Call it a cruel irony of our times: Just when there has never been a more exciting period to revel in the success of Colorado’s two marquee winter pro sports teams, there has never been a more daunting time to try to watch them on television.
For the first time in memory, hockey’s Colorado Avalanche and basketball’s Denver Nuggets have become a dual dynamo of historic proportion, two Stan Kroenke-controlled teams simultaneously at the top of their games, and near the top of their leagues’ standings. But in late August, negotiations between the Altitude Sports network, the broadcast branch of the Kroenke empire, and its three biggest cable and satellite carriers screeched to a halt.
And fans’ TV screens went dark.
Thousands of Avs faithful missed the exploits of early MVP candidate Nathan MacKinnon and the jaw-dropping regular-season debut of rookie Cale Makar. Large swaths of Nuggets fans couldn’t take in the team’s reluctant superstar, Nikola Jokic, igniting playoff hopes amid one of the club’s best starts ever.
And while Altitude recently reached an agreement with DirecTV to carry the games, the network’s talks with cable giant Comcast and satellite provider Dish Network — which account for the majority of its viewers — remain at a standstill. Now, with the NHL and NBA seasons rounding the quarter pole, the impasse appears intractable, the schedule shaded by industry economics.
What began as just another contentious financial negotiation among well-heeled interests has, faster than you can say antitrust lawsuit, taken on the trappings of an existential crisis that might reshape the regional sports broadcasting space.
More immediately, the situation has forced fans to seek out alternative options — some illicit, some merely inconvenient — or forgo the pleasure of watching two bonafide contenders showcase their skills in the same season. Pressed into measures ranging from switching TV carriers, to retreating to bars or imposing on friends with DirecTV, to crafting sometimes unreliable computer work-arounds so they can stream the games on the internet, many fans have grown frustrated by the corporate stalemate and declined to choose sides.
“My rooting interest is for the fans,” said Jonathan Stone, a 39-year-old Denver electrician and staunch Avs fan (as well as a high school hockey coach and rec league player) who has found ways to stream the games — and happily instructs others how to do it. “Between coaching and playing hockey, I deal with hundreds of people a week who are huge fans, and at least half have no way of watching the game.”
Nuggets fans Sam Jeffers, 55, and his wife, Tina Lucero, have held season tickets for the past 16 years. They’ve missed only five home games during that span — and exactly zero televised road games. Amid the blackout, they resolved to do whatever it takes to find those games — but admit to indifference regarding who wins the corporate struggle.
“I could care less,” Jeffers said. “I just want the Nuggets to come out on top.”
Well, that escalated quickly
A federal lawsuit filed by Altitude last month seems to have elevated this conflict from a familiar negotiating dance to a cry for help from one of a very few remaining independent regional sports networks in the country.
Altitude claims that Comcast is a monopsony, essentially a customer whose dominance of the market exerts a sort of reverse monopoly power over its suppliers. In this case, Comcast buys content — regional sports programming — from Altitude in exchange for what’s called a carriage fee.
Altitude contends that Comcast refuses to agree to a carriage fee adequate to sustain the network, or even in line with what it pays its own regional sports networks, in the hope that Altitude will go under — leaving Comcast to scoop it into its collection.
The way Altitude sees it, Comcast knows how much it costs to run a regional sports network since Comcast owns at least eight of them under the NBC Sports brand. Comcast knows a regional sports network needs broad distribution to make financial sense.
According to the lawsuit, Comcast wants the Altitude channel on a more expensive package so fewer subscribers would have to pay for it. The change would mean Altitude would be available to only 15% of Comcast customers instead of 70%.
In a statement, Comcast called Altitude’s proposed annual price increases “significant” and said most of its subscribers don’t watch the channel, based on its data. DirecTV initially said it wasn’t going to agree to any “bad deals.” Dish balked over Altitude’s demand for a minimum number of paying subscribers because Dish, too, wanted to pay Altitude only for fans who actually watch the channel.
The counter offer? Comcast wanted to cut what it pays Altitude by 70%, Altitude President Matt Hutchings said.
“The economics were just the worst, just something that we could not accept and they knew that,” he said. “All we’ve ever asked specifically from Comcast is … treat us how you treat your own network, treat us how you treat other regional sports networks … They knew that if we were to accept, (it) would basically put us out of business.”
Comcast, whose viewers account for roughly half the teams’ regional audience, calls the lawsuit’s claims “meritless.” It counters that Altitude’s demands for yearly increases in carriage fees have inflated the cost of Comcast’s cable package while delivering fixed fees to the Kroenke-owned teams.
Meanwhile, Altitude has been waging an all-fronts public relations campaign to pressure Comcast and Dish to negotiate what it considers a fair deal. Ticket holders have been bombarded with messaging through signs on the Pepsi Center concourses and videos on the arena’s big screen, while all fans have likely seen pop-up messages on the few games shown on broadcast TV or seen them while streaming games through a variety of, shall we say, unconventional sources.
On Wednesday night, Altitude’s on-air talent even hosted a “digital town hall” to field questions and comments about the situation.
Whose side are you on?
The conflict reflects a sports broadcasting landscape that has been shifting and consolidating. Altitude Sports sprang up out of Kroenke Sports & Entertainment on Sept. 4, 2004. While Comcast and DirecTV were noticeably absent from the festivities that day, within a few months they signed deals to carry the network.
Contract renewals went relatively smoothly for the next 15 years — until the August 2019 expiration approached and negotiations went south.
With no new contract, sports fans in 10 states have mostly been shut out of televised games since September. Altitude instantly lost the majority of its potential audience of 2.4 million pay-TV subscribers, according to figures from its lawsuit, as contracts expired with Comcast, AT&T’s DirecTV and Dish Network.
As TV companies often do in this sort of contract dispute, Altitude pleaded its case online to win support through a petition and by posting phone numbers and requests for fans to pester the TV services.
But season-ticket holder Brian Uphouse, a 45-year-old inventory control manager from Westminster, echoed a common theme among fans when he said that, while he understands the public relations push, he’s also disappointed.
Not only were the few games shown over the air on KTVD Channel 20 filled with similar infomercial-like messaging, but the same language surrounds him the moment he steps into the arena for a home game. Even literature in his cup holder pleads Altitude’s case with a call to action. It all strikes him as too much.
“I’m paying the Avalanche a bunch of money to be at the game, not only for tickets, but for concessions, parking, jerseys — and they’re pestering me constantly about that,” he says of the broadcast squabble. “This isn’t my fight. It’s their fight.”
For a moment, that fight appeared to be winding down. On Halloween, DirecTV reached a deal with Altitude. Terms weren’t disclosed.
But there has been no domino effect.
Sharing the high cost of sports
Here’s the thing about this business: Just as subscribers wind up paying for channels they never watch, cable and satellite TV companies find themselves in a similar situation. They often pay a channel a per-subscriber fee regardless of whether those customers tune in.
According to market researcher Kagan S&P Global Market Intelligence, Altitude’s average monthly fee in 2019 was $2.13 per subscriber. This would mean that $2.13 is spread across hundreds of thousands of pay-TV subscribers typically on extended basic plans.
Comcast, for example, charges an $8 “Regional Sports Fee” to all Colorado customers on Digital Starter plans and higher. This plan includes Altitude and AT&T SportsNet for Colorado Rockies baseball games. Even if you don’t care about watching Nuggets or Avs games on Altitude, you still pay $8 a month.
Brian Neylon, Dish TV’s president, said Altitude is known in the industry as being an expensive regional sports network for TV services to carry. But with only a “high single digits” percentage of Dish subscribers watching the channel, it’s too expensive for Dish to carry. Dish prefers to move Altitude to a tier where subscribers opt in and pay extra for it, he said.
Neylon estimates that if Altitude were to launch a direct-to-consumer option, the sports network would need to charge somewhere between $50 and $70 a month per customer. “And that’s really what we’re paying,” he added, “but we’re spreading it out across everybody.”
This is a primary reason why cable and satellite TV companies have long avoided offering channels á la carte. The existing business model — and that of many channels — relies on a large number of customers paying to support most of the channels. If customers only paid for what they watched, then the niche channels wouldn’t survive.
This old business model is broken, said Darrin Duber-Smith, a marketing professor at Metropolitan State University. With Altitude and other niche channels depending on a broad base of non-viewers for revenues, they aren’t playing by the rules of market demand. And each year, costs rise as sports leagues and channels demand more for the right to televise games, movies and shows.
“It’s broken because the sport properties have gotten a little bit too greedy and they have forgotten that they’re not really able to broadcast their own stuff,” Duber-Smith said. “But they need their distribution partners. They need Comcast, they need Dish Network, they need DirecTV.”
This debate has gone on for at least a decade, but TV providers are finally pushing back, he said.
“They have decided that these sports properties are charging too much. And it’s not just here, it’s everywhere,” Duber-Smith said, adding that if networks like Altitude continually raise the price, eventually it outstrips the viewership.
By ignoring the á la carte format, the legacy model also incentivized popular channels like HBO, Showtime and Disney to start their own channels online to deal directly with consumers — and capture every single cent of the subscription fee.
But Altitude shies away from the idea of its own streaming channel. Hutchings says the company isn’t equipped to build one.
“We want to be on the forefront of whatever is out there and whatever consumers are looking for,” he said. “But I think one of our contentions from the beginning is (why make) demands on an independent like us to be the bellwether? … That doesn’t make any sense. When you’re looking at a company like Comcast, if they believe that needs to change, they need to show the way.”
Coping with the blackout
Although fans have grown weary of the dispute, that’s not to say they’ve stood idly by and let the impasse rob them of their ability to see this historic anomaly of top-tier Nuggets and Avalanche teams in the same season.
Far from it.
Uphouse, the season ticket holder from Westminster, knew there were ways to illicitly stream the games for free, but he felt he should pay for the privilege of viewing those contests away from Pepsi Center. So he signed up for an NHL package that would give him streaming access to all out-of-market games for the entire league.
But there was a catch: He still couldn’t watch the Avs, due to rules that black out games in the subscriber’s home market. So he purchased VPN technology — a virtual private network — that effectively masks his computer’s location to the streaming service and allows him to view games in the Denver market.
He pays for the NHL’s streaming service on a more expensive monthly basis, rather than a season-long discount, he said, “because I’m an idiot and have faith (the dispute) will get worked out.”
“I don’t feel powerless, but I feel used and like a pawn,” Uphouser said. “The feed is out there and you can get it in this day and age. I choose to pay for it because that’s how I feel. But I’m not going to sit and cry for Stan (Kroenke).”
Jeffers and Lucero, the Nuggets fans from Thornton, took a methodical approach to the blackout. First, Lucero called Comcast to make sure they got something taken off their bill for the absence of Altitude. Comcast’s calculation: $1.25 of the $8 regional sports fee gets credited to customers.
Not everyone felt that their math was on target. Colorado’s Office of the Attorney General has been investigating any behavior that could “constitute a deceptive trade practice” resulting in a $20,000 penalty per violation, or per subscriber impacted, according to letters sent to Comcast and DirectTV. The AG’s office said it continues to review the companies’ responses to determine next steps in the inquiry.
Once they’d gotten their refund, Jeffers and Lucero googled “NBA stream” and a number of links popped up. As one of the administrators of the Denver Nuggets DieHard Fans page, Lucero already had been fielding endless inquiries about how to make the connection. The fan community, including members who have been following the team from overseas and long have relied on illegal streams, responded and offered tips for watching the games.
Some streams are more reliable than others. Some get taken down mid-game. Others perform perfectly well.
“Everybody has their way around it,” Lucero said. “I don’t think there’s any repercussions. Maybe the link goes down. But the internet gods don’t come to arrest us. That’s how big of fans we are — we’ll try any way to watch the games.”
That might be a viable work-around for the short term, but it’s not much of a strategy for the long haul, said David Goodfriend, an attorney who 10 years ago founded the Washington, D.C.-based Sports Fan Coalition, an advocacy group, after working in the Clinton administration and with the Federal Communications Commission.
“It’s not a viable solution to say, ‘Go hack the stream,’” Goodfriend said. “To me, it suggests the profit-maximizing model is under strain. The pay-to-play model is under strain. There should be a better, more consumer friendly way to do this. I don’t often say nice things about the NFL, but the fact that they keep the local game on broadcast TV in each market is very good.”
Connor Dockery, a 22-year-old broadcasting major at Metropolitan State University of Denver, has the unusual vantage point of learning about the industry in class even as he watches its dynamics unfold in real time. He’s tried streaming Nuggets games a few times, but calls both the reliability and the quality “hit or miss” — and he misses the simplicity of just turning on his television.
Since Altitude struck the deal with DirecTV, he’s watched some games in bars or restaurants, which tend to rely on the satellite provider for sports, or hinted to friends who have the service that he wouldn’t mind coming over to take in the action. He hesitates to subscribe himself, for fear that soon after, a deal will be struck and he’ll regret his decision.
Dockery notes that already the interruption in the broadcasts has robbed fans of the benefit of experiencing the inevitable emotional roller coaster that comes with watching your team day in and day out — especially when it has championship potential.
“You’d love to see the season all the way through, live through the whole experience of the team if either the Nuggets or Avs make a championship run,” he said. “It’s just not the same if you don’t experience the ups and downs.”
Bars once again an option
On Tuesday night, owner John Porter readied his Sportsbook Bar and Grill Wash Park for what he hoped would be a good crowd to watch his DirecTV feed of the Nuggets game against the powerful Los Angeles Lakers. The initial blackout threatened to hurt business before Altitude reached its deal with DirecTV, as some bars received letters from league lawyers directing them to refrain from streaming the games.
Porter heard lots of chatter from fans talking about watching games at home by tapping into illegal streams. But now that he can show the games on DirecTV, he sees an uptick in hometown sports fans.
“I think now that there’s a legal way to do it, people are definitely coming to the bar more than when they had no other options but to roll the dice,” he said.
There was a brief stretch over a weekend when Altitude gave bars a special code to access the live stream. At Bender’s, a true hockey bar attached to an ice rink in Westminster, owner Jim Armstrong, a former longtime sports writer, says people urged him to pirate an illegal stream — but he resisted. Still, the frustration from fans was tangible in a season when neither the favored Avs nor the Nuggets were in the doldrums.
“They have two very good products to promote,” he said. “Somebody asked in the first week or two of the blackout, name me another time the Avs and Nuggets were this good simultaneously. I’d say never. They’re not only very good teams, but they’re fun to watch.”
Unfortunately, watching them requires a little more effort, inconvenience and imagination. And with the next step of Altitude’s lawsuit now pushed into early 2020, it may be a while before there’s either a thaw in negotiations or a reordering of the regional sports universe.
“I don’t think they’re close,” Armstrong said. “People tell me something has to give. But I’d be shocked if in the next week or two there’s suddenly a deal. Somebody’s cutting their nose off to spite their face.
“I just can’t tell you who it is.”