You may have heard that Disney is buying part of the Fox empire for a major chunk o’ change. What’s the game plan with that? Welp, sure sounds like sports to me.
But buried within the release is the announcement that Disney will be acquiring Fox Sports Regional Networks, a collection of cable channels that are broadcast to local subscribers across the country. (Fox Sports, the FS1 and FS2 networks and the Big Ten Network will remain with Fox.) Assuming the deal passes federal antitrust muster, this portion of the pact could have a seismic impact on Disney-owned ESPN, rearranging a business model that until recently was thought to be the cause of the network’s well-documented financial problems.
For starters, ESPN will be acquiring a massive amount of new content, as Fox Sports’ 22 regional sports networks (RSNs from here on out) control the local cable rights to the following professional teams:
NBA (17): Suns, Hornets, Pistons, Magic, Pacers, Pelicans, Timberwolves, Cavaliers, Thunder, Hawks, Grizzlies, Mavericks, Spurs, Heat, Clippers, Bucks, Nets.
MLB (15): Diamondbacks, Tigers, Rays, Royals, Cardinals, Twins, Reds, Padres, Braves, Rangers, Marlins, Angels, Brewers, Indians, Yankees.
NHL (12): Coyotes, Hurricanes, Red Wings, Panthers, Blues, Wild, Blue Jackets, Predators, Stars, Lightning, Kings, Ducks.
That doesn’t even include college football and basketball, plus Major League Soccer and the WNBA…
ESPN will certainly slap its name on all of those networks, but this goes far beyond mere branding. Cable companies can charge customers top dollar for the right to have RSNs in their cable lineup, with monthly costs that approach the more than $9 ESPN gets monthly from each customer who has ESPN, ESPN2, ESPNU and the SEC Network in their package. The price is so high because cable subscribers view RSNs as essential: According to a 2016 Neilsen survey of 1,500 pay-TV subscribers, the local RSN ranked as the fifth-most-important cable channel in their lineups, ahead of any other cable channel (including ESPN). In some markets such as St. Louis and Detroit — both of which are served by Fox Sports RSNs — the local RSN ranked higher in importance to cable customers than broadcast networks such as NBC, CBS, ABC and Fox.
ESPN’s financial woes have stemmed from cord-cutting cable customers who have balked at the high prices cable companies are charging, with the network losing more than 13 million subscribers from its peak of 100.13 million households in 2011. Those losses, combined with steadily escalating rising sports-rights fees, led the network to lay off around 550 employees over the past two years, with the most recent round of job cuts coming late last month.
But customers might think twice about dropping their cable packages if it meant losing access to games played by their local teams. Those games — and the money cable customers pay to watch them — will now be under the ESPN domain. [Emphasis added.]
Complain about the political leanings of their faces, or cord-cutting, or whatever else suits you, but there is still one essential truth underlying everything: content is king. The manner in which we receive our sports will always be secondary to the subject of the broadcast itself. All ESPN is really fighting about is the access fee. That’s the bet the WWL is making. The more it holds, the stronger its leverage.