New TV contract
puts UH in black

KHNL/KFVE doubles its deal
after some tough competition
from Oceanic

The self-styled "Home Team" pulled one out in overtime.

Highlights of deal with KHNL/KFVE

What: Exclusive rights to local television rights for University of Hawaii sports

Length of contract: July 1, 2005, through June 30, 2008 (KHNL/KFVE also has first rights of negotiation for the next three years)

Number of events to telecast: 80

Compensation to UH: $1.75 million per year, $500,000 per year in advertising, video screens valued at $255,000 and potential pay-per-view revenue

The moniker belongs to KHNL/KFVE, the unabashed green-bleeding local TV channels that have broadcast University of Hawaii sports the past 22 years.

With yesterday's awarding of the UH rights for another three years, KHNL/KFVE staved off its toughest challenge by putting its money where its heart is.

UH gets $1.75 million per year, plus side benefits including pay-per-view money that could make the deal worth close to $3 million a year.

UH athletic director Herman Frazier said the rights fee -- more than double the $700,000 per year of the contract that ends June 30 -- will pull the department out of its deficit.

"This will kick in in '05-'06. That is when we said we'd be in the black," Frazier said. "It's guaranteed money right off the bat. We're getting some additional dollars. It doesn't even count the pay-per-view.

"Additional things were added. The Sony screens (for the Stan Sheriff Center, worth an estimated $255,000), the potential pay-per-view. Add that to the relationship, and it made sense. The other offer was not considerably less. I think at the end we made the decision that was in our best interests."

Many industry observers assumed the bid from cable giant Oceanic Time Warner would dwarf that of KHNL/KFVE. But the challengers' bid had a good chunk based on incentives. (The bid was around $1.5 million, according to an Oceanic source who declined to be named.)

Also, KHNL/KFVE was thought to be out of the picture because it did not come to terms with UH during its exclusive negotiating period, even after an extension. General Manager and Vice President John Fink even considered not putting in a bid.

"There was frustration," he said. "We just felt as a small broadcaster we were going up against Goliath. But money wasn't everything."

And, as it turned out, KHNL/KFVE -- which is owned by Alabama-based Raycom Media -- made more of it available than did the competition.

"We would not have been able to do this without the support of top management at Raycom," Fink said. "Our guys know how much local sports means here."

KHNL/KFVE has been awarded the exclusive rights to televise UH men's and women's sports for the next three years. The announcement was made yesterday by John Fink, left, KHNL/KFVE vice president and general manager, and UH athletic director Herman Frazier.

To make back its investment, KHNL/KFVE will have to do well in pay-per-view. Football pay-per-view has made money for UH, KHNL/KFVE and, ironically, Oceanic during the current three-year contract.

Frazier and Fink said they plan to experiment with pay-per-view in basketball and volleyball.

"Our goal is to maximize people going to the games and watching the games," Fink said.

As for a pay-per-view provider, it could continue to be Oceanic, he said.

"I'd like to think I'll be talking to (Oceanic President) Nate Smith," Fink said. "We've had a good partnership."

Other pay-per-view delivery possibilities -- maybe not right away -- include satellite direct TV, wireless video and partnerships with phone and electric companies.

The contract calls for KHNL/KFVE to broadcast 80 live UH sporting events per year.

"Today we agreed KFVE is the partner. Tomorrow we sit down and hash it out," Frazier said. "Once we figure out who the pay-per-view provider is, we go from there."

Fink said he didn't cringe too much when the Western Athletic Conference announced Thursday that ABC would televise UH's home football game against Fresno State this fall, taking away substantial advertising and pay-per-view income. ESPN is televising two other UH games.

"We assume we will lose one or two or three games a year. UH loses pay-per-view potential, but there is a benefit (of exposure). For us, no."

The new deal also means continued employment for KHNL/KFVE employees -- including longtime UH play-by-play announcer Jim Leahey.

"I can come back in from the ledge," Leahey said.


Deal postpones
Oceanic’s plans

Oceanic Time Warner Cable's grand plans to upgrade its equipment for its sports broadcasts will have to wait at least a few more years.

Hawaii's largest cable company planned to invest in new technology if it had been awarded the local television rights to University of Hawaii sports. But those designs were put on hold with yesterday's announcement that KHNL/KFVE had retained the contract with UH.

"What we were looking at was this was going to be a neat opportunity to invest substantial money in bringing in whole new facilities," Oceanic President Nate Smith said. "That was one of the major benefits we felt we could bring to the party, to invest in a whole new infrastructure and bring the production values into the 21st century. We may have to wait a few years for that."

Oceanic was the only other bidder for the contract that was granted to KHNL/KFVE yesterday. UH announced a three-year agreement with KFVE worth at least $1.75 million per year to the school.

KFVE has held the television rights to UH sports for the last 22 years. Smith said Oceanic would be interested in making another bid when the new contract expires.

Oceanic has provided a pay-per-view package for UH's home football games for the last three seasons. But as of yesterday, Smith wasn't sure what the company's relationship with UH would be for next season.

KHNL/KFVE general manager John Fink indicated the station might use a satellite service for pay-per-view in the future.

Smith said he got a call from UH athletic director Herman Frazier prior to yesterday's announcement.

"Herman said while they anticipate having a role for us, they were going to stay with KFVE as the major provider," Smith said. "But it's not clear to me yet what that role might be."

Although he was surprised and disappointed with yesterday's announcement, Smith said he wasn't discouraged by the decision.

"Our long-term goal is to be the top provider of local programming in Hawaii. And this might set us back a little, but it's just strengthened our resolve," Smith said.

"UH sports is quintessentially Hawaiian and centered to our goals for programming. We were getting excited about it, but there's plenty of other opportunities to get excited about going forward."

While KFVE's cash bid eclipsed the amount offered by Oceanic, Smith said he didn't have regrets over the package the company presented to UH.

"While disappointed, I'm not displeased because ... we bid as high as we thought was feasible," he said. "A few things were going to have to fall into the right slot even for that bid to work out. The fact that we got beat on that bid, hats off to them that they've been able to unearth other means of paying for it.

"If (UH) came back and said, 'This is what they bid, would you change your bid?' the answer is, 'No we wouldn't.'

"There's the French proverb about changing the things you can, accepting the things you can't, and having the wisdom to tell the difference between the two. I think we're exhibiting the wisdom."

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