Regional Sports Channels Merge Against Rival ESPN

The owners of two regional, cable TV sports channels have merged their operations in a bid to compete against industry heavyweight ESPN.

NBC and Cablevision Systems Corp., owners of SportsChannel America, and Liberty Media Corp., principal owner of Prime Network, will form Prime SportsChannels Networks to operate the two channels. SportsChannel America will convert into an all-sports news service, while Prime Network will carry events such as collegiate sports, tennis and auto racing.

The local affiliate of Prime Network is Prime Ticket, which carries L.A. Lakers games.

The partners said merging their operations will give advertisers a better opportunity to reach a national audience by attracting more than 41 million cable TV homes with the two services. Regional cable TV sports channels usually carry local sporting events and supplement their schedules with national programming.

Cablevision Systems Corp., based in Woodbury, N.Y., is a partner with NBC in several cable services and will manage the venture. NBC will sell advertising.

“Neither channel on its own was able to get complete national distribution,” said Tom Rogers, president of NBC Cable.

Prime Network and SportsChannel America have been unprofitable since their inception. Both channels have been overpowered by ESPN, which shows major sporting events.

In the background of the transaction is Denver-based Liberty Media Corp., which was spun off from cable giant Tele-Communications Inc. and holds stakes in several cable TV networks, including the Discovery Channel and Black Entertainment Television.

Liberty, which earlier this week boosted its ownership interest in Prime Network to 77%, is in a powerful position to bring about a merger between the rival sports channels because of its clout in the cable industry. The company is also believed to be pushing for a merger between two rival home shopping channels, QVC Network and the Home Shopping Network, in which it is a major investor.

Industry sources said the merger of Prime Network and SportsChannel America, in discussions for more than two years, in part was motivated by ESPN’s interest in launching a second all-sports cable TV network. The partners worry that ESPN II would give the dominant sports cable service a virtual lock on advertising and shut out any competitors.