About all that TV money ...

The Dark Side Of Booming Local TV Deals
by Wendy Thurm - August 1, 2014

... big local TV contracts aren’t always good news for teams ...

When a regional sports network agrees to pay millions of dollars to an MLB team, that RSN (regional sports network) has two principal ways to recoup that investment: (1) sell ads during the game broadcasts; (2) charge a carriage fee to the cable and satellite operators in the region who want to carry the RSN. But what happens when the cable and satellite companies balk at the carriage fees?  ...

When FoxSports San Diego launched before the 2012 season, the RSN was available in only 40% of the San Diego TV market ...

Comcast SportsNet Houston launched in October 2012 and, since then, has been seen only by Comcast cable customers...  With the RSN bleeding cash, Comcast forced the venture into bankruptcy court last September ...

A vast majority of Dodgers fans in LA missed Josh Beckett’s no-hitter, Clayton Kershaw’s no-hitter and every Yasiel Puig bat flip — unless they watched with a friend or at a bar with TWC. Even Vin Scully is without Dodgers’ broadcasts when he’s at home during the team’s long road trips...

... fight between the Washington Nationals and the Baltimore Orioles over the money flowing into the Mid-Atlantic Sports Network ...

Selig was furious...

Attorneys for the two teams and MASN have continued to launch attacks and counter-attacks...

All these TV deal disputes bring to mind the adage “Be careful what you wish for.”
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Vin Scully singing "Take Me Out to the Ballgame"
during a spring training game in Arizona March 2008 by Craigfnp via Wikimedia Commons

This is only one side of the coin.  I've been writing that the ad money is not as guaranteed as so many people think.

Bubble: financial, not gum. Want to bet?  Saturday, March 29, 2014

The real estate bubble of recent years seems to be a lesson not learned by owners of Major Baseball League (MBL) teams...

Increasing numbers of teams are entering into mega contracts for television money for many years into the future.  So what's the problem?  That money may not be there if people watch less than expected.  How much of those mega millions of TV dollars is guaranteed?  No one really knows.  At least 99% of the people assuring us that the money will continue to roll in do not know.

And even if the TV contracts guarantee the money, they cannot deliver what they do not have.  What if fewer people watch games on TV?  What if they watch but simply buy less?  Advertisers will pay less if the contract allows and if  the contract does not allow, advertisers will simply demand that TV networks change the terms.  What can the networks do then?  Re-negotiate their deals with the teams.  This is not an unreasonable scenario.

But you say that is very unlikely to happen.  Sports is the giant content that continues to grow.  Sports on TV generates the biggest bucks from service providers.  ESPN especially gets big bucks.  The regional sports networks get big bucks.  The sports viewing public is insatiable.  Non-sports fans are stuck with higher bills subsidizing their sports loving neighbors.

But wait ...

Technology may ultimately free the non sports viewer by making content easier to get from the Internet so that they can buy a la carte.  ESPN won't be sucking bucks from people who do not watch their stuff.

Over saturation could already be upon us...

And speaking of action, gambling is the unmentioned elephant in the room.  Baseball is most vulnerable because its does not lend itself to point spreads, which work best for football but pretty well for basketball.  Baseball is stuck with odds that vary a lot depending on the day's starting pitcher.

People watch to monitor their bets!
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Those humongous TV deals: is that money guaranteed or what?  Tuesday, January 29, 2013

Collapse is coming.  Tuesday, November 27, 2012