In this transitionary time for the pay TV universe, regional sports networks have become a high-profile service differentiator for most multichannel video programming distributors. With the relatively high cost that accompanies RSNs compared to other cable networks, pulling regional sports networks from a channel lineup frees the MVPD from implementing severe price increases.
Over the last several years, operators have become increasingly judicious with the RSNs they allow into their channel lineups, moving away from offering all or a majority of the RSNs available within their respective service areas. This practice is in response to the rising sports rights costs associated with the RSNs — and live sports in general — the launching of cost-conscious alternatives, such as over-the-top services, and a shrinking subscriber base in the overall traditional cable bundle.
In this report, we look at which operators have remained RSN-friendly and which RSNs have thus far evaded major service disruptions and are still available on a majority of the providers in their area.
For this analysis, we looked at some of the nation's largest MVPDs and compared their respective channel lineups with the RSNs that are available in their service areas.
Based on our estimates, Charter Communications Inc. is currently the most RSN-friendly MVPD, offering 41 of the 47 RSNs, or 87%, that are available across its national service footprint. DIRECTV Group Holdings LLC ranks No. 2 with 41 of 49 RSNs, or 84%, followed by Comcast Corp. with 40 of 48 RSNs and Verizon Communications Inc.'s FiOS with 10 of 12 RSNs, both representing 83%.
DISH Network Corp. is at the bottom of the list, as the sat-caster currently offers only 15, or 31%, of the 49 RSNs available in its service area. In DISH's February 2020 earnings call, Chairman Charlie Ergen said that while "we would love to do a deal with regional sports," it was an easy decision to offer less sports based on the math.
"And we would say that your price should go down if people are watching less," Ergen said on the call. "And one of the big outliers was regional sports in terms of the amount of money they charge and collect versus the amount of people who actually view them."
In terms of the RSNs that have maintained the most active cable, satellite and telco distribution agreements, there are only four that currently have full distribution based on the largest MVPDs in our coverage. The four RSNs include AT&T SportsNet Rocky Mountain (US), New England Sports Network (US), NBC Sports Bay Area (US) and NBC Sports California (US).
Of these four networks, only New England Sports Network's average license fee per sub per month, estimated at $3.02, is priced above the RSN segment's 2020 average of $2.61.
The leverage created in grouping sports networks together for favorable distribution seems to be working as ESPN Inc., Sinclair Broadcast Group Inc. and NBC Sports Inc. are all toward the top in terms of MVPD carriage. ESPN, represented in the RSN segment with just Longhorn Network (US), groups its University of Texas-focused sports network with its other national networks.
Overall, the RSN segment average percentage of active agreements versus the total available MVPD partners is 69%, with Altitude Sports & Entertainment (US) the lowest agreement percentage at 22%. Altitude was the subject of a massive subscriber blackout when the network lost 82% of its subscribers within a three-day window. Altitude, an independently owned RSN, is currently only available to Charter and DIRECTV subscribers that have an expanded basic package or above.
Altitude is in the middle of an antitrust lawsuit against Comcast, which accuses Comcast of not accepting a fair offer for the network in order to drive the RSN out of the market, take the local sports rights of the Denver Nuggets and Colorado Avalanche and launch an RSN out of Denver for itself.
Moving forward, with major professional sports starting to formulate schedules for the 2021 regular seasons as COVID-19 continues to impact major cities across the country, the hope is that some RSNs will return to channel lineups in the coming months.
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Economics of Networks is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.