ESPN Agrees to Buy Cable TV’s Classic Sports Network

ESPN scored a point in its ongoing battle against News Corp.’s Fox Sports for cable viewers by agreeing Wednesday to purchase Classic Sports Network, a 2-year-old channel that focuses on legendary games and players.

Though terms of the deal, which was expected last Friday, were not disclosed, sources estimate that Walt Disney Co.’s ESPN paid $175 million for the channel. That’s a big sum, considering the narrow coverage of the service, which reaches 10 million of the nation’s 70 million cable homes.

Most cable channels need an estimated 40 million subscribers to break even, and reaching that threshold is difficult without the leverage of one of the large cable families operated by News Corp., Time Warner, Viacom Corp., Disney and Liberty Media Corp. That many of these owners also control the programming cable services rely on also makes it hard for independent channels to compete.

“There’s less room for independent channels with the consolidation of cable programming,” said Gil Friesen, a founding partner of Classic Sports who until 1990 was president of A&M; Records.

Classic Sports is the latest prize in a contest that has gained steam over the last year between News Corp. and Disney, which acquired ESPN as part of its ABC Inc. purchase last year. News Corp., in a 50-50 partnership with cable programmer Liberty Media, has strung together a group of regional sports channels under the Fox Sports Net umbrella to challenge ESPN, the world’s most profitable cable network.

Though Fox Sports beat Disney in several recent bidding wars for cable sports assets, it dropped out of the bidding for Classic Sports last month because it could not agree with the owners on control issues and price.

Classic Sports was formed five years ago by Stephen Greenberg, president, and Brian Bedol, chief executive, with financing from Allen & Co. and Warburg Pincus Ventures. Greenberg and Bedol said they planned to remain with the New York-based channel, which becomes a wholly owned subsidiary of ESPN.

ESPN provided little explanation of how Classic Sports will enhance its business, which includes three national cable channels: ESPN, ESPN2 and ESPNews.

“It’s a perfect brand extension, a perfect complement to ESPN,” said Steven Bornstein, president and chief executive. Bornstein said the libraries of ESPN and its sister unit, ABC Sports, would be used to bolster Classic Sports’ programming, which relies on rebroadcasting old games from sports TV archives.

Analysts said ESPN could use its powerful leverage as one of the nation’s most popular channels to build up the number of Classic Sports Network subscribers as it has done already with ESPN2.

Despite speculation, Bornstein said, ESPNews and Classic Sports would remain separate and that ESPN would not tamper with Classic Sports’ formula.

Fox has its own classic sports channel, American Sports Classics, which it acquired this summer as part of a 40% purchase of Cablevision’s regional sports holdings.