[update: the day after this was posted, the Dept of Justice approved the terms of the Disney-Fox deal provided Disney divest itself of the Fox RSNs]
Recent reports in the trades say that both Disney and Comcast are willing to divest the regional sports networks (RSNs) owned by 21st Century Fox to facilitate their proposed purchase of Fox assets. An interesting development, especially since each would be the most likely partner in such a divestment by the other.
RSNs are interesting beasts. There are about 40 RSNs in the USA serving the 82 local major league professional franchises in MLB, the NHL, and the NBA. 20 of these are owned by Fox, 8 by Comcast (NBC Sports), and the remainder split between AT&T, Charter, and independent owners. While most serve all the franchises in their region, a few are dedicated to just one or two teams.
RSNs have a strong local presence. Their connection to their respective “home teams” creates a substantial halo that rubs off on advertisers. This was established at least as far back as 2006, when I executed research for Fox Sports Net. This study conclusively showed the benefits of advertising in RSN MLB coverage versus generic MLB national games. It was repeated with similar results for local NBA teams.
However, despite their success at the local level, the Fox RSNs resisted tries to weave together the local RSNs into a competitor to ESPN. Their differing schedules made establishment of national sports content, cleared at a consistent time, impossible. Ultimately, this led to the establishment of the FS1 and FS2 networks.
Conversely, ESPN’s attempts at local coverage to complement their strong national TV presence and local radio affiliates – with dedicated sports websites for Boston, Chicago, Cleveland, Dallas, Los Angeles, and New York – met with less-than-hoped success.
When the original Disney proposal for Fox came to light, it was naturally assumed that the Fox RSNs would be combined into ESPN – although a dip back into local was something I questioned in my first post about the Disney-Fox deal. However, if nothing else, adding the RSNs may provide more value and content for the ESPN Plus SVOD service.
On the other hand, a Comcast acquisition means trying to integrate the 20 Fox RSNs with their 8. Controlling 28 of 40 RSNs could raise questions about market competition. And, with NBCSN already existing as a national sports network, there is really no need to acquire these RSNs to cobble together a pseudo-network.
The L.A. Lesson
It may be that RSNs are just too much trouble for these large national media companies. With each RSN having to negotiate with several major league teams, and numerous minor league or college teams, every few years, is it really worth the trouble? Ask Charter about Spectrum SportsNet LA, the Dodgers RSN with a huge 25-year contract, that hasn’t been able to get carriage on any other provider than those now owned by Charter. Less than half of Los Angeles has access to it.
Much will happen with the Fox deal, regardless of who wins, between an agreement and the deal being closed. As with the rest of the media industry, sports stakeholders will be watching and wondering how it will effect them. Stay tuned!
David Tice is the principal of TiceVision LLC, a media research consultancy.
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