NEWSLETTER
With the Chicago Cubs’ TV broadcast rights deals – with NBC Sports Chicago, with WGN-9, and with ABC-7 – ending at the conclusion of the 2019 season, we’ve long known that a new deal of some kind would be coming soon.
Well, “soon” is a relative thing, because this has been a major point of discussion going on several years now already. The boom of TV deal revenue changed the landscape for so many MLB teams that the Cubs getting their next deal – especially at a time when revenues are already exploding thanks to savvy way ownership and business operations have leveraged a very competitive team. But when that TV deal kicks in, man alive, the revenue picture for the Cubs could change dramatically again.
And that’s especially true if the owners of the organization create their own new regional sports network (RSN) to carry Cubs games and it actually succeeds. Although revenues to the team in the form of broadcast rights are subject to revenue sharing, the ownership’s equity in (and profits from) an RSN have historically not been subject to MLB’s revenue sharing. If things go well, it can provide not only enormous bank for the owners of the RSN, but also enormous additional pockets of money to be used by baseball operations. Risk, reward and all that.
So, then, it was never a surprise to know that the Cubs’ primary plan was to pursue the creation of their own RSN when their deals expired in 2019. But with some other RSNs struggling in recent years as more and more cable subscribers bailed on their subscriptions, there was at least a chance that the Cubs would go a more traditional, safer route.
The latest report, however, indicates a Cubs channel is still the plan:
Sources: #Cubs will go their own way in a television venture starting in late 2019, ending partnership with NBC Sports Chicago, Bulls, White Sox and Blackhawkshttps://t.co/vc8sD0Arz7 via @MLBBruceLevine pic.twitter.com/CKSfecwJmi
— 670 The Score (@670TheScore) August 27, 2018
The Cubs have taken affirmative steps toward pursuing this route, according to Bruce Levine, and you can read the details in his article there.
What remains undetermined, at least publicly, is what entity the Cubs will partner with on their new network venture. The way these big-market, big-club RSNs have worked is that the teams partner with another network or service provider to create their channel. Levine’s report mentions NBC and Disney as possibilities, but the reality is that a whole host of other companies could be involved in the discussions (including non-traditional tech partners, with whom the Cubs have had conversations).
The two big issues here, the fruits of which we might not see sorted out for a long time yet, are (1) how well the Cubs and their new network can get distribution from various cable and satellite providers, and (2) how streaming rights will be handled. On number 1, we’ve seen a mess in Los Angeles, as SportsNet LA has to charge such obscene carriage fees to justify the obscene price it agreed to pay the Dodgers that the teams games are simply not available in many households. On number 2, MLB still holds the national streaming rights for games, but that seems a vestige of a world long gone by, and has since allowed providers to provide streams to authenticated subscribers. We may enter a brave new world on the streaming front with this very Cubs deal.
Because of the way user behavior is changing with respect to cable subscriptions, I really hope the Cubs figure out some creative way to accommodate streaming fans, while not running afoul of MLB’s rules. I say that not only as a fan who wants to see all Cubs fans able to watch the games if they want, but also for the benefit of the Cubs: creating an RSN necessarily brings with it tremendous risk in the current environment. Streaming is the future. Well, actually, it is increasingly the present. And that’s the aspect of the coming deal about which I’ll probably be most interested.
Stay tuned. For more on this complicated and important topic, see some of our most recent previous discussions here and here.
