The local sports television wars

Part of the reason why Fox may be considering launching a national general sports network and competing more head-on with ESPN may be because they know all too well what ESPN could go through if they, or anyone else, succeed.

One of the more underreported stories of recent years has been the slippage of Fox’s hegemony over the regional sports network landscape. Fox locked down regional sports networks to cover just about every NBA, MLB, and NHL team in the country in the mid-90s, but in recent years competitors, especially Comcast SportsNet and cable providers in general, have slowly made inroads on their turf – to say nothing of teams increasingly starting their own networks. This is especially the case in big markets, while Fox’s hegemony largely still holds in smaller, mid-size markets, but we could see this change as competitors make more money and turn their attention to those smaller markets. Here’s a rundown of how the regional sports network market has changed in the last decade, at Fox’s expense:

• New York: New York City’s FSN affiliate was always owned by Cablevision with no Fox involvement; in 2008, it was rebranded to MSG Plus. In addition to the well-known YES Network, in 2006 the Mets left MSG and teamed up with Comcast and Time Warner Cable to start their own regional sports network, SportsNet New York.
• Los Angeles: Starting next season, Lakers games will be leaving Fox Sports West in favor of a new network started by Time Warner Cable. With the launch of Time Warner Cable’s sports network, the largest market in which Fox enjoys something resembling a monopoly will be Dallas. If you count the Longhorn Network, you have to go to Atlanta, and then if you count CSS, you have to leave the top ten entirely and end up in Detroit. The launch of the network has also raised the stakes considerably in the nation’s second-largest media market; Fox gave the Angels such a payday, including equity in FS West, that they could be said to have funded the team’s winning of the Albert Pujols sweepstakes and contributed to the Dodgers selling for $2 billion.
• Chicago, Philadelphia: Comcast, by contrast, has a complete monopoly in these two markets. CSN Chicago is partially owned by the teams in that market; the Phillies used to own part of CSN Philadelphia but now only control its advertising.
• Texas: ESPN started the Longhorn Network last year, and unsuccessfully tried to convince the NCAA to allow it to air high school sports on it.
• Bay Area: Comcast SportsNet started a network in the region when it won rights to show Sacramento Kings games in 2004. In 2008, FSN Bay Area was rebranded as a Comcast SportsNet station, and the previous CSN station became essentially “CSN Bay Area 2”, changing branding from CSN West to CSN California. Fox still owns a quarter of CSN Bay Area, but Comcast owns 45%, with the remaining 30% owned by the Giants.
• Boston/New England: Cablevision sold Boston’s FSN network to Comcast in 2007, resulting in it being rebranded as a Comcast SportsNet station. NESN has been owned by the Red Sox and Bruins for ages.
• Washington DC: Fox has never had a presence in this market, with Comcast SportsNet ruling the roost. Thus, it was Comcast’s problem when the move of the Expos to Washington resulted in a new regional sports network, MASN, stealing both Washington’s and Baltimore’s baseball teams (who also co-own the network).
• Atlanta and the South: The South is where Fox’s hegemony is strongest, purchasing two different networks from Turner and turning them into FS South and SportsSouth. CSS’s programming is substantially weaker, with its highest-profile programming probably being college sports.
• Houston: In 2010 the Astros and Rockets announced they were joining with Comcast to launch a new CSN station this fall. The impending announcement of that network forced Fox to do something it had never done before: give a stake in the network to a team it covers, in this case the Rangers, a pattern that may soon become the norm for Fox. I do not know if Fox will maintain a presence in the Houston area (they do still hold the rights to Houston Dynamo games), but if not Fox will only even have a network in three of the top ten markets representing 31% of the population in the top ten, mostly LA. CSN, by contrast, will have a network in six of the top ten (representing 47%), not even counting SNY and CSS.
• Seattle, Denver, Portland, Pittsburgh, Utah: In 2008 Fox sold FSN Northwest, Rocky Mountain, and Pittsburgh to Liberty Media, who re-branded them as “Root Sports” in 2011. Altitude Sports and Entertainment also maintains a presence in the Rocky Mountains, showing Nuggets and Avalanche games (with Root Sports keeping the Rockies and Jazz), and Comcast SportsNet started a Northwest branch in 2007 to show Portland Trailblazers games, which expanded into Seattle the following year when the Sonics were stolen, er, moved to Oklahoma City.
• Cleveland: In 2006 the Cleveland Indians left FSN Ohio to start the SportsTime Ohio network.
• San Diego: In a possible preview of the future for smaller markets, the Padres have left Cox-owned 4SD and started a new FSN network. But even where Fox is growing its regional sports networks, it’s not as lucrative as it used to be, with the Padres owning a full fifth of the network.
• New Orleans: While to my knowledge the same RSNs as the rest of the South have a presence in Louisiana, Hornets games and preseason Saints games are aired on the Cox Sports Television network launched in 2002.

Add all this up and it suggests a fairly bleak future for Fox’s regional sports networks. Fox still rules the roost, but the Houston defection may signal a tipping point – because if Fox doesn’t maintain a Houston presence, less than half the population in the top 35 markets will live in a market with an FSN-branded RSN. By contrast, not counting SNY or CSS (but counting Seattle as a CSN market), Comcast SportsNet will move to over a third of the population in the top 35 markets – and SNY alone brings that total to 45%, almost as much as FSN. At that point, Comcast, not Fox, could conceivably get into the business of producing national programming for RSNs, and might not even have to resort to FSN stations in that many markets. Throw in just those markets where CSS’ competition is FS South, SportSouth, and their variants, and CSN goes over the top to 54%. Now you know why the unified FSN branding is no more.

At least in markets where Comcast is the dominant (or even a significant) cable provider, CSN has to be considered a full-fledged competitor to FSN for local sports rights – and that’s before the possibility of Time Warner Cable wanting to expand its sports-network brand, or teams starting their own networks. To this point, Fox has been in retreat in the biggest markets as CSN has taken over and teams have started their own networks. Fox’s move to start offering stakes in their networks may help stem the tide and keep its hegemony in smaller mid-sized markets, but may cost Fox too much money in the long run, especially if the market for local teams is starting to enter a bubble similar to that which has enveloped national sports rights. At best, Fox and Comcast are likely to compete on equal terms from here on out, with Fox’s only advantage being inertia and its lack of ties to cable distribution systems.

Despite the failure of its attempt to compete with ESPN, FSN has proven to be just as much of a cash cow for Fox. But they could be forgiven for wondering how long it will stay that way. Suddenly the idea of launching a general national sports network to compete with ESPN starts to look a lot more attractive.