Comcast Enters a Whole New Arena

In the first hour after the Super Bowl, QVC Inc. sold 35,000 caps and shirts for the winning team, the Dallas Cowboys. In total, the home shopping channel sold $50 million in sports merchandise last year.

Pushing merchandise on QVC is just one way for its owner, Comcast Corp., to squeeze more juice from the two professional sports teams and two arenas it bought this week in its hometown Philadelphia, according to its president, Brian L. Roberts. More significant is what the teams could do in distinguishing Comcast’s cable service from encroachers such as Bell Atlantic Corp., the regional Bell company intent on offering video services to its telephone customers in Philadelphia.

“Movies and sports drive cable subscriptions,” Roberts said. “You can’t own movies exclusively, but you can own sports. This gives us unique content in our most strategic market.”

Roberts said the venture could be the basis for a regional QVC for selling tickets to arena concerts and events, as well as the associated tchotchke. More significantly, Comcast could form a new regional sports network or use its leverage to buy into SportsChannel Philadelphia and PRISM, the two regional channels owned by Cablevision Systems Corp. that counts the two teams’ games among its most popular programs.

Wall Street pounced on the Philadelphia-based cable operator, the nation’s fourth largest, for straying from its core business with a high-priced sports purchase at a time of increased competition, consolidation and deregulation. Initially, the stock fell 10% from its year high of $20.625, but it has been inching back up since Comcast made it clear to analysts that it was paying $250 million, half of it in cash, for 66% of a new venture called Comcast-Spectacor, which controls two Philadelphia arenas, the Philadelphia Flyers hockey team and the 76ers basketball team. Initial news media reports had speculated a cost as high as $600 million for the entire venture. On Thursday, Comcast Class A nonvoting stock inched up 12.5 cents to $18.375 on Nasdaq.

Entertainment companies have long seen the possibilities of linking up with sports teams and Ted Turner used the Atlanta Braves to help build a cable channel. But Comcast is only the second cable system operator to buy a sports team, and many industry executives say it will not be the last. In 1994, Cablevision teamed up with ITT Corp. for the $1-billion purchase of Madison Square Garden, the New York Knickerbockers, the Rangers hockey team and a local sports cable network.

The sports business itself may not be strong but, at least in theory, sports can be one of the last lucrative media monopolies. As one team owner says, comparing sports games with movies or TV shows, “They are renewable, always have a new ending, no one can duplicate them and no viewers are more loyal than sports fans.”

And as Walt Disney Co. has deftly shown with the Mighty Ducks hockey team, the merchandise can be a gold mine.

An owner can also create new value by starting a regional sports channel. Entrepreneur H. Wayne Huizenga’s investment in Cablevision’s SportsChannel Florida is arguably more valuable than his three Florida teams, the Dolphins, the Panthers and the Marlins. Now that he owns 50% of the regional channel, the founder of Blockbuster Video will switch his baseball and hockey teams’ games to the channel as rights expired with the competing Sunshine Network, owned by Liberty Media.

“It’s over for Sunshine,” said Charles Besser, president of Intersport Television in Chicago, a producer and distributor of sports programming. “Baseball and hockey fans will all sign up for SportsChannel, allowing him to increase subscription fees.”

Comcast will be able to do the same thing. SportsChannel’s rights to carry 76ers games are up in another year and the rights to Flyers games are currently up for renewal.

Another one bites the dust: After unsuccessfully agitating last year to be let out of his contract, Andy Hill has been sprung from his post as president of CBS Productions--right in the middle of pilot season.

Hill, who has six pilots in development for CBS for the fall, has butted heads with his new boss, Leslie Moonves, since the former Warner Bros. executive became president of CBS Entertainment last summer. CBS executives say Hill felt insulted when Moonves moved him off the executive floor. Sources said Moonves believed Hill wasn’t helping him improve the network’s drooping morale.

Last year, when Hill asked to be let out of his contract to pursue the top network development job at MCA Inc., Moonves refused.

CBS has had more success developing shows in-house than at any major network, with NBC’s “Caroline in the City” and a full slate of shows for Saturday night. Hill has overseen those efforts since 1990.

It is unclear whether MCA is still interested in Hill or who Moonves will tap to replace him at CBS.

Moonves has replaced several top CBS executives since arriving, and some at the network worry that his team is too heavily weighted toward former studio types rather than broadcasters.