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THE EASIEST MONEY IN PAY-PER-VIEW
By CHARLES JAY, Editor/Publisher, TotalAction.com

Back in 1999 one of Don King's companies - Kingvision - sued a bunch of Cleveland-area establishments for pirating the signal for the first Holyfield-Lewis fight. King sought anywhere between $50,000-$110,000 from each one of these places in the way of damages.

While this may have seemed like a bullying tactic by King, it represents a cottage industry which is almost unknown to the general public. Suing bars, restaurants, clubs, etc. for stealing a closed-circuit signal is no accident, and certainly no afterthought. To any seasoned exhibitor of these events, it is not only something which is an important consideration from a copyright standpoint, it is also seen as potentially a tremendous revenue stream, and an almost risk-free way to increase profits on an event.

Here is how it works: let's say King, or some other major promoter, is putting on a mega-event. Someone in the Dallas area, for example, wants to buy the rights to the fight for their specific territory and re-sell it to commercial establishments in the area. That person will sub-lease the rights to the event from the major promoter and will go to work selling it off to individual entities. Usually, depending on how big the event is, he will have to charge the establishment a minimum number of dollars per person, multiplied by its certified capacity, so as not to create a conflict with the pay-per-view that will air in homes locally.

Since, in some of these large markets, there are quite a few potential customers, a telemarketing campaign is undertaken, in which salesmen will call all of the bars, restaurants, etc. in the area. If the rights owner in the territory has been through this before, he has, at the ready, a list of all the places that are in possession of a decoder. If he hasn't been through it, the national promoter will often furnish him with the list. These are the prime prospects to sell, and they get the priority calls.

If an establishment which has a decoder refuses to buy the event, it goes on a special list, along with other large places that may not, to their knowledge, have a decoder, or who couldn't be sold the event for a variety of reasons
(agreements for exclusivity with certain buyers, etc.).

Then, during the week before the fight is held, all of these places are called by one of the salesmen, posing as an innocent member of the public, inquiring about the availability of the fight. He'll ask, "Are you guys showing the fight this Saturday?" The establishments that answer in the affirmative, or say something like, "We don't know yet," are the ones that get the attention of the rights owner, because there is reason to suspect that they are going to at least try to steal the signal.

Sometimes it is very difficult to pirate a pay-per-view event. But nothing's impossible, and any number of techniques have been used over the years. The promoters know this, and so do the rights owners. What they will do is contact an agency like Pinkerton or Wackenhut and arrange to have one of their representatives sent to every location where the pirating is suspected. If one does indeed find that someone has stolen the signal, that representative will simply fill out an affidavit to that effect after the fact. Since these people are bonded, their testimony is more or less airtight.

When the dust clears after the event is over, the rights owner, or his attorney (many rights owners ARE lawyers), gets on the phone and starts calling all the places that were guilty of stealing the signal. And that's when the hardball really begins.

Having caught the place dead to rights, and armed with the knowledge that theft of a pay-per-view or closed circuit signal can result in a fine of $250,000 and loss of a liquor license, the rights owner has quite a bit of leverage indeed. So he'll squeeze the owners of each one of these establishments for as much as he possibly can. And rather than face the potential penalties, or go through a lengthy litigation process, forking over $25,000 or more isn't so bad. And this figure can multiply quickly, depending on how many establishments felt they could beat the system.

I have known rights owners who actually made more money through this "squeeze" than through the actual sales of a fight in their territory. When you consider the potential upside, it shouldn't be a major surprise.

And for a guy like King, I guess it's just a little more icing on his cake.