The Start of Something Big: Fox and MLB Reportedly Reach Deal on In-Market Streaming

I don’t want to oversell this news, because, on its face, it’s merely the logical extension of something that’s been coming for a long time. But it could be the start of marked shift, one with direct and significant implications for the Chicago Cubs.

First, the news: after months and months of negotiation, Major League Baseball and Fox have reportedly reached an agreement that will allow subscribers to a Fox-affiliated regional sports network (RSN) to stream live MLB games within the teams’ own market. You’ll definitely want to read the full report in Sports Business Journal for the particulars – this is not yet a done deal, mind you – but the gist is that it’s the first step in MLB allowing teams and RSNs to cash in on rights to stream their games within market, which had otherwise been blacked out.

Until now, MLB has controlled all streaming rights (MLB.tv), and distributed revenues therefrom evenly among the 30 teams. Teams could strike deals with RSNs for their cable broadcast rights, but they could not allow those RSN’s to stream games locally online, even to authenticated subscribers of the RSN. In other words, if you were in Chicago, you could watch the Cubs on your TV via your Comcast cable subscription, but you could not watch any Cubs games online, either via Comcast or via MLB.tv. It was all a little backwards: the RSN’s wanted local games blacked out on MLB.tv so that the value of their exclusive cable rights would be higher … but then they, themselves, couldn’t offer viewers the choice of watching the game (online) on their phone or tablet or whatever.

The good news, then, is that this Fox/MLB deal would be the first step in solving the streaming conundrum. In exchange for allowing Fox RSN’s to provide live streams to their subscribers (which would, in theory, make the media deal more valuable to the RSN, and, thus, the team), MLB gets a small share of the team’s media deal, according to Sports Business Journal, and also gets to manage the streams on its systems (which is now a standalone company called BAM Tech) for a fee. Teams, RSNs, and MLB all make a little more money than they were already, and fans get more viewing options and a more robust service.

Why does any of this matter to the Cubs, whose TV deal is not up until after 2019, and who are not affiliated with Fox?

As I said, this is just the beginning.

Let me boil it all down: until now, large market, large-fan-base teams had no way of cashing in a little extra on the streaming side (as opposed to TV side) of their rights deal. Because the RSNs could not stream games, they weren’t going to pay teams more for those rights. Instead, all money tied up in fans being able to stream games was either lost (because of no local stream solution) or went to MLB as a whole (MLB.tv).

Now, however, if RSN’s can stream locally, there’s a little extra money in it for them, which means they could pay the best/most attractive teams a little more (read: the Cubs). Some of that extra money would go to MLB as a whole, but not all of it. And as streaming becomes more and more important, this distinction – the ability for a disproportionately popular team like the Cubs to take advantage of that popularity for increased revenue – is critical. Maybe it makes you feel a little bad for the “have nots” of the sport, but it is better in the long-run for the Cubs.

The immediate implications for the Cubs and for Cubs fans, then, are minimal. First, it doesn’t seem like CSN (let alone over-the-air providers like WGN-9 and ABC-7) are jumping at a local streaming agreement with MLB just yet, so it might not be until the Cubs’ new TV deal – likely via the creation of their own RSN – that in-market streaming actually becomes available in and around Chicago. Then again, it’s possible that this Fox deal, which covers half of MLB’s teams, will spur other RSNs into immediate action. I think it’s hard to say on that part right now.

Second, this would not impact the blackout restrictions on MLB.tv, which are tied to large, exclusive regions (that’s why the RSN’s pay big bucks to teams and charge providers huge subscriber fees). You’d still have to be an authenticated subscriber of a cable/satellite package that carries the RSN in order to stream the games locally.

Could this be the start of something on that end, too, though? Maybe. If RSNs got the right to sell advertising space on MLB.tv streams for local users instead of blacking them out? And if MLB got a small cut of that revenue? There may very well be a solution here, but given how long this Fox/MLB deal took to hammer out, I wouldn’t look for anything too soon.

Very long story short: in-market streaming is coming, likely next season, to fans in cities with teams that have deals with Fox RSNs. Other RSNs may follow suit. Those teams may make a little more rights-related revenue. The Cubs’ TV broadcast rights deal is up after 2019, and is currently being negotiated with interested suitors. All of this stream stuff will bear heavily on those negotiations, and this news could assist them in netting more revenue from the eventual deal.