With huge carriage standoffs for regional sports networks in New York and Los Angeles continuing to grind on, analysts say sports program licensing costs have finally reached a tipping point.
"I believe that finally sports TV is in crisis mode," said Jimmy Schaeffler, head of media and telecom consultancy Carmel Group, to the Wall Street Journal.
Meanwhile, also speaking to the paper, media consultant and former Fox executive David Sternberg said distributors "have learned that they can live without" regional sports channels. "The balance of power has definitely shifted to the distributors," he said.
DirecTV (NYSE: T) and other pay-TV operators in the Southern California region have not responded enthusiastically to Time Warner Cable's (NYSE: TWC) 30 percent price cut last week for SportsNet LA, the exclusive TV home of the Los Angeles Dodgers.
The channel, which is underpinned by a $8.35 billion, 25-year licensing contract with the team, is entering its third Major League Baseball season without carriage on No. 2 SoCal operator DirecTV, or any other local pay-TV company of local significance beyond TWC.
Cox Communications, a niche operator in the SoCal region, told FierceCable last week, "Our perspective has not changed. We hope that we can come to an agreement with TWC SportsNet LA that does not burden our customers with excessive price increases. We are seeking a fair price for this new channel. We know that the Dodgers are popular sports programming for select customers, but that programming comes at an extremely high price for all customers. We will continue to fight on behalf of all our customers, not just sports/Dodgers fans, and protect the value of the products and services we provide."
Comcast (NASDAQ: CMCSA), meanwhile, continues to balk on renewing Yankees RSN the Yes Network — a channel that costs subscribers in its Northeastern footprint, on average, $5.36 a month, according to SNL Kagan.
"We can only return Yes to our customers if the network and its majority owner, Fox, become realistic with their price demands," said Marcien Jenckes, executive VP of consumer services to WSJ.
While SportsNet LA and Yes Network continue to command attention, there are other examples of operators pushing back on expensive RSN programming. Comcast's failure to secure carriage for CSN Houston, which is still tied up in court proceedings, is probably one of the best examples.
Speaking at the team's winter convention in Chicago, Cubs operations chief Crane Kenney said any deal that his team carves out with a pay-TV operator will be fundamentally different from TWC's $8.35 billion deal with the Los Angeles Dodgers.
"Remember, there is no way sell the rights to someone else and they take all the risk," Kenney said, according to CSN Chicago, which was among the media outlets at the convention. "The world doesn't work that way, with one exception: That's what happened in L.A., where now Time Warner can't clear the games in half the homes. And obviously it's a huge loss for them."
- read this Wall Street Journal story