NEWSLETTER
Earlier in the week, we talked about the Chicago Cubs’ ongoing quest to balance their long-term desire for a massive TV broadcast rights deal for their full slate of games, which don’t become available until after 2019, with their short-term desire to find the best home for the games that had previously been on WGN-TV (a little less than half of the set). The first part of that equation remains unchanged, and the possibility of a long-term deal remains on the table, but probably not coming any time soon. But the second part looks like it might be clearing soon, and it could mean a familiar home in the short-term.
A new report in the Tribune indicates that the Cubs are indeed still talking to WGN-TV about a new deal that could keep some of the Cubs’ games with their familiar home in 2015, and possibly through 2019. It always seemed like staying with WGN for this bridge period (from 2015 to 2019) was the most likely outcome, and, even if the Cubs see a reduced rate from the already well-undermarket fees they were receiving from WGN ($250,000 per game), opting out of their deal with WGN last year was still necessary to ensure that the full slate of games became available after 2019 (otherwise, the WGN rates carried through 2022).
The Tribune report, from Robert Channick, suggests three very important things about the possibility that the Cubs re-up with WGN: (1) it may not be quite as many games as were previously on WGN, with some additional games moving over to CSN; (2) the deal would likely include an opportunity for the Cubs to opt-out if a long-term deal were figured out before 2019 (that will remain the Cubs’ primary focus, given the huge dollars at stake); and (3) there may be some kind of revenue-sharing arrangement where WGN commits less money up front, but the Cubs stand to earn more if ratings are strong (as expected) and sales are up.
If you’re into this topic, I highly recommend reading Channick’s report for more of the particulars.
While it’s very simple to discuss the broadcast rights situation at a high level, the details are extremely complicated. There are additional layers that Channick doesn’t get into, and I won’t get too far into right now either, involving the ongoing streaming revolution, and the relationship between big-time broadcast deals, the cable subscriber fees necessary to support those deals, the rebellion of cable providers to pay those fees, and the increasing prevalence of “cord cutting”. This is complicated stuff, and, frankly, the streaming component is probably the most difficult and most important piece of the long-term pie. MLB Advanced Media currently controls all teams’ rights to stream online (via MLB.tv), but that’s a topic being negotiated with local cable providers, and it remains possible that the cable bubble – for team broadcast rights – won’t entirely burst, thanks to some kind of arrangement where the team and the cable provider will secure the streaming rights within their own broadcast territory. And with an a la carte programming revolution clearly on the way thanks to HBO, maybe those cable providers eventually offer a la carte team streaming for a monthly price, and the team can share in that revenue.
And, believe it or not, this all actually ties in to the ongoing Net Neutrality debate! As cable providers become more and more marginalized by independent content creators going at it alone over the Internet, the ability to transition revenue from cable subscriptions to providing Internet service has to be very appealing to cable companies. Further, as the line between content creators, TV stations, and web presences become blurred, it’s not at all difficult to imagine a future where people pay for access to, for example, “ESPN Everything,” (or, “Cubs Everything”, as the case may be) which we no longer think of as these discrete, individual services like a TV channel and a web site and a streaming service. Instead, it just becomes one big thing that you pay ESPN directly to access, not unlike Netflix or what HBO will soon become. The cable-company-turned-Internet-service-provider would love, then, to be able to charge ESPN extra to connect you to them more quickly (something that’s on the table in the proposed new not-so-neutral Net Neutrality rules), or even to put ESPN Everything on a certain “tier” of Internet service, and then charge end-users different rates depending on what tier of service they would like. Sound familiar? It’s basically just the cable model for a new era, and it would allow cable companies to protect themselves against the very things that HBO’s move foreshadows.
See? I’m already getting down the wormhole. I have many more thoughts on these issues, but it’s the kind of thing that takes a long time to process, research, discuss, and ultimately write. Hopefully I’ll get there at some point.
As I said, it’s complicated stuff, and there’s a reason the planning and negotiations are taking so long. I suspect the Cubs may be the first team – because the full rights don’t come up until after 2019 – to really be considering the streaming impact, and working hard to preserve their rights in that regard. That’s just a gut thing, not anything I’ve specifically heard, mind you.
One thing about which folks need to be reminded: even if some Cubs games return to WGN’s local broadcast station in Chicago, that doesn’t necessarily mean all of the games will be carried on WGN’s cable station, WGN America (the one you folks outside of Chicago get on your cable subscription). That’s because WGN America is making good on a long-stated desire to move out of the superstation business and into the full-on cable network business, complete with original programming (which appeals, in theory, to everyone in the country, whereas Chicago-based sporting events are disproportionately attractive to folks in and around Chicago). It’s possible that some games, if the Cubs remain with local WGN, will trickle onto WGN America (maybe mostly day games), but WGN America is moving on to other things. I just want to make sure you’re properly warned about that possibility.
