Saturday, April 02, 2005

Detroit Sports Media Market

10. Detroit

1.95MM TV households

The original RSN in Detroit was Pro-Am Sports System (PASS). In 1997, Fox Sports Net was rolling up its regional sports business and was faced with a decision of what to do in the Detroit market. The logical option was to acquire PASS, but the proposed purchase price was so high that Fox simply decided to take over the business by acquiring the local sports rights itself, thus putting PASS out of business. Not a very good negotiating strategy on the part of PASS...

Fox eventually acquired the rights to all 3 professional sports teams in the market, and now has a long-term lock on the rights in a market dominated by Comcast. A couple of years back Fox gained an even stronger foothold by acquiring the rights to nearly all of the local Red Wings games, which had been on local broadcast station WKBD. In non-lockout years, the Red Wings are the pre-eminent ratings draw in the Detroit Metro area (and basically all of Michigan). Fox's acquisition of these games has effectively kept Comcast from launching a sports channel in Detroit.

12 Comments:

At 11:39 PM, Anonymous Anonymous said...

I don't know know who else is reading these, but I've always been curious about the RSN's and how they work. Now I know why there are three in New York. I hope you do one on the Cleveland/Cincinnati/Ohio area.

 
At 11:40 PM, Anonymous Justin Felder said...

I put up the last post.

 
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At 7:05 PM, Anonymous Anonymous said...

I remember watching the wings on WKBD (the station was syndicated to nearly all of the state on cable systems because of their coverage of the Wings, Lions, Pistons and Tigers [if I remember right, Tigers maybe not].

It's quite interesting to note, however, that PASS went out of business essentially as soon as FSN Detroit started up. Usually, some fledging RSN's tend to clinch on to some share by broadcasting exclusive interviews with coaches, players, etc.

 
At 8:41 PM, Anonymous Anonymous said...

Comcast has been running a competing RSN in Detroit for years. The network is named Comcast Local and is on Channel 8 on most Comcast cable systems.

http://comcastlocal.com/

Note that Houston passed Detroit as the 10th largest TV market in the US in terms of population and the number of total households.

 
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At 7:48 AM, Anonymous Anonymous said...

Hey,

I was wondering if anyone knows of where I could get a list of all the RSN and which sports they carry. I need this info for an undergrad paper I am working on. Any help is greatly appreciated!

Shannon Cunningham
shannonuw@gmail.com

 
At 1:32 PM, Anonymous Anonymous said...

Mr Kaiser,

Thank you for providing a blog that gives some explanation of RSNs. I am currently writing a paper for a law class and was wondering if you could help me by pointing me in the right direction. I want to write about RSNs: History, Implications of the current system, Alternatives?, and then Conclusion. If you could help I would greatly appericate it. Thank you for your time and I will check back on here later to see if you could help. Thanks again.

 
At 8:45 PM, Blogger tytanium10 said...

Well, my last post was 4 years ago so let me think about it...

 
At 9:10 PM, Blogger tytanium10 said...

A brief history:

As far as I know, all professional teams (except NFL) have maintained the right to televise their games locally. 25 years ago their only option was to choose a local broadcast station to do so.

With the rise of cable, new potential bidders emerged in each geographic region - supported not only by advertising but also by cable affiliate fees. Entrepreneurs acquired the rights to televise these games and used the rights to launch a cable network. They were simply willing to pay more than the local broadcast channels. In Detroit for example, the Wischman family launched PASS with the Red Wings and had little difficulty getting cable distribution.

Rupert came along and decided to launch a competitor to ESPN but with a twist - he rolled up regional networks and combined them with a national backbone programming service to provide the best of both worlds.

It is important to understand that in essence any of these regional sports networks (not owned by the cable operator themselves) is simply a middleman. They buy the team rights, produce the games, and sell them to the cable MSOs (operators) at a pretty good margin. Comcast got wise to this and decided to bid on the rights itself and create its own networks so that it could keep the margin for itself. This is why you see Comcast Sportsnet in Chicago, Mid Atlantic, the Bay Area, etc. Over time Comcast will take over more regional sports programming because it makes more sense to cut out the middleman. Plus Jeff Shell, the original architect of the Fox Sports Net strategy, is now the programming head at Comcast.

Every pro team believes that they have at least a credible threat to start their own RSN in order to negotiate for a better rights agreement with the incumbent RSN (mainly Fox). Some have called this bluff (such as the Royals, Twins, and Trailblazers) only to eventually succumb to the economic reality that they can get more $ from Fox than they can make themselves.

One factor that may change the dynamics of regional sports (setting aside the larger potential shift away from linear television, period) is the rise of league-specific cable channels such as NFL channel and NHL channel. Leagues may decide that it is in their best collective interest to dedicate more games to a owned an operated national cable channel and redistribute the profits than to allow each owner to fend for themselves locally. However, only one game can be shown at once on a national network.

Meanwhile, the proportion of games that still get distributed on local broadcast (not cable) channels will continue to decline over time. RSNs can simply afford to pay more than broadcasters due to the cable affiliate fee revenue stream.

In conclusion:
Regional Sports Networks will likely continue to operate for the foreseeable future, but MSOs such as Comcast, Cox, and Time Warner will likely take over most of the programming rights in their respective regional territories and the leagues themselves will look to take control of more games for "national" rights to increase their bargaining power and revenue opportunities.

Hope you get an A.

 
At 2:17 PM, Anonymous Anonymous said...

Thank you for your help.

 

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