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More Major League teams are taking their TV coverage in-house by forming regional sports nets BY MICHAEL FREEMAN
Facing resistance from local broadcast TV outlets and cable operators to pay higher rights fees, more Major League Baseball franchises are moving to take their game telecasts in-house by launching their own regional sports networks. While as many as 75 percent of MLB clubs are currently losing money, the potential rewards of retaining their own television rights (and in-game advertising inventory) may be worth the hefty start-up costs in this era of squeezed local license fees.
In New York, the YES (Yankees Entertainment and Sports) network's carriage agreement earlier this month with Cablevision fills a gaping hole in distribution for the Yankees' flagship TV outlet, bringing new hope to other clubs that are planning the do-it-yourself approach. Two other big-market MLB franchises, the Boston Red Sox and Philadelphia Phillies, have enjoyed success with their partial ownership stakes in New England Sports Net and Comcast SportsNet Philadelphia, respectively.
Still, the path to introducing a regional sports network is littered with many failed efforts. And the strategy, which is currently being introduced or seriously studied by more than a half-dozen MLB clubs, remains challenged by a weak ad economy and costconscious cable operators wary of new channels and higher programming costs.
For teams having a stake in a regional sports network, "the opportunities to control your own distribution and ad sales are so much more promising than just taking rights checks from a middleman," says Lee Berke, whose LBH Sports, Entertainment and Media consults pro teams on launching their own RSNs. "Every [Major League] team that is nearing the end of its current [TV] deal is exploring the RSN approach, even if they're in a small market."
Indeed, teams around both leagues are going to be keeping a close eye this season on Kansas City-the No. 31 TV market in the country, according to Nielsen Media Research-where on March 20 the Royals flipped the switch on their own regional sports net. The Royals, typical of many smaller-market MLB franchises that are suffering from flagging fan support and rising player payrolls, are likely to be watched as a test of the viability of do-it-yourself networks for...