NEWSLETTER
At the Cubs Convention, Cubs Business President Crane Kenney did not make a comprehensive announcement about the upcoming Regional Sports Network that the Cubs are expected to create with a distribution partner (rumored to be Sinclair). Rather, he said only that the expectation remains that the Cubs will start an RSN with a partner, that there could be other unspecified teams involved, and the Cubs may be ready to announce something in a month or so when certain other news came out.
Knowing that another round of bids on the old FOX RSNs were due at the end of January certainly made it easy to connect some dots, especially with two of the expected bidders – Sinclair and Major League Baseball – possibly intimately connected to the Cubs’ own RSN deal. It’s also possible that the Ricketts Family’s purchase of the final 5% of the Cubs that was still owned by the Tribune could have been the related news, but I’ve long thought there was a clear relationship between the Cubs’ deal and the FOX RSN sale, so I’m gonna stick to that particular gun.
Were you wont to speculate as to the reason for the connection between the two stories, you might say it has to do with the Cubs ascertaining more about the market rate for their product, or Sinclair wanting to make sure they can nab upwards of *HALF* of the MLB teams’ RSNs before committing to the Cubs at a certain price tag, or it could be that there is the potential for some kind of new type of RSN that combines multiple regions, or it could have to do with the resolution of in-market streaming rights which could well be tied to the FOX RSN sale (especially with MLB as a bidder) and the intrusion of national streaming services into this space.
Or it could be a mix of all of those things. Or it could be something entirely unanticipated by dudes at keyboards like me.
Whatever the connection, it remains deeply important to the financial future of the Cubs’ organization to follow the FOX RSN story closely, and, to that end, that second round of bids has come in:
Disney's effort to unload sports networks has attracted bids from groups including Sinclair, Apollo Global, and Major League Baseball, sources say https://t.co/v6MveTNLvu
— Bloomberg (@business) February 1, 2019
As expected, Sinclair and MLB are still in the bidding, as well as Apollo Global Management, which is a private equity firm (and would presumably need to work with at least one more partner in the distribution industry for a purchase to make much sense). It isn’t a lock that the RSNs will be sold to one of those three entities, as Disney – which is selling these FOX RSNs after their merger with FOX – could also decide to spin the RSNs off into a new company, which would be separately owned by the Disney shareholders. The fact that that’s even on the table should tell you everything about just how crummy the bids have been.
To that end, it seems like the price tag is hurting for the same old obvious reason that the Cubs’ own RSN has seemed a risky venture for the past few years:
Why is Disney struggling to sell the Fox regional sports networks?$DIS $FOXA
Thanks for shoutout @business @anoushasakoui https://t.co/3LP3zrOJPI pic.twitter.com/LQorfTfQyo— Rich Greenfield (@RichBTIG) February 1, 2019
Carriage issues. That’s always going to be the issue nowadays.
The rumored price tag for the Cubs’ channel is really significant, and if they are going to get cable and satellite providers to pay it in the face of rampant cord cutting, then they will need some muscle behind them to ensure they get carriage (hence why the partnership with Sinclair, which is the largest owner of local broadcast networks in the country, makes sense).
That, too, would seem to make the FOX RSN deal all the more relevant to the Cubs, who could wind up partnering with the very entity that buys those RSNs. In that case, it seems like getting carriage – maybe even outside just the Chicago region – could be a little smoother process.
Then again, if you want to get REALLY crazy, you start thinking about what happens if MLB, itself, buys these RSNs. Since MLB controls the streaming rights for all teams, in an era where streaming will soon become more important than TV (it’s already there for a lot of us), it’s not at all hard to imagine MLB simply trying to take over the TV rights for most of its teams, and then it can much more easily provide streaming to fans. Maybe the Cubs would want to get in on that group of teams, too? Like I said, I’m just getting a little crazy now.
For more on this complicated stuff, start with this post and this post, each of which will give you a lot more background, with links to additional info.
