It’s not all about Altitude.
Frenemies of the Denver sports broadcasting arm of Kroenke Sports and Entertainment have been in its shoes before. Longtime partners Comcast and AT&T’s DirecTV also own regional sports networks and have felt the pain as local sports channels nationwide deal with business models some say are broken. The networks face rising costs and competition from newer streaming services.
The TV service providers complain that Altitude’s fees for the right to broadcast the NBA’s Denver Nuggets and the NHL’s Colorado Avalanche games are too high while the actual number of viewers is too low. Altitude says that without the TV providers agreeing to a minimum number of subscribers, the network won’t be economically viable.
But in 2017, Comcast was in Altitude’s position. Wave Broadband in Washington state complained to the Federal Communications Commission that Comcast’s SportsNet was “unfairly trying to force Wave to provide higher-priced premium sports TV channels to customers who don’t want them,” The Seattle Times reported. Unable to attract enough subscribers to meet Comcast’s minimum requirements, Wave lost.
In July, Dish Network subscribers lost access to 16 local Fox Sports networks, a brand now owned by Sinclair Broadcast Group. In October, Comcast-owned NBC Sports Chicago stopped its broadcast for Dish customers.
Dish TV President Brian Neylon says pay TV has reached a “capitulation point” as subscribers choose to spend their time and money elsewhere — like on streaming services.
“No longer can we make all people pay for what some people want,” he said. “There’s nowhere else that works. At the grocery store, you don’t pay for my milk. …That just doesn’t work that way. But they (regional sports networks) are asking for this to continue.”
More than three months into the blackout, passionate Avalanche and Nuggets fans probably have left Dish already, but the Douglas County-based satellite TV service has kept subscribers who care less about regional sports.
“Pay TV providers need to adjust and figure out how to differentiate themselves in the market,” said Adam Gajo, a sports business analyst with Kagan S&P Global Market Intelligence. “And some are deciding to go without regional sports networks based on the data that they have.”
The standoff shows the broken industry may finally be changing. And regional sports networks, or RSNs, which were once advertising and subscriber gold mines, must reevaluate their future, said Brian Ring, principal analyst with Ring Digital.
“There’s this tectonic shift happening in the entirety of the global TV business,” Ring said. Dish founder “Charlie Ergen is a super-smart guy and said, ‘OK, we’re gonna engage here and not pay and let’s see what happens.’ It turns out they had a very good quarter. And this is now a danger zone because the longer those things go on, the worse it is for RSNs.”
End of an era?
TV is obviously not the same as it was in 2004 when Altitude debuted. Back when Altitude was getting up and running, consumers had few online options when it came to watching live local sporting events. Slower internet meant many households couldn’t stream video.
You still had to request Netflix to snail-mail movies on DVDs.
Today, of course, there are plenty of internet TV viewing options for free or a fee. Consumers can even watch live sporting events online, such as Thursday Night Football through Amazon Prime. Meanwhile, prime time TV viewership is down 20% since 2014, according to The Hollywood Reporter. And cable or satellite TV providers have lost millions of subscribers during the same period, as customers cut cords and switch to options that don’t require a cable subscription.
And still, costs continue to rise. Professional leagues want more money for the right to broadcast games. Channels like Altitude want more money from the TV providers in order to pay for the rising cost of licensing rights.
But providers like Comcast and DirecTV want to pay less since they’re competing with online-streaming services like Sling TV, which have fewer channels but more popular ones in plans that cost less than what Comcast and DirecTV charge.
“Now you get this shift where (internet TV) is now a big thing and subscribers have a lot more options,” Gajo said. “If you’re not interested in sports, if you’re only interested in certain genres, then you can kind of pick and choose so the dynamics have changed, and RSNs are being looked at as a premium offering, but they’re still part of the extended basic cable package.”
As an independent network, Altitude has limited leverage compared to the national companies with multiple local sports networks. Sinclair, which bought 21 local Fox Sports networks from Disney this year, can use its heft during negotiations.
“You’re only specifically talking about Altitude in Denver versus (saying) ‘Hey, if you don’t want Sinclair RSNs, you’re also going to be impacted in Los Angeles, Houston, Dallas and New York,’” Gajo said. “The independents are really in a tough spot because they don’t have that leverage when they go into these distribution negotiations.”
John Bergmayer, legal director at the Washington, D.C.-based consumer rights organization Public Knowledge, points out that for independent programmers, the current state of the marketplace isn’t very friendly. Independent programmers are forced into a model where they’re either owned by cable companies or venture on their own into the streaming market and bypass cable altogether.
“You understand why media companies want to merge to get more leverage against cable, or smaller cable companies want to merge to get more leverage against Disney and Viacom,” he said. “But you end up with a cycle of fewer and fewer — and bigger — companies. I don’t think in the long run that’s benefiting consumers. Right now, with these blackouts, consumers are sort of caught in the crossfire of these disputes.”
Altitude does have something behind it that few regional sports networks do: billionaire Stan Kroenke and his sports empire that includes the Los Angeles Rams, Arsenal Football Club in London, and most of Colorado’s pro teams — the Avalanche, Nuggets, indoor lacrosse’s Mammoth and soccer’s Rapids — plus local college and high school football games. Kroenke Sports, which employs some 3,000 workers in the Denver area, also owns the Pepsi Center and Dick’s Sporting Goods Park.
Kroenke could take the lead in rebuilding the fan base for professional sports teams everywhere, said Darrin Duber-Smith, a marketing professor at Metropolitan State University in Denver.
Here’s his proposal: Kroenke should make Altitude a loss leader and make it easier for fans to watch the games. Consider making more games available for free on regular TV. Use the channel to nurture the casual fanbase.
“People don’t become avid fans overnight,” Duber-Smith said. “It takes a while, you know, you watch the games and you decide you want to go. You’ve got 75,000 people moving here every year. They’re not being exposed to these teams.
“If you’re Altitude, if you’re Kroenke,” he added, “you are tripping over dollars to pick up nickels.”
Already registered? Log in here to hide these messages.
The latest from The Sun
- Coronavirus deaths at Colorado nursing homes slow, reach 737; outbreaks at restaurants, stores continue to climb
- Colorado, Denver join 25 other cities and states in suing EPA for relaxing clean-car rule
- Safety and stoke: A-Basin’s coronavirus reopening provides glimpse of what next ski season may look like
- Democrats approve rule to allow lawmakers to avoid Colorado Capitol, cast votes remotely during coronavirus
- Coronavirus cost Colorado’s solar industry thousands of jobs, but there’s one bright spot