Over the holiday weekend, Comcast just dropped the YES network.
Putting together the pieces, the cable operator said it was too expensive to carry the network.
From reports:
Comcast dropped YES Network, the television home of the New York Yankees, Brooklyn Nets and other programming, in Connecticut, New Jersey and Pennsylvania at midnight Wednesday.
The Yankees have a 20 percent stake in YES, while 21st Century Fox owns the remaining 80 percent. Comcast claims Fox's demand for a 33 percent increase in subscriber fees is too high for the network, which leans heavily on its Yankees programming for viewers.
The two parties' previous agreement expired earlier this year during the Yankees' season. Comcast and Fox agreed to temporary deals to keep broadcasting during the Yankees' playoff hunt.
However, now that the season is over and the Nets are one of the worst teams in the NBA, Comcast has hardened its line and Fox won't budge. The final midnight deadline passed, and YES Network was blacked out.
Comcast said in a statement:
YES Network carried approximately 130 baseball games this past season and well over 90 percent of our 900,000 plus customers who receive YES Network didn’t watch the equivalent of even one quarter of those games during the season, even while the Yankees were in the hunt for a playoff berth. Viewership of the network in the baseball offseason is even lower. FOX and the Yankees are asking all of our customers to pay them hundreds of millions of dollars over the next several years to continue receiving the channel. The price FOX and the Yankees are requiring from our customers is not acceptable given the Network’s minimal viewership, which is why we have decided we can no longer justify continuing to carry the Network. YES simply does not present an appropriate price-value proposition for our customers.
A Comcast spokesman declined to comment on whether negotiations would continue.
Comcast has 900,000 YES subscribers in Pennsylvania, Connecticut and New Jersey — the latter two states will be most affected by the loss of hometown sports broadcasts. Comcast is not currently franchised in New York, where YES will continue to broadcast.
With the Yankees season over and the Brooklyn Nets off to a less-than-stellar start, losing nine of the last 10 games, the YES Network may not have much leverage on its side at the moment. Moreover, the network is the most costly regional sports network, according to SNL Kagan, raking in $4.89 a month on average per cable TV customer. YES Network is carried in more than nine million homes in the New York market.
>>>> Two key points from the reports: 1. YES Network was extremely expensive to pass on to cable viewers, which shows in that only 10% of Comcast customers carried the channel. 2. The YES network received about $53 million per year from Comcast, which is a huge revenue source.
This also bodes ill for the Cubs planned 2020 launch of the Cubs Network. New York-New Jersey-Philadelphia market is about double the Chicago television market. The YES Network wanted a 33% increase in its carriage fees. Now, cable operators have been losing subscribers for years, mostly from the high cost of sports channels that many do not want to have on their bills. Comcast made a business decision that puts approximately 225,000 Yankee-Nets fans in the dark.
If you try to tie down the projected Cubs numbers off the YES model, with a 10 percent saturation rate, the Cubs cable base would be around 450,000 paid viewers, at only $13.5 million in annual revenue. This is a far cry from the billion dollar Dodger network deal, which now seems like a total disaster for Time Warner cable, the Dodgers' partner.
ESPN has been the kingpin in cable channels, but its luck has turned for the worse.
A steep drop in subscribers over the last two years has resulted in a $900 million annual hit to ESPN's bottom line.Analyst reports and SEC filings indicate that between 2013 to 2015, ESPN lost about 7 million total subscribers, with the flagship channels ESPN and ESPN 2 each dropping 4 percent from a high of 99 million to 95 million subs today. Dropping most dramatically was ESPN Classic, which is down 16.1 percent to 26 million subscribers.
The launch last year of the SEC Network, which has around 63 million subs, has helped "mask" a huge drop in affiliate revenue from ESPN's other networks. Based on an average per-subscriber carriage fee of $6.61 for ESPN, $0.83 for ESPN2, $0.63 for the SEC Network and $0.22 for ESPNU, the national sports conglomerate is taking in around $650 million less each year in affiliate fees compared to two years ago.
Meanwhile, he estimates the resulting loss of advertiser reach has shaved off another $200 million to $300 million from ESPN's bottom line.
So the gold standard of cable sports channels is getting hammered by lower subscriber base and declining cable advertising revenues. If ESPN and YES have major problems with their sports networks, how can anyone in the Cubs business office think they can do better on a more limited product in a smaller market?
