It’s that time again where a big bad cable network is squaring off with a big bad television provider over rights fees. Fox, which owns 80% of the YES Network, is holding out for $5.36 per customer per month in order to allow Comcast the privilege of carrying its programming to the 900,000 customers in New Jersey, Pennsylvania, and Connecticut.
Every report I’ve seen and statement from executives say the two sides are “far apart” on where they are in the negotiations so I decided to see just how “apart they are. This will involve some math, so buckle up, relax, this won’t hurt a bit (Unless you are a Comcast subscriber and like to see the Yankees on TV.
Lets start with Fox, they want $5.36 per customer per month from Comcast, that is a total of $4.8 million per month.
The YES Network, as of last June, does a 2.5 rating when the Yankees are on. That means of the 900,000 fans with Comcast, presumably 22,590 of them are actually watching the games.
Now, lets assume EVERY one of the those customers decides they HAVE to have the Yankees and switch providers (many do not have the option due to local monopolies). Let’s say all of them flat out left Comcast and their $150/month bill. Comcast would lose $3.34 million per month.
So at the absolute WORST case scenario, should every person who watches the Yankees leave Comcast, Comcast would still have saved themselves $1.5 million dollars per month in rights fees to YES Network.
So what does this all mean to the future of Regional Sports Networks (RSN’s)? Well, it could mean quite a bit, in the past few years they have gambled big time to obtain live sporting event content for their channels. The Yankees for example, have a contract with YES Network that will pay them $98 million dollars in 2016, with a 5% increase every year until 2042! The entertainment world is now “online” Netflix, Hulu, MLB At-Bat, and even illegal streams are how the next generations are getting their content.
As television providers balk at paying the carriage fees and more people unplug from traditional cable packages in favor of streaming options, the RSN’s are going to have a difficult time recouping the money they pay their partner teams for the right to air their game in the home-market.
In the context of YES vs. Comcast, the New York market as 7.8 million households. With the loss of Comcast, they lose 11% of that share. If Comcast successfully fends off and does not agree with YES, other providers may follow-suit.