Cubs’ proposed network in jeopardy?

Changing marketing conditions could be factor; AT&T may be only hope

If the Cubs are looking to launch their own TV network in 2020, their options are becoming quite limited.

According to a report Monday in Sports Business Journal and Awful Announcing, AT&T is considering looking to add the baseball team to their portfolio of sports rights. AT&T operates a few regional sports channels (RSNs) in several areas including Pittsburgh, Denver, Salt Lake City, Houston, Seattle, and Las Vegas. Three AT&T SportsNets (Pittsburgh, Northwest, and Rocky Mountain) were former Fox Sports RSNs, being sold to Liberty Media in 2006, becoming part of DirecTV and rebranded with the Root Sports name in 2010. Liberty sold DirecTV to AT&T in 2014, including the sports networks and were rebranded AT&t SportsNet. AT&T’s merger with the former TimeWarmer was recently approved after a lengthy battle with federal regulators.

Among the teams AT&T has rights to include the Pittsburgh Penguins, Colorado Rockies, Houston Astros, Utah Jazz, Seattle Mariners, and the Vegas Golden Knights. Sports Business Journal noted the newly merged company could go after the Cubs, which would be a huge addition to their portfolio.

Currently, the teams’ television rights are spread out among three outlets: ABC-owned WLS-TV with 25 games; Tribune Media’s WGN-TV, with 45 games, and Comcast’s NBC Sports Chicago with around 70. Deals with all three expire around October 1, 2019.

The sports trade journal noted the Cubs were in talks about an extension with NBC Sports Chicago for the last several months.

The news comes as a surprise as the Cubs have been talking about launching their own RSN for years, using the New York Yankees’ YES Network as a model. But the talk has stalled with changing market conditions as the allure of a RSN… isn’t so alluring anymore.

Cubs win the World Series in 2016 after 108 years.

For one, the Los Angeles Dodgers paired up with Time Warner Cable (now Spectrum) to launch a RSN channel for the team, only to find resistance from cable and satellite operators in a standoff now years long. Only Spectrum in the Los Angeles area carries the Dodgers’ channel as DirecTV and Dish refuse to carry it, due to the high price-per-subscriber amount Spectrum was seeking.

Another reason is the future of Fox’s regional sports networks are in question as much of 21st Century Fox is up for sale, including the RSNs. Currently, Disney and Comcast are in a bidding war for the properties, and both have told federal regulators they plan to sell the RSNs to avoid anti-trust issues if they are required to. The scenario could play out after the Cubs’ contract with their current rightsholders expires and could be tougher to make a deal with Fox Sports’ RSNs, whomever ends up owning them.

Also, many viewers are cutting the cord and opting instead to subscribe to slimmer packages offers by alternative providers, including YouTube, Playstation Vue, and Fubo. The Chicago Fire soccer team already took advantage of this trend, as they struck an exclusive deal with ESPN Plus to carry all of their games.

And keep in mind WGN-TV is in the process of being sold to a Maryland car dealer with connections to Sinclair Broadcasting for $60 million. This could play a role in whether the Cubs would stick around “Chicago’s Very Own”, who has aired the team since 1948.

Given all of this, the only realistic shot the Cubs have in launching their own channel is with AT&T, with the possibility of the Cubs getting an equity share. The team could use AT&T’s interest as leverage in any negotiations with NBC Sports Chicago or Disney/Fox.

But you’re asking…. can the Ricketts family possibly launch the channel themselves, without any help from a cable channel like YES initially did? Though the Ricketts have deep pockets, a start-up channel would cost a tremendous amount of money, and widespread distribution isn’t guaranteed – even with the Cubs as a primary attraction. Thus, a partner such as AT&T to help absorb the costs makes sense. And even YES had to sell a majority stake in its channel to Fox.