Upcoming Conferences and Events
SBJ/September 24-30, 2012/Media
RSNs have blueprint for dealing with autumn work stoppage
Published September 24, 2012, Page 11
Stop me if you’ve heard this before: Regional sports networks are preparing for an autumn without professional games because of a work stoppage.
Last year, it was the NBA. This year, it’s the NHL. But for RSN executives, the situation is identical.
“Exactly the same,” said Comcast SportsNet Mid-Atlantic President Rebecca Schulte. “Everyone hopes the lockout gets resolved, but we are prepared to use the same plan we used last year.”
Executives at regional sports networks across the country are experiencing a sense of déjà vu as they scramble to fill in live games that will be lost if the league and its players can’t reach an agreement before Oct. 11, when the season is slated to start.
The fact that these networks have a blueprint from last year’s NBA lockout does not make the potential loss of NHL games any easier.
“Live local sports is the cornerstone of what we do,” said Jeff Krolik, executive vice president for Fox Sports Networks, which holds rights to 13 NHL teams. “When we lose live local sports, that’s not good for us. You can’t replace it.”
NHL game ratings typically are lower than ratings for MLB and NBA games but still are higher than almost anything else RSNs put on air. Pittsburgh Penguins games on Root Sports last season averaged a 7.89 rating, the highest mark for all U.S.-based teams, followed by the Buffalo Sabres, whose games on MSG Network averaged a 6.55 rating.
It’s virtually impossible to make up those ratings with replacement programming.
Fox Sports Networks will rely on college football, soccer and UFC programming to fill in any programming void left by the NHL.
Comcast’s RSNs will patch its NHL holes with similar programming, but it believes its RSN strategy of producing original news and studio programming will allow it to fill in programming holes more easily. CSN Mid-Atlantic produces 2 1/2 hours of studio programming each day, and some of its programming is working, as measured by ratings. The net has had its biggest success so far with Washington Redskins-related programming. Through two games this season, Redskins postgame programming has generated a 1.98 rating in D.C., 32 percent higher than the Washington Capitals’ 1.50 average game rating last season.
Most other programming, though, doesn’t match the ratings of live events, something that will become more of a problem once football season ends.
“There’s no immediate concern on a programming front, at least in the short term,” Schulte said. “Come January or February, when there’s less programming, it will become more of an issue.”
January and February is when RSNs will start to feel real financial pain, too, according to industry sources.
With the cost of local sports rights skyrocketing — plus the fact that RSNs are some of the most expensive channels available — cable operators are more likely to enforce contract clauses called “product guarantee provisions.” These mandate that RSNs have to provide a certain number of games. If they don’t, they will have to give distributors some sort of rebate.
Different networks have different contracts, of course, but typically these clauses kick in once an RSN loses around 20 games, sources said. Rebates can be anywhere from 10 percent to 50 percent of an RSN’s affiliate fee. The size of the rebate depends on several factors, like a team’s ratings and the total number of live games carried from all sports. If the NHL is the only winter sport on an RSN, the rebate would be higher.
These provisions did not kick in during last year’s NBA lockout because the league played a 66-game season, losing only 16 games per team.
RSNs also will be hit by the loss of advertising revenue. Because game ratings are so much higher than other programming, it’s difficult for RSNs to give advertisers make-goods for lost games. That’s lost revenue.
On the flip side, RSNs stand to get rights fees rebates from teams for games that aren’t played. RSNs also will save on production costs for lost games.
But potential pain is much greater than any reward. The longer the NHL lockout continues, the more RSNs stand to lose.
John Ourand can be reached at firstname.lastname@example.org. Follow him on Twitter @Ourand_SBJ.