How much should a service provider pay for sports content--especially when the team concerned isn't all that hot? That question is back in the news after Jeff Weber, president of content and ad sales at AT&T (NYSE: T) made it clear that U-verse won't pay for what it considers an unattractive sports channel offering.
"We are not going to pay prices … we are not carrying certain regional sports networks in one of our biggest markets … and we knew we didn't need to because the data was crystal clear about how intense those viewers were," Weber said at the Nomura Global Media Summit in New York City.
Weber didn't specifically pinpoint the Houston market, where U-verse is at loggerheads with Comcast (Nasdaq: CMCSA) over how much, if anything, to pay for access to the regional sports network that carries the Astros baseball and Rockets basketball teams. That market information was ferreted out by sister publication FierceCable with a story that provided fodder for the local media in Houston to kind of, sort of, agree with Weber. The two teams in question--especially the Astros, with the second worst record in baseball--don't really demand appointment TV.
"The Astros are not currently a winning team with a huge local, state, or national following and the team is making it known that it won't be competitive for several seasons. And the Rockets offered up a nice season, but when they don't pack the arena on a nightly basis, it's hard to argue that they're must-see TV," John Royal wrote in the Houston Press.
Houston doesn't hold a monopoly on sports franchise exclusivity. The situation plays out in markets all over the country where service providers--wisely or otherwise--took monopoly stakes in local sports franchise transmissions and are basically holding those rights hostage.
In the Philadelphia market where I reside, Comcast has long been lambasted for holding onto the Phillies, 76ers and Flyers with a white-knuckled fist. Comcast used a regulatory footnote that lets service providers withhold content if it isn't bounced off a satellite--in Philadelphia Comcast uses terrestrial transmission to deliver its Comcast Sports Network (CSN) to various cable properties in the serving area.
While the MSO has cut a deal with the spottily available Verizon (NYSE: VZ) FiOS service, it's never made a great effort to provide it to DirecTV (Nasdaq: DTV) and Dish Network (Nasdaq: DISH). The net result has been lower satellite penetration in the area--especially as the Phillies won a World Series and the Sixers and Flyers were competitive, and the only way to watch them was on Comcast or in the limited areas where FiOS is available.
That paradigm could change as the Phillies dive toward mediocrity and join the playoff-missing Flyers and Sixers. Even sports-crazed Philadelphians have better things to do with their time than sit in front of the tube watching losers.
That's the point that Weber made. Statistics show subscribers aren't attracted to losing teams, so in Houston, and perhaps in other markets, AT&T is betting that subscribers will be happy not to see their bills go up just so they can watch the Astros rebuild.
Of course the real losers in this sports marketing situation are not the service providers or the teams, they're the consumers who either pay too much to watch teams that aren't worth the money or don't get to see local teams.
Early in the season, when the Phillies still offered that rare glimmer of hope only spring training can provide, I tuned to an ESPN broadcast on my DirecTV service. I quickly learned that while the rest of the country could see the game on a national sports service--for which I'm sure I pay a hefty price--I was blacked out because Comcast owned the rights in my region.
Surprisingly, my anger wasn't directed at Comcast; it was aimed at the Phillies, whose decision to sell their soul to Comcast enraged me as a fan. I didn't rush to the phone to order Comcast, as that service provider might have hoped; I changed the channel to something that was available.--Jim