NEWSLETTER
After years of rumors, speculation, and negotiation, the Chicago Cubs have finally arrived at the plan for their TV broadcast rights after the 2019 season: they will create a new channel to be the exclusive home of all of their non-national games. No more NBC Sports Chicago. No more WGN. No more ABC.
It’s what the Cubs have said they wanted to do for a long time, and now, by partnering with Sinclair Broadcast Group, the Cubs will be able to do it. It’s going to be a very new world for Cubs fans, so there’s a lot to unpack.
The new regional sports network (“RSN”) will be called Marquee Sports Network (“Marquee”), and the Cubs have indicated it will primarily be focused on Cubs-centric content beyond just the games, though there will be yet-unidentified other local sports incorporated. For those of you in the Chicago area, you will have to hope that your local cable satellite provider picks up Marquee, lest you be unable to watch Cubs games until such carriage deals are in place.
On that front, let’s talk about how these RSN deals typically work, and how that creates an opportunity for the Cubs … and risk for the fans.
A team and/or its ownership group partner with a TV-adjacent entity (a content company, a cable company, or a distributor (like Sinclair, in this case)) to create a new cable channel. Typically, that new RSN is the entity that buys the rights to the team’s games from the team, and that’s where you see those massive TV contract numbers going to the team. In this case, we could eventually see a reported deal where Marquee is buying 15 years of Cubs broadcasts for $1 million per game, or whatever. (Currently, the Cubs get an average of under $750,000 per game. The Dodgers, on their never-to-be-repeated deal, got upwards of $2 million per game.) It’s absolutely possible the Cubs’ ultimate deal could be structured differently when the pens meet the paper, but this is how they are typically structured: RSN buys rights from team for $X per game for Y years.
The RSN, in turn, seeks to make money through two primary vehicles: advertising on the network and the fees it collects (per month, per subscriber) from cable and satellite providers as the price to carry the channel.
But because the team and/or its owners have an equity stake in the RSN, itself, they also kinda need the RSN to do well in order to justify the TV rights payment that’s going from the RSN to the team. That can be a problem in one of two ways:
(1) The fee the RSNs decided to charge cable and satellite providers to carry the channel could simply be too high (SportsNet LA). Some providers could balk at the price, and people who are subscribing to that service simply didn’t get the channel. One pundit was speculating a $6 per month per subscriber fee for the Cubs’ new channel, which would be at or near the very top of the market.
(2) The region that the RSN wants its channel carried could simply be too large (CSN Houston). Again, some providers may balk at a required monthly fee to carry a channel that they feel like their users in a particular region aren’t going to care about. On this front, the Cubs could try to target a very large region for Marquee – Illinois, Iowa, Indiana, parts of Wisconsin, and perhaps beyond. (Stray note: the Yes Network is made available nationally, way outside New York, by some providers for an extra fee. You wonder if the Cubs could try to do the same for Marquee, given their national fan base.)
Sometimes, these issues are the fault of the RSN entity, but sometimes it’s more of a reverse-engineered problem, because the TV rights contract between the RSN and the team simply paid the team far too much money, which could only be covered if the fees to carry the channel were super high and/or the subscriber base was huge.
So there’s a balance here. Obviously the team wants a massive rights deal, and it also wants the RSN to do well financially. And to do that, the RSN wants to charge as much as the market will bear for its channel. But there’s a tipping point at which providers won’t pay that price because they know that when they try to pass it on to their subscribers’ monthly bill, those subscribers will inch ever closer to doing what more and more people are doing: cutting the cord.
That’s when you have a team getting nominally paid a huge TV rights fees, but tons of the team’s fans are unable realistically to actually watch the team, and/or are having to stay on a cable plan just to watch their team, and/or are having to pay a lot more for their existing cable package. (For those of you outside the MLB blackout region, by the way, you will still be able to watch the Cubs on MLB.tv like usual.)
Balance the pricing and carriage just right, and you could have the next YES Network (Yankees), which generates huge revenue *AND* is valued at upwards of $4 billion. Balance it wrong, and you could create an anchor on your finances *AND* piss off a huge chunk of your fanbase.
All that make sense? That’s where things are going to be now for the Cubs, Sinclair, and Marquee. They will be working to get their channel carried by as many providers in the Chicago region as possible, at the highest per subscriber price as possible – something Sinclair may use its leverage as a local broadcast owner to help. If things are going well, we’ll hear about providers getting signed up in the coming months.
If the Cubs are good this year, that probably won’t hurt. Eh hem.
We may also hear about the Cubs working on deals with other providers like Hulu, YouTube TV, PS Vue, Sling, etc., but those are necessarily very complicated by the nature of MLB’s control of “streaming” rights. Suffice to say, without a fundamental change in the way MLB parses out those rights, getting Marquee on your favorite streaming service will be tricky. (For those of you in the Chicago area who already get Marquee on your cable/satellite platform, yes, you will be able to stream games in-market.)
As far as the partnership goes with Sinclair, a company seen as controversial by many because of its political efforts, Cubs President Crane Kenney told The Score today that the team does not see an issue. Sinclair will not have any input on the channel’s content – that will be entirely up to the Cubs – and Cubs partners have not raised any concerns about the relationship:
Crane Kenney: #Cubs have no concerns about Sinclair's politics affecting the Marquee Sports Network in any way, and team hasn't had pushback from corporate sponsorshttps://t.co/oEVzZZ5n0X pic.twitter.com/V1OkX2bOwA
— 670 The Score (@670TheScore) February 14, 2019
We’ll see if any additional backlash about Sinclair develops in the coming year.
One other Sinclair-related note: Sinclair has long been involved in the sale of Fox’s RSN’s by Disney, though the latest round of bidding reportedly had them out of the mix unless they partner with some other entity. I mention that because, if Sinclair *were* to land the FOX RSNs, then they would wield even more leverage in carriage deals across the country in ways that could benefit the Cubs. Or – and I won’t go too far in speculating – there could be relationship opportunities between sister RSN networks at that point, be it in content, coverage, distribution, or whatever. Short version of the point: if Sinclair gets in on the FOX RSNs in some way at some point, it’s probably going to be a good thing for the Cubs.
As for the content on Marquee, as I said, you can expect other local sports programming – think lower-tier college basketball or soccer or whatever – and I am hopeful that we could see some Cubs minor league games. That may prove more challenging than you’d think, though, because there will be a lot of overlap with Cubs broadcasts, and the extensive pre-and-post-game shows. Moreover, for those of you who’ve watched MiLB.tv, you know that the production quality at minor league games is not quite what you expect on an RSN, and investing to get there might not be in the plans. The YES Network, for what it’s worth, does occasionally air minor league games from the Yankees farm system.
Other content on the channel will doubtlessly include Cubs Productions shows, documentaries, archival games, and possibly other Chicago sports programming (i.e., not games, but other adjacent programs).
OK. That’s all for this post, I think. It is not intended to be a completely comprehensive post on the TV deal, because there remains so much we still don’t know, and so much that will necessarily play out over the next 12 months. We’ll check back in on the story as new bits develop.
