are talking about?

Tracy Dolgin: Sure. The one thing we all agree with is that authentication is critical to this process. We have figured out with our product how to do it, but obviously it's a little bit different than what they're proposing.

I do not believe all content is created equal. And therefore, to give it away free to consumers, I believe is an oversimplification, at least for our product, of the way this should be done. For our purpose, we believe subscription is the right way to go, although I understand why Time Warner as a distributor wouldn't feel that way necessarily because it would like us to give it the product for free. But from our standpoint, I don't want to devalue our most premium product by giving it away for free.

While we'll see in the long run how this plays out, I do know one thing: If I give it away for free now, I'll never be able to charge for it. While, if I charge for it now and in some way the world changes and it makes sense for us to give it away for free, then I can always do that at some point.