Charter Communications is expected to shutter the Spanish-language regional sports channel Spectrum Deportes on August 15th. The company said in a statement, “while we never expected Lakers and Galaxy games to have equal viewership on Spectrum SportsNet and Spectrum Deportes, the [Spanish-language] network averaged less than a few thousand viewers per season since its launch (2012).” The company is expected to offer subscribers an alternative Spanish audio feed of live Lakers and Galaxy games and will replace the channel’s sports content with hyper-local all-news programming; Spectrum SportsNet will continue to operate unchanged.
Howie Long-Short: Charter, which brands its services as Spectrum, assumed control of SportsNet and SportsNet Deportes following its ’16 acquisition of Time Warner. The decision to cancel Deportes simply boils down to dollars and cents, the company was spending a lot of money to operate a network that had little viewership. While you can’t argue with that reasoning, the timing seems a bit odd; LeBron James’s arrival in Los Angeles has SportsNet commanding a 100% YoY increase ($14,000) on the cost of ad spots during Laker’s games. It’s reasonable to suspect Deportes would also have benefited from the James effect.
Charter Communications (CHTR) reported Q2 financials on Tuesday, reporting both YoY revenue (+5% to $10.9 billion) and earnings (+96% to $273 million) growth; despite the loss of 57,000 net pay-tv subs during the most recent quarter. CEO Tom Rutledge isn’t concerned though as he reiterated the company is a broadband provider at its core, simply using video to attract and retain customers. That philosophy helps to explain why the company has chosen not to pursue content related acquisitions despite “a lot of” advances. Shares rose +3.5% on the day, closing at $304.58, but remain down -9% YTD and -21% over the last 12 months. It’s worth mentioning that Liberty Broadband (LBRDA) is a large stakeholder in CHTR.
Fan Marino: One might think that the decision to fold-up Deportes would result in a mass exodus of Spanish-speaking fans from CHTR, but that’s likely not going to be the case. Spanish speaking fans tend to watch American sports (think: NFL, NBA, NHL) on U.S. outlets. In fact, SportsNet drew 12x the number of Spanish speaking Lakers fans that Deportes did during last season). While CHTR doesn’t need Deportes to reach fans of the Big 4 sports, it might to reach those who prefer soccer and boxing; bilingual Latinos have historically chosen to watch those sports in their native language.
Fun Fact: 2018-2019 will be the first season in 25 years the Lakers will not have a Spanish-speaking broadcast.
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The NFL’s 6-owner Compensation Committee will hold a conference call later today to discuss Commissioner Goodell’s proposed contract extension, despite opposition (i.e. threat of a lawsuit) from Cowboys owner Jerry Jones. The commissioner’s salary and compensation package is at the top of the agenda; with reports indicating that Goodell has formally requested $49.5 million in annual salary, plus the lifetime use of a private jet and healthcare for his family. At least one NFL owner agrees with Jones, saying “that number for Roger just seems too much. It’s offensive. It’s unseemly.” Goodell made $34 million in 2015, the last year that the league maintained a tax-exempt status that required his salary be made public.
Howie Long-Short: $49.5 million would have made Goodell the 3rd highest paid CEO in 2016, behind only Les Moonves (CBS, $68.6 million) and Tom Rutledge (CHTR, $98 million). For comparison purposes, Moonves’ CBS Corp. generated $13.17 billion in 2016, while Charter Communications brought in over $29 billion in ‘16 revenue. Goodell has grown NFL revenues to over $15 billion; perhaps his asking price isn’t nearly as “offensive” as it initially appears.
Fan Marino: I asked NFL Live Host Trey Wingo if he thought Commissioner Goodell was worthy of a $50 million annual salary. His response, “here’s the deal. You are worth what someone is willing to pay you. Jerry Jones was one of the 31 (Packers are public) owners that voted unanimously in favor of Roger’s contract extension. The 6-person Compensation Committee will decide what fair compensation is. Now, Jerry is upset with Roger and is trying to spearhead a change on something he’s already voted on. At the end of the day, you’ve already negotiated this. You can’t go back now.” Trey’s right, Jerry voted in favor of Goodell’s extension and knew his compensation would be determined at the sole discretion of the Compensation Committee. His opportunity to present opposition has passed.
Editor Note: Beginning Monday November 27th, Golic & Wingo will air weekdays from 6-10a EST on ESPN (DIS) radio, with simulcast on ESPN2 (moving to ESPNU in January).
Sources: Committee to talk Roger Goodell contract; last commish proposal included $49.5M salary, private jet
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Charter Communications (CHTR), the country’s 2nd leading cable provider (behind CMCSA), will be introducing a sports-free streaming service under its Spectrum brand. The bundle will include 25 news & entertainment channels, but NO sports channels, for just $19.95/mo. The base package does not include any ESPN, Fox Sports, NBC Sports or CBS Sports channels.
Charter Communications testing a sports-free skinny bundle offering
Howie Long-Short opines: The break-up of the bundle continues. ESPN is a victim of their own success. Margins and subs are under pressure, though still hugely profitable. As for sports leagues, OTT could actually lead to more bidders and ever-higher value for sports rights.
Fan Marino says: ESPN is paying 4x the amount paid in 2015-2016, for NBA games through the 2024-2025 season. The 2nd leading cable provider is planning on offering a bundle without ESPN. When does the cost of programming begin to exceed the revenue generated from NBA broadcasts?