Talks between Comcast (NASDAQ: CMCSA) and regional sports channel YES Network have degenerated into a blackout, affecting around 900,000 Comcast video customers in New Jersey, Connecticut and Pennsylvania.
YES Network is the exclusive regional sports network (RSN) home of the New York Yankees, which own 20 percent of the channel, alongside majority owner Fox Sports. The NBA's Brooklyn Nets and soccer team New York FC also call YES their exclusive local TV home.
The two sides had been working off temporary extensions to a carriage agreement that expired in February. YES said Comcast pulled the channel without warning at 12:01 a.m. today.
"Comcast's reputation for poor customer satisfaction is well known, but this surprise development represents a new low," YES Network said in a statement. "YES and Comcast reached an agreement in principle on the key points of a new contract many months ago, and YES continued to operate in good faith under that arrangement through the entire Yankees and NYCFC seasons and into the Nets season. Unfortunately, because YES will not yield to Comcast's demands for special treatment and anti-competitive terms, Comcast has decided to drop YES Network and its coverage of the NY Yankees, Brooklyn Nets and the New York City FC."
YES is asking for a 33 percent fee increase, according to the New York Post. It's already the most expensive-to-carry RSN in the U.S., according to SNL Kagan.
A Comcast source told FierceCable that the company did notify customers and local franchise boards prior to dropping the channel. Officially, Comcast said that not enough of its viewers are watching Yankees games to justify YES' expense.
"YES Network carried approximately 130 baseball games this past season and well over 90 percent of our 900,000-plus customers who receive YES Network didn't watch the equivalent of even one quarter of those games during the season, even while the Yankees were in the hunt for a playoff berth," Comcast said in a statement.
Indeed, with the Yankees in off-season mode until spring, and the Nets, a miserable 2-9 to start the season and sure to play few relevant NBA contests that aren't available on national networks like ESPN or TNT, YES' current audience potential seems limited.
The Post said Comcast could be looking to secure streaming rights to the channel -- this would be notable, given the control Major League Baseball exerts over RSNs and how they negotiate OTT with pay-TV operators.
Comcast may also be looking for so-called "most favored nation" language in its contract, which would guarantee it gets the lowest carriage price versus its satellite and telco competition in the region.
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Update: A previous version of this story incorrectly reported that the YES Network is the exclusive home of the New York Knicks. It is actually the home of the NBA's Brooklyn Nets.