MSG Networks offers Altice binding arbitration as carriage dispute enters third week

MSG Networks is offering to go to binding arbitration via a neutral third party in their carriage dispute with Altice, three weeks after Altice removed MSG Networks — including live coverage of Knicks, Islanders, Rangers and Devils games — from Optimum TV.

“Our goal is to make sure our Knicks, Rangers, Devils, and Islander fans who are Optimum subscribers don’t have to miss another game,” MSG Networks said Tuesday evening in a statement. “To that end, we are willing to agree to a short extension tied to resolving our dispute through binding arbitration by a neutral, third party. This will enable Optimum subscribers to watch their favorite sports programming while we resolve our outstanding issues.”

Altice, parent company of Optimum TV, pulled MSG Networks from its lineup at 12:01 a.m. on Jan. 1.

A carriage dispute is a disagreement over compensation between the distributor, which is Altice, to carry a channel from the provider, which is MSG Networks.

The stakes are high for both sides, each of which is debt-laden and fighting the headwinds of the cord-cutting era.

Altice has been seeking to retain subscribers by offering deals that include discounted bills, deals on fuboTV and the Gotham Sports app, and in some cases gift cards worth several hundred dollars to customers who threaten to leave.

It is unclear how many customers have resisted such offers and made the switch to Verizon Fios, DirecTV or DirecTV Stream, all of which carry MSG.

For Altice, like all cable companies, the priority is to keep internet customers, a business with much higher profit margins than carrying television channels.

MSG Networks, meanwhile, is paying a heavy financial price during the standoff. Analysts at Guggenheim, an independent investment bank, estimate that 33% of MSGN’s revenue comes from Altice subscribers.

Sportico reported that Guggenheim sent a note to investors estimating that Altice is projected to pay MSGN $127 million in carriage fees this year, a loss that would be difficult to sustain for MSG Networks’ business if the dispute persists.

That dynamic has made the Altice/MSG dispute a topic of intense interest and speculation on Wall Street.

New York Attorney General Letitia James warned last week that she is watching out for consumers’ interests as the standoff entered its second week.

“Consumers who expect the programming and games they paid for are the ones missing out,” James’ statement said in part. “I will be monitoring this situation closely to ensure New York customers receive the services they are paying for.”

With Neil Best