News

Web Won’t Disrupt RSNs’ Game

12/20/2010 12:01 AM Eastern

Today’s evolving entertainment
delivery platforms give me
pause. Their changing dynamics
have laid siege to longfamiliar
sports business
models, presenting difficult
questions. Chief among
these is whether new-media
delivery technologies
will alter traditional business
models sooner rather
than later.

Change is coming, but not
as quickly as the headlines
indicate. The state of regional
sports networks (RSNs) shows
why this is true.

Change will come to RSNs later
than sooner for two reasons:
consumer comfort and a revenue
model that pays even when people
don’t watch. Until revenue models
are no longer consistent with traditional
viewing pleasure, old media
platforms will not give way as the
dominant player, or “hub”.

The economics of RSNs allow for
a quality production and clear, crisp
delivery — two key factors for multiplatform
distribution. This was true
in the 1970s, when I founded Madison
Square Garden Network, and
still in 1998, when we made MSG
the first RSN to feature live HD event
telecasts.

Change will occur gradually as
new media platforms provide consumers
with comfort and convenience,
such as live scores on a mobile
device or laptop viewing via a broadband
connection, virtually anywhere.
Whether watched in Iowa or Hawaii,
this is an RSN feed. In this sense, the
RSN business is a matured business,
the “hub” of video delivery to new
platforms.

The RSN business model positions
it differently than the more fragile
subscription models for the Internet
and mobile delivery. Is its stability
as a hub a long-term prospect?
That depends on viewing and media
consumption patterns —
and the presence of a basic
economic driver.

What can disrupt the
RSN model is a loss of
subscription fees through
loss of content or a revival
of the a la carte debate.
Right now, the MSO pays
the RSN per subscriber,
and the RSN pays the
team a rights fee. When
these things happen simultaneously,
as they do now, we live in balance.
The loss of games to national television
packages affects this balance, and at a
critical point, this shift will damage
the RSNs’ core business model.

The pressures of new delivery
platforms on the RSN model are off -
set by the technical enhancement
of current platforms, HD and the
promise of 3D, all of which increase
the traditional viewer comfort zone.
The business model of new delivery
platforms depends upon the economics
of the current RSN business
model to drive ancillary options; the
subscription structures of new platforms
are too volatile to displace the
traditional television platform as a
media driver.

While a push toward an a la carte
channel world would alter the RSN
landscape significantly, the fundamental
changes this shift implies
make its successful implementation
a long-term vision. For RSNs and the
larger sports and broadcast industries,
the change curve is a long and
winding road.


Joseph M. Cohen, chairman and
CEO of HTN Communicators, was
a founder of MSG Network and cofounder
of USA Network.
September