A revolution is imminent charter communication‘ Cable TV packages – especially for sports channels.
The cable and broadband company announced on Monday that it plans to offer a new, two-tier cable package system that will allow customers to select a cheaper Sport Lite TV option without regional sports channels.
The crucial move comes as the industry struggles with more and more people choosing to ditch cable in favor of streaming services. This has taken a toll on sports channels, hitting regional sports networks particularly hard, which have long brought in lucrative royalties to leagues and teams.
Diamond Sports Group, owner of the largest portfolio of regional sports networks, filed for bankruptcy earlier this year. Other broadcasters have introduced direct-to-consumer streaming options at prices that don’t overturn the long-standing lucrative pay-TV model. But they are often considered expensive for consumers and could turn off potential streaming customers.
Charter, which owns two of its own regional sports networks, wants to change the formula. From the third quarter, the cable television business will be relaunched under the Spectrum brand with two new services, the company said.
Spectrum Select Plus includes the provider’s entire sports programming and regional sports channels, while Spectrum Select Signature excludes certain sports programming at a discounted price.
The two options will be rolled out on a market basis across most of Charter’s US footprint.
Customers who choose the specific sports option will receive free direct-to-consumer streaming apps for local sports channels in their area. Charter will also be able to market and sell these regional sports network apps to its broadband-only customers. Major networks like ESPN and FS1 will continue to be available on Spectrum Select Signature.
“This new model paves the way for a more flexible approach to the outdated sport packaging model and puts the focus where it should be: on the customer,” said Tom Montemagno, Charter’s executive vice president of program acquisition, in a statement release.
The company pointed out that in the past, sports broadcasters’ agreements meant that distributors had to pay for the rights to the content and make their programming available to a large majority of subscribers – typically more than 80%. That’s the case even if many of those customers never tune into the channel.
Pay-TV bills usually include the cost of regional sports channel fees. National sports networks, such as DisneyESPN is known to be among the most expensive providers for pay TV providers like Charter and DirecTV.
Charter noted that the new two-tier system still gives sports fans what they want, while giving non-sports viewers a cheaper option. The company also said the model supports sports networks that are pursuing streaming options.
As both distributor and owner, Charter is exposed to the issues faced by sports networks. With the acquisition of Time Warner Cable in 2016, the company acquired two regional sports networks – Spectrum SportsNet and SportsNet LA, which broadcast Dodges and Lakers games. Charter also plans to introduce a streaming alternative for these channels.
In addition, Charter and DirecTV announced a new distribution agreement for these regional sports channels on Monday.
As part of the agreement, Charter agreed to a “significantly lower penetration threshold” that will allow DirecTV “to better target their subscribers who want Lakers and Dodgers programming.” This also allows DirecTV to offer cheaper and more flexible options for non-sports customers.
Spectrum Networks chief executive Dan Finnerty said in a press release early Monday that while viewing habits are changing, regular-season sports programming is still popular.
“Given that these customers represent a relatively small percentage of the total video subscriber base, and given the significant increase in direct-to-consumer dialing, the model for RSNs needs to evolve to reflect the realities of the current market,” said Finnerty, Sr Vice President and General Manager of Spectrum Networks. “With this agreement, we are taking a step to transform the business model so that customers have more control.”
Correction: This story has been updated to reflect that Charter’s Spectrum Select Signature tier continues to offer some sports networks.
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