NEWSLETTER
The cable TV landscape is being nudged once again in the face of streaming technology. From HBO offering a standalone online product this year, now to DISH offering an online streaming package of channels, including ESPN, for $20 per month. The cable model continues to erode, and with it, the promise of easy TV deal megabucks from a regional sports network for a baseball team like, say, the Chicago Cubs.
Such a megadeal relies on huge carriage fees paid to the RSN, supported by costs that the cable provider passes on to all customers via a huge bundle of channels they may or may not want (it’s easier to make big bucks if every subscriber is kinda-sorta-unknowingly paying $4 per month for the CubsNet channel, rather than trying to sell the channel individually only to interested folks for $15 per month). Without those carriage fees, the RSN cannot profitably support the megadeal they gave the team for their broadcast rights (see, for example, the situation in Los Angeles). And, if customers increasingly have non-cable streaming options available to get access to the content they want, they will continue to balk at paying huge cable bundle prices, and cut the cord.
So, moves like this DISH online offering are small indicators that the landscape could have shifted so dramatically by 2019 (when the Cubs’ full slate of games becomes available) that the Cubs’ rights fees model is going to have to be both creative and forward-looking. I know MLB controls every team’s streaming rights for now, but here’s hoping the Cubs carve out protections for themselves to capitalize on the value of their own streaming rights should the cable model continue to devolve.
It’s hard to accurately predict titanic shifts when you’re in the middle of them, but I’m pretty sure we are right now. And I’m pretty sure the end result is going to be the end of things like “TV channel” and “streaming app” and “web site” as separate ideas. Smarter men than I will have to predict exactly where it’s going, because rights deals tend to extend out for as much as 30 years. The world of entertainment delivery is going to look so, so different.*
(Aside: that is, by the way, a big part of the reason Internet service providers are fighting so hard to get rid of strong Net Neutrality. Cable companies are now also Internet companies, and if consumers merely go to streaming in order to save money and increase choice, the ISPs will simply figure out a new way to pass on the “cost” (aka the revenue they’ve lost to cord cutters) of streaming to consumers or content creators.)
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Speaking of the Cubs’ TV rights, although we know what they’re doing for a portion of their non-CSN games from 2015 to 2019 having signed a deal with ABC-7, we still don’t know the plan for the remaining games. A deal was expected to be announced, possibly with local WGN-9, by the end of 2014. That didn’t happen last week, so we’ll have to continue to monitor the situation.
I’d still expect an announcement soon – perhaps at the Cubs Convention next week – but the time it’s taking to nail things down only underscores how complicated these things are. And, when considering the importance of the long-term deal for the full slate of games, together with the evolving cable model, how fraught with peril.
