SBD/June 5, 2014/Media

As TV Deal Nears End, Cubs Eye Everything From Forming RSN To Returning To WGN

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Last year the Cubs exercised an option to end their agreement with WGN-CW
The Cubs do not have a TV partner for next year, but "everything is in play, from starting their own digital-only channel to even returning" to current partner WGN-TV under a new deal, according to sources cited in a front-page piece by Robert Channick of the CHICAGO TRIBUNE. The Cubs last year "exercised an option to end their agreement" with WGN-TV. The possibility that the Cubs, who today are formally announcing they are leaving WGN Radio, might "abandon both Tribune Co.-owned stations after being under the same corporate umbrella for nearly three decades signals a dramatically changing sports landscape." Sources said that the current deals with Comcast SportsNet Chicago and WGN-TV are "earning the club" about $60M in annual broadcast rights fees. Getting out of the WGN-TV deal, which ran through '22, "enabled the Cubs to sync up expiring broadcast and cable rights" in '19, as the team "seeks to form a much more lucrative" RSN. Sources said that the Cubs "get about $500,000 per game from CSN and about $250,000 from WGN-TV," and added that the team is "looking to bump up the WGN side of the schedule closer to $500,000 a game." Sources said that WGN-TV "is losing about $200,000 per game under the current contract, and it is balking at any increase in the rights fees." One potential bidder is Fox, which "could acquire the broadcast rights and park the games" on WPWR-Ind. Sources said that Fox also "could move to launch" an RSN with the Cubs in '20. Sources said that CSN Chicago is "unlikely to pick up the WGN half of the schedule." Another possibility is WCIU-Ind., which "has been airing a handful of Cubs, White Sox and Bulls games each season" since '99. Despite "being jilted by the Cubs in November, WGN remains a likely partner" (CHICAGO TRIBUNE, 6/5).

DOLLARS & SENSE: WGN Radio President & GM Jimmy deCastro yesterday discussed the decision to end its 90-year relationship with the Cubs, saying while the station is "very proud of our longtime association" with the Cubs, it "has to make good business sense, and the current arrangement just does not." Appearing on WGN's "Kap & Haugh" show, deCastro said, "For more than a year, we’ve been working with the Cubs organization to try and re-craft the contract that we inherited. When Sam Zell sold the team (in '09), they did new television and new radio rights deals, and the payment for the rights to carry Cubs broadcasts have doubled since that time." He continued, "We offered them an opportunity where they could take the sales and control all the broadcasts and we would just air the games. In fact, we said we’d charge them $1 a game if they wanted to air that on our radio station, simply because we want to be able to play those games to our audience. ... We offered four or five different elements, including equity ownership in the station, and they chose, as of late (Tuesday) night, a deal with CBS which is an ‘all cash’ deal, seven-year deal with multiple millions of dollars. Just doesn’t make business sense, so we passed.” deCastro acknowledged that the Cubs' recent on-field struggles did factor into the decision. He said, "There is a little bit of connection. There has to be -- 288 losses in 2011 through 2013, 34 games already this year. When we looked at the ratings services ... they judge by meters that people actually listen to. There were several Saturdays and Sundays last year at the end of the year, we had no meters” ("Kap & Haugh," WGWG-LP, 6/4). deCastro also said, "We’ve lost a lot of money on the Cubs, and we’ve stood behind their rebuild for years. And we offered to continue to lose a lot of money in the future, but not the kind of money that CBS is going to lose." He noted, "We’re still going to be associated with the Cubs. We still think it’s going to be a big, big part of our platform. We’re still going to spring training" (CHICAGO SUN-TIMES, 6/5).

INTERESTING TIMING: In Chicago, Paul Sullivan writes the "biggest day of the year for the Cubs baseball operations department arrives" with today's draft, an event it "has been focusing on for months." Sullivan: "Naturally the business operations department chose that same day to have a news conference to announce its new long-term radio deal." This is "just another example of the obvious disconnect between the two branches of the Cubs' hierarchy." President of Business Operations Crane Kenney "pretends he's the straw that stirs the drink," while President of Baseball Operations Theo Epstein "stays in the background and bites his lip" (CHICAGO TRIBUNE, 6/5).
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