An impasse between Comcast and a regional sports network (RSN) carrying the Yankees boils down to the intricacies of so-called "most-favored nation" contract language being included in a renewal deal, according to the Wall Street Journal.
Comcast (NASDAQ: CMCSA) dropped the 21st Century Fox-owned YES Network earlier in November, with the two sides unable to renew carriage terms since their previous deal expired Jan. 31. YES provides exclusive local access to the Yankees to 900,000 homes in Connecticut, New Jersey and Pennsylvania.
Most-favored nation clauses deliver an MSO like Comcast protection against a programmer like Fox offering a competing distributor better terms. For example, if Fox gave a rival a cheaper deal on YES streaming rights, it would also have to offer Comcast the same rate.
According to WSJ, Fox wants to expand the agreement to include other channels. For instance, say Fox offered YES at a cheaper carriage rate to Apple (NASDAQ: AAPL) for its new pay-TV streaming service. But at the same time, Apple also agreed to take a larger bundle of Fox cable channels.
In order to capitalize on its most-favored nation clause and get the same rate as Apple, Comcast would also have to match the portion of the Apple deal that requires carriage of the additional channels.
Fox said its demand is an attempt to keep Comcast from "cherry-picking" only the best parts of deals, as the programmer carves creative new agreements with digital companies entering the pay-TV market.
For its part, Comcast said Fox is merely seeking to leverage the carriage of additional channels..
The WSJ report gives insight into one of the bigger RSN disputes to emerge recently, with YES controlling Northeast access to what is perhaps the most powerful draw in American sports, the Yankees. YES is also home to the NBA's Brooklyn Nets.
The battle is being waged with the Yankees still more than two months away from reporting to spring training, and the Nets already out of the NBA playoff picture.
- read this Wall Street Journal story
Comcast drops YES, regional sports home of the Yankees and Nets, after carriage dispute
MLB finally allows authenticated streaming, enables 15 Fox RSNs to live stream games next season
Comcast dropping YES is a 'gutless money grab,' Yankees president says