Wednesday, April 04, 2012
More On RSN Contract Valuations
|Rangers||Fox Sports Southwest||8.1||$2.66|
|Mets||SportsNet New York||7.4||$2.38|
|Angels||Fox Sports West||7.1||$2.66|
|Red Sox||New England Sports Network||4.1||$3.35|
|Phillies||Comcast SportsNet Philadelpha||3.1||$3.03|
The surprises, of course, are that the Dodgers have less market penetration than the Angels. (The lower per-capita price is a direct function of their current TV deal.) Regarding the Dodgers' next contract, the article makes this unbelievable bit of speculation (as usual, emboldening is all mine):
Analysts say a Dodgers network could command a monthly fee of about $3.50 per home beginning in 2014 and reach a market that could stretch as far east as Las Vegas and north to San Luis Obispo.I say that's unbelievable because of the news from BGR (nee Boy Genius Report) that one million US adults discontinued cable TV service in 2011, representing more than a third of the estimated 2.65 million who have done so since 2008. The trend of cable-cutting is accelerating, but these ridiculous deals presume that the costs of RSN contracts will continue to be amortized over a larger customer base. That seems implausible if satellite and cable TV viewers continue to conclude those services aren't worth the money.
That could translate into nearly $300 million in revenue annually before the network sells a single ad spot. Another bonus: Proceeds from regional sports networks aren't subject to baseball's revenue-sharing rules, which seek to maintain competitive balance among the MLB's 30 teams.
Update: Deadspin, whom I find myself with increasing respect for these days (they have been on the side of the angels in both the Michael Vick and Penn State stories), has a fantastic piece about this very subject that echoes my feelings about the situation, and provides additional clarification:
Read the whole thing.
We're now learning that that cable providers are tired of RSNs' bullshit and perfectly willing to yank telecasts. Non-fans—against their will—subsidize telecasts for fans. Consider the MSG-Time Warner standoff in winter (and what's going on in San Diego now). According to reports (because none of this is transparent), Madison Square Garden wanted Time Warner customers to pay a 53 percent increase on its $4.65-a-month fee. That's $7.11 a month—or $85.32 a year, from every Time Warner subscriber in New York—for the Knicks, Rangers, Islanders, and Devils. Time Warner naturally balked, and might have held out longer if not for Jeremy Lin. In San Diego, Fox Sports San Diego is reportedly seeking a 400 percent fee increase from Time Warner Cable. Time Warner wisely has said no.
MLB could also face competition from First Row Sports or some other outlaw streaming enterprise. The pirate feeds don't cut out nearly as much as they used to, and, so far, the feds haven't been able to sue them out of existence.
As for a customer revolt: One gets progressively likelier, as cable prices climb while the economy lags and the market develops viable alternatives. One doesn't need cable anymore to fall under a screen's spell. There's Netflix and Hulu, video games are better than ever, and there's all kinds of other stuff to watch on the internet. Why should someone who buys cable just for the occasional movie write the Knicks such a big check? As the bills get bigger and bigger, people will check out. As for FCC intervention—forcing à la carte cable, or some such thing—it's not likely, but it's not impossible.
Above and beyond all of that, as I pointed out in an earlier post, overall television ownership is in decline. That's just mind-boggling.