Cubs Set to Launch TV Channel in 2020, Control Exclusive Local Broadcast Rights to Games

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The Chicago Cubs are reportedly planning to launch their own television network (think: YES) at the completion of next season, as the Ricketts family wants to control the team’s exclusive local broadcast rights. While rumors that the Northsiders would leave NBC Sports Chicago for greener pastures (pun intended) have persisted for years, the club’s recent decision to hire Mike McCarthy (former President of MSG Network and CEO of St. Louis Blues, not the Packers coach) to execute the transition is the clearest indicator to date that the team is moving forward with the plan. President of Business Operations Crane Kennedy announced on Wednesday, in no uncertain terms, that “2019 is our last year with Comcast, so we’ll move over and launch our own channel in 2020”. It remains unclear if the team will “bring in a carrier to oversee the production or go at it alone by producing and selling their own product.”

Howie Long-Short: The Cubs own 20% of the RSN NBC Sports Chicago (as do NBC Sports Group, White Sox, Bulls and Blackhawks), but the club’s existing broadcast deal with the network (and with ABC, WGN) expires in October ’19 and there are no mandates requiring team games remain on the station. It’s the front-office’s belief that they can maximize revenues by maintaining a team-owned network, capital needed for the franchise to operate with a “big market” payroll. Of course, there’s no guarantee the move will be successful; “the carriage problems surrounding the Los Angeles Dodgers and their reported $8 billion deal with Time Warner Cable have fueled fears of a bubble.” It’s worth mentioning that should the Cubs decide to partner with an established carrier, NBC Sports and Disney are said to be interested.

Speaking of Disney, the company has 22 RSNs it must sell within 90 days as a condition of its acquisition of 21st Century Fox film and television assets. We’ve suggested several potential landing spots, but one we hadn’t mentioned was Fox (FOXA). It now appears as if that is a possibility, as The Information has reported Fox execs are considering buying back the channels. It’s been estimated the RSNs could sell for between $15-20 billion, which would be upwards of 10x EBITDA – if MoffettNathonson’s estimate that the stations earn a combined $2 billion in EBITDA is accurate.

Fan Marino: MLB attendance is down, but fans continue to watch on television. Nielsen Media reported that through the All-Star break, 11 RSNs with rights to broadcast MLB games ranked #1 in their market in primetime (amongst all channels) and 11 more finished in the Top 3 (if only comparing cable channels). RSNs that host MLB franchises were #1 in primetime in 24 (of 29) U.S. markets. It’s worth noting that 6 (Cards, Indians, Brewers, Royals, Yankees and Diamondbacks) of the 11 RSNs ranked #1 in the market in primetime (amongst all channels) are Fox Sports affiliates that Disney must unload.

FYI, the Cardinals draw the largest TV audience in MLB, averaging 86,000 fans/game on Fox Sports Midwest.

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Author: John Wall Street

At the intersection of sports & finance.

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