Comcast Drops Rangers, Knicks Games From MSG After Saying Hardly No One Is Watching Them

The Madison Square Garden Network traded beards with Comcast on Friday as the two media companies wrangled over the rights fees that halted professional sports content on the service.

The broadcast deal between MSG and Comcast expired on September 30, leaving sports viewers in the New Jersey and Connecticut areas without content featuring the New York Knicks and the National Hockey League Rangers. Both are controlled by MSG. The network also broadcasts games from the Devils, Islanders and Major League Soccer. The NBA season begins October 19, while the NHL season begins October 12.

MSG called the failed negotiations “disappointing,” saying Comcast tried to “force us to agree to terms they would never agree to for their own regional sports networks, including SNY in New York,” said a statement from MSG to CNBC. SNY is another regional sports network that broadcasts MLB Mets games.

MSG’s statement also indicates that Comcast has rejected proposals similar to agreements MSG has made with other operators.

MSG Network also planted a banner on its website alerting consumers to the dispute. The network is owned by Madison Square Garden Entertainment Corp., which is listed on the New York Stock Exchange and has a market capitalization of $ 2.4 billion.

It is not known how much Comcast pays MSG to distribute its channels. The network generated total revenues of $ 166.1 million, according to its fourth quarter earnings report last August. But the report added that “Affiliate fee revenue was down $ 9.7 million, mainly due to the impact of an around 7% drop in subscribers.”

Comcast, the parent company of CNBC, has defended its decision to drop MSG. In a statement, he wrote that his internal data shows that “95% of all customers who have received MSG in the past year have not watched more than 10 of the roughly 240 games released.” Comcast does not serve residents of New York City, who instead receive cables from companies such as Charter, Altice USA, and Verizon.

Comcast said, “We don’t think our customers should have to pay the millions of dollars in fees that MSG charges for some of the country’s most expensive sports content with extremely low viewership in our markets.”

On Xfinity’s website, the company wrote that it would reduce its regional sports network (RSN) fees to customers in “applicable areas” affected by the decision to remove MSG Network.

In media circles, this dispute could be a sign of RSN and it could impact the income of local pro teams.

The loss of Comcast viewers to MSG comes at a critical time for its Knicks franchise. The team made the NBA Playoffs last season for the first time since 2013 and have energized their fan base. But Comcast is no stranger to the RSN turmoil featuring teams from New York.

In 2015, he dropped out of YES Network, co-owned by the Yankees. The channel eventually returned to Comcast in 2017. This dispute needed to be resolved as the Yankees are a premium sports brand outside of New York City. And Major League Baseball games are the main blood vessel for RSNs.

NBC operates its RSN in New York with SNY and owns properties in areas such as Philadelphia, Boston, Chicago and San Francisco. And Comcast has temporarily renewed its deal with Google-owned YouTube to allow the service to continue serving its NBCUniversal content.

When discussing the Comcast and MSG dispute, Lee Berke, a longtime sports media rights adviser, called the move a “risk” because there could be a backlash on the part of customers. But he also warned that the RSNs are in danger if they do not improve their strategy.

“The Comcast MSG situation is more than a temporary situation,” Berke said. “This is a symptom of a persistent and substantial problem for RSNs to continue to gain distribution of pay television services as the pay television universe continues to shrink.”

“The feeling (of the cable companies) is, ‘How many subscribers are we going to lose compared to this improved margin that we have by not carrying these expensive DSNs,” Berke added. “If the savings outweigh the loss of subscribers, then they will continue.”

MSG does not offer MLB games, so it cannot exploit this asset for sports marketers. And distribution took another hit with the loss of Comcast. In 2010, MSG did not agree to terms with Dish Network, which resulted in its removal from satellite service. The network is still not available on the service.

Dish has reduced RSN offers overall over the years. For now, it has stopped broadcasting SportsNet and Root Sports, owned by AT&T, which has just reclaimed the rights to the Portland Trail Blazers. And he removed the properties of NBC Sports last April.

“The current RSN model is fundamentally broken,” Dish chairman Brian Neylon said in a statement last April. “This model requires almost all customers to pay for RSNs when only a small percentage of customers actually watch them. As the cost of these channels continues to rise, we believe it no longer makes sense to include them in our TV programming.

Berke said RSN’s offerings will continue to decline in the years to come.

“When your pay TV universe has grown to 100 million subscribers at its peak, to about 70 million or less, or about 8% per year, it becomes more and more difficult to maintain the same stability of channels that you had. in the past, ”Berke said. “RSNs are increasingly feeling the warmth and weight of these changes.”

Most of MSG’s subscribers are in the New York area, but the loss of Comcast viewers in surrounding areas impacts affiliate revenue and impressions, which could hurt ad sales. And Berke considered more ways to watch hockey content.

“If you really want hockey you have new packages with ESPN and TNT,” he said. “And an additional 75 NHL games will air on ESPN + and Hulu.”

–Alex Sherman of CNBC contributed to this report.

Disclosure: Comcast owns NBCUniversal, CNBC’s parent company.