As regional sports networks try to stay prudent of mercurial revenue streams, cable operators are searching for methods to sustain the fading business model and continue profits. Charter, which owns and operates Spectrum cable, is now launching a programming package bereft of both regional sports networks and league-owned networks beginning in the third fiscal quarter.
Service in the revamped Spectrum TV Select will be split into two different tiers depending on the presence of these sports networks. Spectrum Select Signature will not include the aforementioned sports networks, but subscribers will still have access to ESPN and FOX Sports 1. Conversely, Spectrum Select Plus will include the regional sports networks and additional premium sports services, some of which include Golf Channel, NHL Network and NFL RedZone.
The cost between the two services is expected to vary by about $10 per month, according to Sports Business Journal media reporter John Ourand. Moreover, the new tiers will reportedly only be marketed to new customers or those interested in changing their slate of programming.
Additionally, Charter has renewed its regional deals with the Los Angeles Lakers and Los Angeles Dodgers on Spectrum SportsNet and Spectrum SportsNet LA, respectively. The latter channel had a prolonged contract dispute with DIRECTV; however, terms were agreed to that significantly attenuates the distribution threshold.
As a result, the company was able to create an option with a nominal fee and aims to create an over-the-top (OTT) streaming platform for consumers to have more ways to watch the networks. DIRECTV will also create direct-to-consumer streaming services for its Los Angeles regional sports networks, and it will be available to all multichannel video customers subscribed to a package with these networks. A specific launch date and price has not yet been determined.
After all, cord cutting has remained persistent in the United States with rising cable prices and viable alternatives in the marketplace, whether or not they are free ad-supported streaming television services notwithstanding. In fact, streaming comprises a preponderance of total day television consumption among persons age 2+ per the latest Nielsen Gauge Report.
The Mid-Atlantic Sports Network (MASN) is the only one of Charter’s current regional sports networks that has not agreed to the new terms of the deal. The broadcast home of the Baltimore Orioles and Washington Nationals contested a decision by the restructured Major League Baseball Revenue Sharing Definitions Committee regarding rights fees for the teams between 2012 and 2016.
The decision was ultimately upheld by a New York Court of Appeals, requiring MASN to pay approximately $100 million to each franchise, something it argued would jeopardize aggregate profitability. Terms for payments during the five-year periods of 2017-2021 and 2022-2026 have yet to be agreed upon. Charter has informed league executives and regional sports networks that the tiers will not be activated unless all of a market’s regional sports network agrees to the terms of the new deal.
Regional sports executives are trying to ensure they remain available on cable and satellite systems, but are also working on securing direct-to-consumer rights to launch a different means of subscription. Various networks have already launched products, including NESN, MSG Networks and Bally Sports, the latter of which is in an imbroglio against Major League Baseball amid its parent company, Sinclair Broadcast Group, declaring Chapter 11 bankruptcy.
