Comcast drops MSG’s Rangers, Knicks video games after saying nearly nobody 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 Photos

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 Networks 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 known as the failed negotiations “disappointing,” claiming Comcast tried to “drive 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 stated. SNY is one other regional sports activities community that airs Mets MLB video games.

MSG’s assertion additionally stated Comcast rejected proposals just like offers MSG has with different carriers.

MSG Networks additionally planted a banner throughout its web site alerting customers of the dispute. The community is owned by Madison Sq. Backyard Leisure Corp., which trades on the New York Inventory Change and has a $2.4 billion market cap.

It is not clear how a lot Comcast pays MSG to distribute its channels. The community generated whole revenues of $166.1 million, in keeping with 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 guardian firm of CNBC, defended its determination to drop MSG. In an announcement, it wrote its inside information exhibits “95% of all prospects 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 consider that our prospects ought to must pay the hundreds of thousands of {dollars} in charges that MSG is demanding for among the costliest sports activities content material within the nation with extraordinarily low viewership in our markets.”

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

In media circles, this dispute may very well 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 Photos

A brand new actuality for RSNs?

The lack of Comcast viewers for MSG Networks comes at a vital 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 with regards to turmoil relating to 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 exterior of New York. And Main League Baseball video games are the principle blood vessel for RSNs.

NBC operates its RSN in New York with SNY and has properties in areas that embrace Philadelphia, Boston, Chicago and San Francisco. And Comcast quickly renewed its take care of 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 known as the transfer a “threat” as there may very well be pushback from prospects. However he additionally cautioned RSNs are at risk if they do not enhance their technique.

“The Comcast MSG state of affairs is greater than a short lived state of affairs,” Berke stated. “It is a symptom of an ongoing, substantial downside for RSNs to proceed to achieve distribution from pay-TV companies 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 now have by not carrying these costly RSNs,” Berke added. “If the financial savings surpass the loss in subscribers, then they will stick with it.”

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

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

“The present RSN mannequin is basically damaged,” stated Dish president Brian Neylon in an announcement final April. “This mannequin requires almost all prospects to pay for RSNs when solely a small proportion of shoppers truly watch them. As the price of these channels continues to escalate, we now not suppose it is smart to incorporate them in our TV lineup.”

Berke stated RSN choices would additional 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 tough to take care of the identical steady of channels you’ve got had previously,” Berke stated. “The RSNs are more and more feeling the warmth and the brunt of those modifications.”

Most of MSG’s subscribers are within the New York space, however shedding 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.

“When you actually need hockey, you’ve gotten new packages with ESPN and TNT,” he stated. “And 75 further NHL video games can be proven on ESPN+ and Hulu.”

–CNBC’s Alex Sherman contributed to this report.

Disclosure: Comcast owns NBCUniversal, the guardian firm of CNBC.

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