Fox Sports goes hard for rights, additional RSNsPublished December 3, 2012
Fox Sports’ shopping spree for local sports rights isn’t over yet.
In addition to its $1.5 billion purchase of a 49 percent stake in YES Network and its $6 billion offer to secure rights to the Los Angeles Dodgers for the next 25 years, Fox executives are deep into negotiations to pick up rights to the Cleveland Indians, sources say. Fox also has conducted on-and-off talks for the past several months to pick up Orioles and Nationals rights in the Baltimore-Washington, D.C., market, though sources say those talks have cooled considerably.
The market for live sports rights continues to be white hot, with rights fees and advertising revenue continuing to rise dramatically. Fox’s aggressive interest in local sports rights in Cleveland, Los Angeles and New York demonstrates its commitment to its regional sports network business, which has long been one of the most profitable parts of News Corp. It is also a public statement that it will continue to acquire local rights to ward off competition.
A potential deal with the Indians could be close at hand. Indians owner Larry Dolan launched the regional sports network SportsTime Ohio in 2006, with much of the RSN’s programming centered on Indians games.
But since its launch, SportsTime Ohio has had trouble with its cable carriage deals, which have among the lowest rates of all RSNs. Cable operators pay an average of $2.21 per subscriber per month, according to SNL Kagan, which is below the national RSN average of $2.49.
It’s unclear whether Fox is interested in picking up the Indians’ rights for its FS Ohio RSN, which already carries games from the Reds, Cavaliers and Blue Jackets. Fox also could be looking to buy the channel outright.
Rumors of SportsTime Ohio’s pending sale have been around for several years. Time Warner Cable has long been mentioned as a potential suitor. But sources say that talks with Fox have progressed fast enough that they expect a deal to be finalized before the 2013 MLB season.
Fox’s efforts to land the Mid-Atlantic Sports Network, where Orioles owner Peter Angelos serves as majority owner, are not moving as smoothly. Sources say Fox has spent the past several months in on-again, off-again talks to acquire all or part of MASN, which holds the rights to the Orioles and Nationals. Fox currently is not in that market and this would fit with its strategy to build on its RSN business.
Comcast, which operates Comcast SportsNet Mid-Atlantic, also had preliminary talks, which sources say did not progress far.
Several sources described those negotiations as currently off, saying that Angelos opted not to sell the RSN.
Fox’s involvement in talks with MASN came at MLB’s urging, sources said. MASN still is involved in a rights fee dispute with the Nationals. That dispute hasn’t been resolved, though both parties met at MLB’s New York offices last week. MLB hoped that a deal with Fox would solve the dispute. MASN and Fox have not met for several weeks, and no further talks are scheduled.
Fox’s move to acquire more local sports rights fits in with its strategy of building on its 20 RSNs.
The cost of live sports rights has increased radically in the last few years, as television networks try to grab the highest-rated live programming on TV. Fox felt burned in Los Angeles in early 2011, when Time Warner Cable negotiated the Lakers’ rights away from Fox Sports. The move caused Fox to be more aggressive about protecting its current RSNs and negotiating for new rights.
The move to own more local sports rights also will help Fox’s forthcoming national channel, Fox Sports 1. Fox has not formally announced its plans to rebrand its motorsports channel, Speed, into an all-sports channel called Fox Sports 1. But it has told rights holders and ad buyers that it plans to make the change in August.