As Spring Games Begin, Local TV Issues Still Percolating

Spring training games kick off today with four tilts: two in the Grapefruit League and two in the Cactus League. All 30 teams will be in action in Saturday. Same for Sunday, when live television broadcasts start. That’s right. Major League Baseball, live on your television for the first time since October.

Well, if you live in the right place and have the right cable and satellite operators.

If you’ve been following my posts over the past several months, you know what I’m talking about. I wrote about every nook and cranny of the baseball-on-television landscape. I dissected the local TV contracts for all 30 teams. I analyzed the Dodgers’ proposed new TV deals. I examined News Corp.’s billion-dollar investment in the Yankees’ YES Network. I explained how the new revenue-sharing program in the collective bargaining agreement is flexible enough to capture the new local TV revenue. I talked about MLB’s blackout policy and the lawsuit trying to put a stop to it. I looked at the dispute between the Orioles and the Nationals over rights fees from MASN and the one between Fox Sports San Diego and several cable companies that kept the Padres off hundreds of thousands of televisions in San Diego last season.

As the 2013 spring season gets underway, many of these disputes remain unresolved and new ones are on the horizon. Plus, there’s a growing sense that the extraordinarily rich local TV deals we’ve seen in the past few years are reaching a tipping point. That is, that the live sports programming bubble may about to burst.

First, some updates:

Fox Sports San Diego reached agreements with all satellite and cable operators in the San Diego viewing area, except for Time Warner Cable. For the first time since the dispute arose, the Padres met with Time Warner earlier this month to seek a resolution. None was forthcoming. The parties remain at an impasse over the price Fox Sports San Diego seeks to charge Time Warner to carry the channel — which is known as a carriage fee. Unless a deal is struck soon, the 185,000 Time Warner customers in the San Diego area won’t be able to watch Padres games on TV this season. For a listing of cable and satellite operators that do carry Fox Sports San Diego, and on which channels, click here.

The Orioles and Nationals remain deadlocked in their dispute over the rights fees MASN must pay to the Nationals. Commissioner Bud Selig asked representatives from the Rays, the Pirates and the Mets to form a committee and recommend a solution. So far, nothing. In December, MLB retained investment bank Allen & Co. to seek a new owner for MASN. The idea would be to separate the Orioles from the Nationals and create an independent regional sports network. Then each team would separately negotiate a new local TV deal with the network.

This season brings the Astros to their new home on Comcast SportsNet Houston. But like the Padres, the Astros will not be seen in every home with cable or satellite service unless CSN Houston reaches a deal on carriage fees with DirectTV, DISH, AT&T U-Verse and other providers. For now, CSN Houston is available in Texas, Oklahoma, Louisiana, Arkansas and parts of New Mexico on Comcast Cable, EnTouch, Coastal Link Communications, Consolidated Communications and Phonoscope. The Astros own a significant equity stake in CSN Houston and, therefore, has every incentive to get a deal done.

Cubs games will be broadcast on WGN and Comcast SportsNet Chicago as they have been for many years, with half the games on each channel. But the WGN-Cubs relationship — which dates to 1948 — may be coming to an end soon when the contract expires at the end of the 2014 season. Currently, the Cubs receive about $60 million a year in rights fees from WGN and CSN Chicago. They see the exploding local TV deals and want a piece of the action. But it’s complicated. For one, the contract with CSN Chicago runs through the end of the 2019 season, making a superdeal with that network or any other unlikely for the 2015-2019 seasons. Second, there’s more than TV rights fees at stake. When WGN became a superstation in the 1980s, millions of baseball fans around the country became Cubs fans. Those folks can’t get CSN Chicago, and are blacked out on MLB.tv, making WGN their only option for watching Cubs games. If the Cubs walk away from WGN entirely, they will lose that segment of their fan base. It will be interesting to see which way the Cubs decide to go.

It will also be interesting to see what options are available to the Cubs. As the Padres’ and Astros’ situations show, regional sports networks are locked in battle with the cable and satellite operators over carriage fees. The RSNs have agreed to pay tens of millions of dollars per year for the right to broadcast games, only to find that the operators won’t pay the demanded carriage fee. The RSNs are squeezed for revenue and fans are blacked out of their home team’s games. When the operators do agree to pay the rising carriage fees, then non-sports fan customers complain about the escalating costs of cable and satellite.

Some experts believe we’re at a tipping point, and the price of live sports programming cannot continue to rise at the current rate. But others note that we’ve heard these warnings before, and the system has remained essentially unchanged. Indeed, Forbes ran a story in November 2011 entitled “Sports TV Rights: The Next Bubble” and another one last month entitled “TV Sports A Spectacular Bubble.”  So the bubble’s either coming, or it’s here, or it’s been here and left or something else entirely.

For baseball, the huge local TV deals already in place, coupled with the new national TV contracts that will kick in next season, have led to a rise in player salaries. Whether future deals for the Cubs and other teams with expiring contracts will raise the bar even higher remains to be seen. In the meantime, Padres and Astros game remain to be un-seen.