The Cubs are looking to cash in on a portion of their TV rights (currently contracted to WGN) after the 2014 season, and the full slate of games (the remainder are contracted to CSN) after the 2019 season. If the status quo remains in baseball game delivery mechanisms, the Cubs will cash in enormously within the next five years, depending on when they’re able to lock down a long-term deal for the full slate of games.
But will the status quo remain?
For many months now, MLB has quietly been fighting a lawsuit in New York that seeks to end the territorial restrictions that help prop up the value of local TV, which have exploded in value over the past decade. Those territorial restrictions ensure that a regional sports network (RSN) that pays handsomely for exclusive broadcast rights will become the only way a fan in its territory can watch his favorite team (and, thus, he’ll push for his cable or satellite provider to pay the carriage fees to carry the RSN). If you’ve got MLB.tv, you probably already understand this issue well. For me, I’m blacked out of Reds, Pirates, and Indians games in Columbus, Ohio. Unless I get their games on a cable or satellite package, I can’t watch them.
Jeff Passan has the latest on this lawsuit, in which he says MLB has fallen back on its entirely unique (and, if I mean, entirely legally bizarre) antitrust exemption. Anyone who tells you they know how this lawsuit will shake out over the next year (or longer) is selling you some snake oil, because the bulk of it is under seal – and there are so many complexities and wrinkles to this kind of case that it just can’t be projected.
Instead, we can just follow it, and muse on the implications. The big one: if MLB is forced to rethink its blackout policy, does that mark the death knell to the Cubs’ big money TV deal efforts? Not necessarily. I might even go as far as “probably not.”
For one thing, it’s not as if the recent large deals – the Dodgers and Time Warner, the Phillies and Comcast – were struck without any contemplation of these kinds of potential legal issues. That is to say, I’m sure these entities, and their lawyers and accountants, have already figured out how an un-blacked-out MLB would impact their deals, and there are probably ways to keep the majority of the deal value in-market.
Perhaps it means showing local ads during MLB.tv broadcasts, the revenue for which goes to the RSN? Perhaps it means that fans in otherwise blacked-out areas can pay a surcharge (which is divvied up among the affected RSNs) for the right to view those games? Those are just a couple ideas, but you can see how there are ways to keep things status quo from the team and RSN perspective, while simultaneously improving things for fans.