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Excerpted from Multichannel News, by Linda Moss

A cable operator and a programmer -- namely Insight Communications Co. Inc. and ESPN -- sparred Wednesday over the issue of networks levying programming costs for ancillary services such as HDTV.

"I’m not interested in replicating a linear business model in high-definition, VOD or broadband," Insight vice president of programming Terry Denson said during a panel at the Kagan Broadband Summit here.

Denson lobbed the first shot when he complained about costs that programmers are charging for services like HDTV.

"What’s important to me is not so much the linear programming costs, but it’s the nickel-and-diming on the ancillary services," Denson said. "If you have an HD service, or if you have VOD content, it’s helpful to me if you help me with the marketing and, also, if there is no cost associated in the early years."

His remarks drew a quick response and rebuttal from Sean Bratches, ESPN’s executive VP of affiliate sales and marketing.

Bratches pointed out that the new programming services are costly to create. "It takes capital investment," he said. "It takes manpower, creativity to develop a lot of these products. And it’s important that it’s done right the first time."

He added that content created for new services is critical to the growth of new products like digital and HDTV, and operators have invested $75 billion to rebuild their plants so they can sell these new products.

In turn, Denson claimed that it is just too early for programmers to assign prices to new services like HDTV.

"I know that there are significant costs involved [to programmers creating new services]," Denson said. "There are rights issues involved, but what is important is that I don’t think it’s necessary to replicate the linear business model, and I think it’s too early in the distribution of these services to really have a determination as to how you are going to monetize them."

While Denson and Bratches had a difference of opinion, the sports programmer maintained that relations between operators and networks are smoother than ever.

"Yes, there’s a lot of rhetoric out there, but when you really pull the sheet back, there is more cooperation going on between the programming community and the operator community than there ever has been," Bratches said.

Denson agreed that as far as coming to terms for programming costs relating to traditional linear networks, "We can work these things out at the negotiating table and expect to get a reasonable result."

The exchange took place during a panel session at the Kagan Broadband Summit in NYC yesterday.
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