Looking for additional revenue opportunities, several professional-sports are
mapping game plans to launch their own regional sports networks.
Major League Baseball's Houston Astros and Chicago White Sox and Cubs; the
National Basketball Association's Houston Rockets and Denver Nuggets; and the
National Hockey League's Colorado Avalanche are all exploring leaving their
respective Fox Sports Net regional services to start their own channels, despite
the poor track record of such ventures.
Those teams could join MLB's Kansas City Royals, Minnesota Twins and
Baltimore Orioles, which all announced plans to launch stand-alone regional
sports networks over the next couple of years.
The moves could hurt FSN in terms of lost programming and revenue from
operators seeking rebates from the services, as well as advertisers that would
shift their budgets.
Among the new crop, the Astros and Rockets appear to be the furthest along.
The two would team up to launch a Houston-based regional in 2005, when the
Astros can exercise an option to exit a long-term deal with Fox Sports
Southwest. The Rockets do not have an existing deal with Fox.
The Astros' TV contract allows the team to opt out of its deal, which runs
through 2009, if Fox does not match a rights offer from another entity. The rub,
according to Fox, is that the Astros have to wait until 2005 to tender
Undaunted, the team filed a lawsuit against Fox Feb. 28, forcing it to match
within 30 days a $213 million offer from the proposed Houston Regional Sports
Network, according to the Houston Chronicle.
But Fox Sports Networks president Bob Thompson said its contract with the
Astros specifically states that the network does not have to match any offer
Further, the contract states that any offer must come from a third-party
vendor, which would eliminate HRSN, in which the Astros hold a majority
Representatives from the Astros and Rockets did not return phone calls.
Chicago's baseball clubs are also evidently eyeing a network pairing. The
White Sox and Cubs have out clauses in their respective agreements with Fox
Sports Chicago that would allow them to explore launching a regional sports
network, sources close to the situation said.
The Chicago Tribune -- the corporate parent of which, Tribune Co.,
also owns the Cubs, as well as WGN-TV -- reported that Comcast Corp., the area's
major cable operator, would own a stake in and distribute the service.
White Sox owner Jerry Reinsdorf may also look to add his NBA franchise, the
Chicago Bulls, to the lineup, according to the Tribune.
WGN-TV, a superstation, holds the local over-the-air television rights to all
Fox Sports Chicago and Comcast officials declined to comment on the matter.
Representatives from the ball clubs could not be reached for comment.
And the Associated Press reported that Kroenke Sports, owner of the Nuggets
and Avalanche, is thinking about moving the teams to its own regional sports
network. Both teams' current distribution deals with Fox Sports Rocky Mountain
end in 2004, according to sources.
But Thompson is confident that the regional Fox services remain the most
viable distribution outlet for teams.
With the exception of Yankees Entertainment & Sports Network, teams have
been unable to successfully launch stand-alone regional sports networks.
And YES -- which airs games from MLB's New York Yankees and the NBA's New
Jersey Nets -- has its own troubles: a 3 million-subscriber hole in the middle
of its distribution lineup in the New York DMA stemming from the service's
inability to reach a carriage agreement with Cablevision Systems Corp.
On a positive note for Fox, its Fox Sports West service reached a multiyear
deal to distribute games involving the NBA's Los Angeles Clippers. Earlier this
year, the Clippers walked away from the network after failing to reach a