Spectrum Confirms Plans to Offer Cable Package Without RSNs; What Can Regional Sports Channel Owners Do to Survive?
John Ourand of the Sports Business Journal is pretty used to publishing big scoops by now. Ourand was the first to report earlier this week that Spectrum, the second-largest cable provider in the United States, would soon begin offering new subscription plans that did not force users to pay for regional sports networks (RSNs).
That report was confirmed by Spectrum and its parent company Charter Communications on Tuesday. Charter announced via press release that sometime in the third quarter of this year, it would relaunch its Spectrum TV Select service in certain markets. Users will have two options: Spectrum Select Plus, which will carry RSNs, and Spectrum Select Signature, which will exclude RSNs in favor of a lower price point.
The rollout of this change will not be uniform, as Spectrum does not have the right to offer cable packages without RSNs in every market yet. Often, carriage contracts between RSN owners and cable providers stipulate the channels must be carried in the most popular or base plans, which drives the price of those plans up.
As part of the announcement, Charter confirmed it was launching a direct-to-consumer (DTC) streaming option for the RSNs it owns, Spectrum SportsNet and Spectrum SportsNet LA. This streaming platform will be offered to all affiliate subscribers for free, though there was no word on when the company planned to officially roll out such a service. These channels offer Los Angeles Dodgers, Los Angeles Lakers, and Los Angeles Sparks games in Southern California.
“The launch of Spectrum Select Plus underscores our commitment to providing our customers with the best sports coverage while ensuring our non-sports fans have options that meet their needs,” said Tom Montemagno, Executive Vice President, Programming Acquisition. “This new model paves the way for a more flexible approach to the outdated packaging model for sports, and it puts the focus where it should be, on the customer.”
The company is even willing to offer packages without its own RSNs, as this week it announced a new deal with DIRECTV that will allow the satellite provider to offer packages without the Spectrum SportsNet channels in the Los Angeles market.
These decisions by Charter and Spectrum spell big trouble for RSN owners, who have relied upon the revenue generated by contracts that forced providers to offer their channels to 80% or more of subscribers. Owners like Diamond Sports Group, which is responsible for 19 Bally Sports-branded RSNs, are already having trouble coming up with enough revenue to pay teams what they’re owed, as cord-cutting has greatly reduced the number of pay-TV customers in general.
So what can RSN owners do to try and stem the tide? For some, there may not be any answers. Others will likely attempt to rely on streaming revenues to fill in the gaps. That’s exactly what Kiswe chief strategy officer Mike Schabel predicts. Kiswe offers DTC streaming of Phoenix Mercury games in the Arizona market and was set to take over Phoenix Suns streaming as well, before a protest from Diamond Sports in bankruptcy court muddied the arrangement.
Diamond is practically desperate to get more streaming rights from Major League Baseball to make up for its revenue losses. One report suggests that a representative of DSG’s parent company Sinclair Broadcasting Group essentially tried to blackmail the league into selling it more streaming rights before going into bankruptcy. Now, the RSN owner is attempting to negotiate a new carriage deal with the Arizona Diamondbacks, whichreportedly will include the streaming rights to the team, and its games would be shown on Bally Sports+.
Diamond’s success in pursuing more MLB streaming rights could make or break its future. RSN owners will have to try to spin up their own streaming platforms, or partner with existing streamers to try to make up revenue losses from traditional TV packages. That problem only becomes more urgent as providers like Spectrum launch new plans that don’t force users to pay for RSNs they don’t watch.
Bally Sports+
Bally Sports+ is a direct-to-consumer streaming service that offers live games for those who want access to your local Bally Sports RSN without subscribing to a cable or satellite package.