Comcast Corp. will expand its sports reach westward with the fall 2004 launch of a Chicago-based regional network.
Comcast SportsNet Chicago, which will feature games from four local pro sports teams, is the first of several moves Comcast is planning in the sports arena that could ultimately include acquiring regional sports networks in such markets as Oakland-San Francisco and New England.
Under terms of the deal, Comcast will have a 30% stake in the Chicago network, but it will have management control and be able to brand the channel.
Groups affiliated with Jerry Reinsdorf, owner of the National Basketball Association Chicago Bulls and Major League Baseball's White Sox; the Wirtz family, with ties to the National Hockey League's Blackhawks; and Tribune Co., which runs baseball's Cubs, will divide the remaining stake, according to sources. It was unclear at press time, though, which percentage each of those entities would hold.
The Chicago channel will join Comcast SportsNet services serving the Philadelphia and Baltimore/Washington D.C. DMA within the MSO's regional stable. The network, slated to bow on Oct. 1, 2004, will feature 248 games from the aforementioned clubs, as well as ancillary pro-team programming, sports news and collegiate action. The service will also offer select games in high-definition.
The Rainbow Holdings Inc. and Fox Sports Net-owned Fox Sports Chicago regional service currently holds the cable rights to all four teams. In October, the teams exercised an out clause to exit those agreements — which ran through 2009 — giving the regional five years' notice.
"We're excited by the deal. Chicago is a big market for us," said Amy Banse, vice president of programming investments at Comcast, noting that the MSO will be looking to ink distribution deals with other operators serving the DMA, as well as satellite providers.
Banse said Comcast reaches about 80% of the inner market.
MSO executives would not reveal financial specifics of its agreement with the teams, nor would they reveal a rate card for the network. A spokeswoman also would not confirm industry speculation that the network would cost operators at least $2 per subscriber per month.
Comcast will have management control of the service and sell ad time, but split an undisclosed percentage of those revenue with the teams.
Comcast was also attracted to the deal due to the price containment it should bring.
"This long-term deal has price escalators built in that we believe are significantly less than what we would have to pay a third party [FSN Chicago] over time," a source familiar with the negotiations said.
The move of the four sports teams to Comcast all but decimates Fox Sports Net Chicago's programming lineup, but Rainbow executives say the 3.8 million-subscriber network will not only remain on air, but continue to be a viable service for cable operators.
"The service certainly changes, but we'll look to the resources of Fox and Fox Sports Net," said Rainbow Sports senior vice president of marketing and communications Dan Ronayne. "There are plenty of opportunities in the marketplace and we will bring together all the resources to program [the service] in the most compelling way possible."
Sources within both companies said there's still a possibility that Comcast could purchase Fox Sports Chicago along with several other Rainbow-owned regional sports networks in Comcast-dominated markets such as San Francisco/Oakland, New England and Florida, in the near future.
The sticking point to such as deal is working out an agreement with News Corp-owned Fox Sports, which owns about one-third of the Rainbow sports services. A source close to both companies said that any potential Comcast/Rainbow/Fox Sports deal is on hold until News Corp. completes its acquisition of a controlling interest in DirecTV Inc. parent Hughes Electronics Corp.
Comcast SportsNet Chicago's 2004-05 game plan is to carry 72 Cubs games, 95 White Sox games, 42 Bulls games and 39 Blackhawks games.