With MLB spring training underway and the regular season fast approaching, the carriage situation for Sinclair’s new Chicago Cubs-focused RSN Marquee Sports Network is drawing some extra scrutiny. Marquee launched Feb. 22 and has struck deals with “more than 40” providers since, including WOW! (Wide Open West) Wednesday, but they still don’t have a deal with Comcast. And that could be rather important for their bottom line, considering that Comcast is the largest cable provider in the Chicago area. Here’s more on that from a larger piece by Bloomberg’s Gerry Smith on carriage issues at Marquee and other RSNs:
A new cable channel that carries the Chicago Cubs made its debut on Saturday, but Ken Matuszak, a lifelong fan of the team, wasn’t able to tune in.
His cable company, Comcast Corp., doesn’t carry the new Marquee Sports Network, which is jointly owned by Sinclair Broadcast Group Inc. and the Cubs. That means Comcast’s 1.56 million subscribers in the area, the most of any pay-TV provider, are shut out as preseason baseball gets underway.
…Marquee Sports recently agreed to pay $132 million a year on average for the rights to Cubs games, or more than double the previous deal. The network stands to lose about $100 million a year in subscriber revenue from the blackout on Comcast, based on a $5-a-month price. Even a settlement at less-than-ideal terms could force the network to “dramatically trim its revenue outlook,” [Bloomberg Intelligence analyst Geetha] Ranganathan said.
While that story’s original headline (and remaining URL) of “Cubs’ channel that fans can’t see symbolizes sports network woes” isn’t entirely accurate (fans can absolutely see Marquee if they really want to; they just have to be willing to switch to a provider that carries it, something that even Matuszak (the complaining fan cited here) told Smith he’ll do if this isn’t resolved by the start of the regular season), the numbers are notable for illustrating the consequences for Marquee if they’re not able to strike a deal with Comcast. Comcast’s huge subscriber numbers in the Chicago area mean that there’s a stark difference between having carriage there or not having it. And that could be very important for Marquee’s impact on Sinclair’s bottom line.
How important might this be? Well, we can get even more specific than the “about $100 million a year.” Using the 1.56 million Comcast subscribers in the area Smith cites, that would be $93.6 million annually if all of them received Marquee (not guaranteed; it could wind up on a higher tier) for 12 months (also not guaranteed, as there are always some subscribers who cancel cable or move to a different provider).
For this year alone, if a deal is made that begins paying Marquee $5 per subscriber in March (so for 10 months), that’s $78 million. And the impact might be even larger, given previous analyst estimates that Sinclair has been asking $6 to $7 per subscriber per month for the channel. A deal at $6 per sub per month would get them $112.3 million for 12 months or $93.6 million for 10 months, while a deal at $7 per sub per month would get them $131 million or $109.2 million respectively. And that $7 per sub per month deal would almost cover the rights fee they’re paying the Cubs before including revenue from any of those other 40-plus providers.
As with many carriage disputes, it’s far from clear if there will be any resolution here. It’s notable that Comcast still doesn’t carry the ACC Network, where they’re the last major holdout; that perhaps indicates a willingness to take a hard line on carriage of new networks. But the Cubs/Marquee case perhaps has a higher chance of successful fan pressure; if enough Comcast subscribers switch or threaten to switch, maybe they feel some pressure to make a deal. Many of these deals are deadline-motivated, though, and it seems likely that there may not be a ton of movement until regular-season games get closer (although the sides are reportedly in talks).
In any case, this will be an interesting battle to watch, especially with Sinclair facing earnings/stock challenges and ongoing carriage disputes (for their recently-acquired Fox RSNs) with Dish and now YouTube TV. And it’s going to be a very significant one for Marquee’s bottom line. With a Comcast deal, this network looks a lot better financially than it does without one.