Is the regional sports bubble about to burst?


SportsIt’s quite possible, says Eric Lindros of SB Nation. Major League Baseball’s Philadelphia Phillies are about to go for a new contract, but Lindros wonders if recent history in the broadcast sports arena will prevent the team from cashing in as it might like.

Argument number one is that the value of having a regional sports franchise is partly predicated on having a lot of eyeballs to tune in the games and watch them. Lindros notes that the fact that the number of cable subscribers is dwindling rather than growing is note a good sign, particularly when one considers that the bulk of the cord-cutters are in the younger demographics.

He notes very high margins enjoyed by certain cable companies, but wonders how much of this they want to invest to prop up a sports franchise, particularly when sports is typically eating 50% of an MVPD’s programming budget already.

And recouping the investment in an RSN is becoming very difficult indeed. Lindros notes the experience of Comcast in Houston, where it charges $3.40 a month to give subscribers access to baseball’s Astros and basketball’s Rockets. That high price of admission has prompted the two satellite services to say no thanks, and as a result, the games are available to only 40% of the metro’s TV households. A similar situation is said to exist in San Diego, to a lesser degree, as Time Warner Cable has refused to carry Fox’s local franchise, shutting out22% of the DMA.

Lindros mentions using an RSN as a loss leader to bulk up overall subscriber totals, but wonders if the gain in subs can be enough to make up the cost. RBR-TVBR would add that for every sports fan such programming pulls in, it possibly chases another away due to the high cost of programming the non-sports fan will never watch.

Figuring out a way to bundle RSN programming is also facing a tide in which the calls for a la carte program options are only increasing in volume.

Finally, Lindros notes that the Phillies are experiencing a loss in viewership even as their rights contract nears its completion. The team will be negotiating from a weak position with an MVPD universe that is possibly becoming wary of long term sports contracts.

The contract still has two more years, so the usual advice — stay tuned — applies.