http://www.chicagobusiness.com/article/ ... bs-in-2020
The proposition remains a gamble: Breaking up the regional network partnership with the Bulls, Blackhawks and White Sox on Comcast SportsNet Chicago to form a standalone network could be a cash boon for the North Siders, given the eye-popping sums that media companies have paid for live sports rights in recent years. Yet obstacles remain, like distribution, finding enough content to air when games aren't being played and the sheer cost of launching a network.
The decision has more than the Cubs' financial future riding on it. The owners of the other three teams may now need to prepare to lose the partner with the largest fan base on the network. And depending on the nature of the sports TV landscape three years from now, a channel owned by those teams could be in direct competition for TV dollars with a Cubs network.
Under the current setup, the four teams and NBCUniversal hold equal stakes in CSN Chicago. It was a partnership that made sense when it was launched in 2004, with Sox and Bulls owner Jerry Reinsdorf taking the lead to structure the deal while the Cubs' Tribune Co. ownership had other revenue coming in from games on WGN-TV/Channel 9.
But since then, new products and viewing platforms have emerged to show live games that have made franchises' forming of their own networks more feasible. And with TV ratings that are nearly five times that of the Sox, the Cubs are unlikely to renew a deal unless they can get a bigger piece of the revenue from things like rights fees and advertising.
Reinsdorf and Blackhawks owner Rocky Wirtz, who decline to comment on the matter, will have to determine whether such a deal makes sense for them. If it doesn't, it will be up to fans, cable providers and any other distribution platforms to figure out what they're willing to pay for a Cubs network and a separate one for the Bulls, Blackhawks and Sox.
CSN Chicago charges distributors a monthly fee of $3.80 per subscriber to carry it (a cost that is passed along in your cable bill), the second most expensive network in most basic packages behind ESPN, according to media research firm SNL Kagan.
If distributors aren't willing to pay more than that to carry both the Cubs network and a three-team regional network starting in 2020, the market will determine which one gets a bigger piece of the pie. And with cable providers facing headwinds of cord-cutting and new players like Twitter entering the live sports distribution space, there is reason to believe they won't be willing to shell out substantially higher fees.
“There does come a price point for (regional sports networks) where cable companies and multiservice operators will choose one or the other and not both,” says Marc Ganis, president of Chicago-based sports franchise consultancy SportsCorp.
BRINGING THE VIEWERS
But another challenge may be ensuring that losing one of its most popular TV products doesn't decimate advertising interest. Cubs viewership on the network this year was higher than that of the network's Sox and Bulls games combined.
Filling the live sports gap left by the team shouldn't be a problem. Despite losing the roughly 80 Cubs games it shows per year, CSN could actually have more live sports if the teams bring the 100 or so combined games they air on broadcast networks like WGN onto one network.
That could provide leverage with advertisers, who will no longer have broadcast options like WGN or WLS-TV/Channel 7 to use as bargaining chips to lower ad rates. The tough part could be delivering as wide an audience as it does now with the Cubs, whose appeal stretches far beyond Chicago into Iowa and Indiana where CSN Chicago is carried.
“I think CSN has some value, and a Cubs network has some value,” says media buyer Paula Hambrick, whose Orland Park-based Hambrick & Associates has purchased airtime for clients during games on CSN Chicago this year. “Advertisers are willing to buy content wherever it makes sense so you could reach the target audience you need.”
For now, sources close to all four teams and NBC Universal say discussions are ongoing about what their broadcasting ties will look like when their agreement expires at the end of 2019.
The picture will likely become clearer by the end of next year, as Cubs officials estimate they would need at least two years to set up a new network if they choose.