Comcast drops Rangers, Knicks games after saying almost no one watches them

Julius Randle #30 of the New York Knicks drives to the basket towards the Atlanta Hawks throughout Spherical 1, Recreation 5 of the 2021 NBA Playoffs on June 2, 2021 at Madison Sq. Backyard in New York Metropolis, New York.

Nathaniel S. Butler | Nationwide Basketball Affiliation | Getty Pictures

Madison Sq. Backyard Community traded barbs with Comcast on Friday as the 2 media corporations dispute over rights charges that halted professional sports activities content material on the service.

The printed deal between MSG and Comcast expired on Sept. 30, leaving sports activities viewers within the New Jersey and Connecticut areas with out content material that includes the New York Knicks and the Nationwide Hockey League’s Rangers. Each are managed by MSG. The community additionally airs Devils, Islanders and Main League Soccer video games. The NBA season begins on Oct. 19, whereas the NHL season begins on Oct. 12.

MSG referred to as the failed negotiations “disappointing,” claiming Comcast tried to “pressure us to simply accept phrases they’d by no means conform to for their very own regional sports activities networks, together with SNY in New York,” a MSG assertion to CNBC mentioned. SNY is one other regional sports activities community that airs Mets MLB video games.

MSG’s assertion additionally mentioned Comcast rejected proposals much like offers MSG has with different carriers.

MSG Community additionally planted a banner throughout its website alerting shoppers of the dispute. The community is owned by Madison Square Garden Entertainment Corp., which trades on the New York Inventory Change and has a $2.4 billion market cap.

It isn’t clear how a lot Comcast pays MSG to distribute its channels. The community generated complete revenues of $166.1 million, in response to its fourth-quarter earnings report final August. However the report added its “affiliation payment income decreased $9.7 million, primarily as a result of influence of a lower in subscribers of roughly 7%.”

Comcast, the dad or mum firm of CNBC, defended its resolution to drop MSG. In an announcement, it wrote its inside knowledge reveals “95% of all clients who acquired MSG over the previous 12 months didn’t watch greater than 10 of the roughly 240 video games it broadcast.” Comcast would not serve residents of New York Metropolis, who as a substitute get cable from corporations together with Constitution, Altice USA and Verizon.

Mentioned Comcast: “We do not imagine that our clients ought to should pay the hundreds of thousands of {dollars} in charges that MSG is demanding for a few of the most costly sports activities content material within the nation with extraordinarily low viewership in our markets.”

On Xfinity’s web site, the company wrote it will decrease its regional sports activities community (RSN) charges to clients in “relevant areas” impacted by the choice to drop MSG Community.

In media circles, this dispute might be an indication RSNs and that would influence native professional staff revenues.

Followers arrive to Madison Sq. Backyard earlier than the sport between the Golden State Warriors and New York Knicks on February 23, 2021 in New York Metropolis. For the primary time for the reason that onset of the COVID-19 pandemic, Madison Sq. Backyard reopened its doorways at restricted capability.

John Smith | Corbis Information | Getty Pictures

A brand new actuality for RSNs?

The lack of Comcast viewers for MSG comes at a important time for its Knicks franchise. The staff made the NBA playoffs final season for the primary time since 2013 and energized its fan base. However Comcast isn’t any stranger relating to turmoil concerning RSNs that characteristic New York Metropolis groups.

In 2015 it dropped YES Community, co-owned by the Yankees. The channel finally returned to Comcast in 2017. That dispute wanted to resolve as a result of the Yankees are a premium sports activities model outdoors of New York. And Main League Baseball video games are the primary blood vessel for RSNs.

NBC operates its RSN in New York with SNY and has properties in areas that embody Philadelphia, Boston, Chicago and San Francisco. And Comcast renewed its cope with Google-owned YouTube to permit the service to proceed streaming its NBCUniversal content material.

When discussing the Comcast, MSG dispute, longtime sports activities media rights advisor Lee Berke referred to as the transfer a “threat” as there might be pushback from clients. However he additionally cautioned RSNs are in peril if they do not enhance their technique.

“The Comcast MSG scenario is greater than a short lived scenario,” Berke mentioned. “It is a symptom of an ongoing, substantial drawback for RSNs to proceed to realize distribution from pay-TV providers because the pay-TV universe continues to shrink.”

“The (cable suppliers) feeling is, ‘What number of subscribers are we going to lose versus that improved margin we’ve by not carrying these costly RSNs,” Berke added. “If the financial savings surpass the loss in subscribers, then they’re going to stick with it.”

MSG would not carry MLB video games, so it may well’t leverage that asset to sports activities entrepreneurs. And distribution took one other hit with dropping Comcast. In 2010, MSG did not conform to phrases with Dish Network, leading to it being dropped from the satellite tv for pc service. The community nonetheless is not obtainable on the service.

Dish slashed RSN choices general over time. For now, it stopped carrying AT&T-owned SportsNet and Root Sports, which simply picked up the Portland Path Blazers rights. And it eliminated NBC Sports activities properties final April.

“The present RSN mannequin is essentially damaged,” mentioned Dish president Brian Neylon in an announcement last April. “This mannequin requires almost all clients to pay for RSNs when solely a small share of shoppers really watch them. As the price of these channels continues to escalate, we not suppose it is smart to incorporate them in our TV lineup.”

Berke mentioned RSN choices would further decline within the coming years.

“When your pay-TV universe has shrunk to 100 million subscribers at peak, right down to roughly 70 million or much less – shrinking to about 8% a 12 months – it turns into an increasing number of troublesome to keep up the identical steady of channels you’ve got had prior to now,” Berke mentioned. “The RSNs are more and more feeling the warmth and the brunt of those adjustments.”

Most of MSG’s subscribers are within the New York space, however dropping Comcast viewers in surrounding areas impacts affiliate income and impressions – that would damage promoting gross sales. And Berke factored in additional methods to observe hockey content material.

“For those who really need hockey, you might have new packages with ESPN and TNT,” he mentioned. “And 75 further NHL video games can be proven on ESPN+ and Hulu.”

Disclosure: Comcast owns NBCUniversal, the dad or mum firm of CNBC.

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