Comcast’s planned purchase of 21st Century Fox properties would give the cable company ownership of the “vast majority” of regional sports networks [RSNs] in the US, a trade group that opposes the potential merger pointed out yesterday.
Comcast already uses its ownership of NBCUniversal and NBC-branded RSNs to raise prices on TV watchers who subscribe to other cable companies, the American Cable Association (ACA) said.
“If Fox agrees to sell to Comcast, these problems get only worse because the combined company would own the vast majority of regional sports networks across the country and increase its roster of popular national programming networks,” the ACA said. The ACA represents nearly 800 small- and medium-sized cable operators.
The amount Comcast charges other cable operators for access to RSNs gets passed on to individual customers in their monthly service charges and fees added to cable bills specifically to cover the cost of regional sports networks.
Fox owns 22 regional sports networks while Comcast owns nine. Disney—which owns ESPN and ABC—has a deal to purchase Fox’s sports networks and other properties, but Comcast is preparing to outbid Disney.
There are 82 US-based sports teams in Major League Baseball, the National Basketball Association, and the National Hockey Association. By our count, Comcast RSNs would air games for 59 of those 82 if it is able to buy Fox. Comcast-owned sports channels currently have programming rights to 16 US-based pro baseball, basketball, and hockey teams, while Fox’s networks have rights to 43.
In all, Comcast and Fox together would have the rights to 24 out of 29 US-based NBA teams, 15 out of 24 US-based NHL teams, and 20 out of 29 US-based MLB teams. (NFL games are broadcast on national networks instead of regional ones.) Check out the full list later in this story.
Buying Fox sports networks would also give Comcast the rights to additional Major League Soccer teams and major college sports programs.
The alternative to a Comcast/Fox deal is Disney buying the Fox properties, which would also boost the size of a TV sports empire by joining Fox’s sports properties with Disney’s national sports channels. The Disney-owned ESPN and ABC have TV contracts for the NFL, college football and basketball, MLB, the NBA, various soccer leagues, and other sports.
ESPN and the Fox regional sports networks “together would account for 30 percent of all affiliate fees for basic cable networks and RSNs and a massive 58 percent of affiliate fees for basic cable sports networks and RSNs,” S&P Global Market Intelligence said in a recent report that Comcast pointed out to Ars.
Either way, a Fox deal would produce a bigger programming giant that could demand higher fees from cable and satellite TV providers that buy access to sports channels. But in Comcast’s case, the company setting the price for sports TV channels would also be the nation’s largest cable TV and broadband operator.
Major benefits—for Comcast
Owning RSNs lets Comcast set the price that cable, satellite, and online TV services pay to air local sports games, because Comcast’s rivals have to buy those rights from Comcast. The other major benefit of owning RSNs is that Comcast’s cable TV service can broadcast games for local sports teams in many markets without having to pay another company for programming rights. This benefit won’t extend across Comcast’s footprint, however, because 14 of Fox’s 22 RSNs are in local markets where Comcast’s cable TV network doesn’t have a “substantial” presence, economist Geoffrey Manne wrote.
Some of the smaller cable companies represented by the ACA compete against Comcast for TV watchers in local markets where access to regional sports networks is crucial for keeping customers.
Comcast’s payment demands have been restrained by government conditions imposed on its 2011 purchase of NBCUniversal. But those conditions began expiring earlier this year, and the final conditions will expire on September 1, 2018.
“As a result, Comcast can keep raising the price for consumers for its television, sports, and cable programming by threatening to withhold all of this programming at once,” the ACA said. “And, by being able to carry NBCU programming at more favorable rates and terms than it charges rivals, Comcast can also harm its competition to totally dominate the market.”
In response, Comcast provided Ars with a general statement that says, “The marketplaces for both video distribution and programming content are incredibly competitive, and this potential deal will enhance that intense competition and benefit consumers.”
Comcast also said that “NBCUniversal has successfully negotiated hundreds of programming deals with both traditional and online video providers.” Smaller cable companies have repeatedly complained about the prices charged by Comcast, though.
Similar concerns caused the Department of Justice to sue AT&T in order to block its acquisition of Time Warner Inc. The DOJ said that TV providers who own programming companies have incentive to raise prices on rivals and impede the development of online video services that also must buy access to programming. AT&T is fighting the lawsuit, and a judge’s decision is expected by June 12.
With 31 regional sports networks, Comcast and Fox would dwarf the total networks owned by other pay-TV companies. AT&T owns four RSNs, while Charter owns or has at least a 50-percent stake in six RSNs. There are also some independent RSNs, such as NESN in Boston, Altitude in Colorado, MSG networks in New York, and MASN in Baltimore and Washington, DC.
Comcast RSNs already air games for the following teams:
MLB: Chicago Cubs, Chicago White Sox, Oakland Athletics, Philadelphia Phillies, San Francisco Giants.
NBA: Boston Celtics, Chicago Bulls, Golden State Warriors, Philadelphia 76ers, Portland Trail Blazers, Sacramento Kings, Washington Wizards.
NHL: Chicago Blackhawks, Philadelphia Flyers, San Jose Sharks, Washington Capitals.
Comcast is trying to buy Fox RSNs that air games for the following teams:
MLB: Atlanta Braves, Arizona Diamondbacks, Cincinnati Reds, Cleveland Indians, Detroit Tigers, Kansas City Royals, Los Angeles Angels of Anaheim, Miami Marlins, Milwaukee Brewers, Minnesota Twins, New York Yankees, San Diego Padres, St. Louis Cardinals, Tampa Bay Rays, Texas Rangers.
NBA: Atlanta Hawks, Brooklyn Nets, Charlotte Hornets, Cleveland Cavaliers, Dallas Mavericks, Detroit Pistons, Indiana Pacers, Los Angeles Clippers, Memphis Grizzlies, Miami Heat, Milwaukee Bucks, Minnesota Timberwolves, New Orleans Pelicans, Oklahoma City Thunder, Orlando Magic, Phoenix Suns, San Antonio Spurs.
NHL: Anaheim Ducks, Carolina Hurricanes, Columbus Blue Jackets, Dallas Stars, Detroit Red Wings, Florida Panthers, Los Angeles Kings, Minnesota Wild, Nashville Predators, St. Louis Blues, Tampa Bay Lightning.
The Fox sale to either Disney or Comcast would not include the Fox News Channel, Fox Business Network, and Fox Broadcasting Company. Besides regional sports networks, the sale would include 21st Century Fox’s film and television studios, cable entertainment networks, and some international properties.
The sale would also include Fox’s 30-percent stake in Hulu, the online video streaming service. Disney and Comcast each already own 30 percent of Hulu, so purchasing Fox’s 30-percent stake would give either Disney or Comcast majority control over the service.