In a groundbreaking agreement that may be a model for future sports media deals, Comcast Corp. on Tuesday is expected to announce the launch of a sports cable TV network that would broadcast Cubs, White Sox, Bulls and Blackhawks games now run on Fox Sports Net Chicago.
The Philadelphia-based cable giant, which provides cable TV to about 1.7 million Chicago-area customers, will offer Comcast SportsNet Chicago to its subscribers next October.
Comcast, Blackhawks owner William Wirtz, White Sox and Bulls owner Jerry Reinsdorf and Tribune Co., which owns the Cubs and this newspaper, each would have an equity stake in Comcast SportsNet, according to a source involved in the negotiations.
None of the parties involved with the deal would comment Tuesday.
Earlier this year, Tribune, Reinsdorf and Wirtz announced that they were ending their agreements with Fox Sports Net as they researched other cable programming avenues and considered going out on their own.
Under current contracts, Fox Sports Net will continue to broadcast pro sports games through the end of next year’s baseball season. Fox currently carries 72 regular-season Cubs games, 102 Sox games, 44 Bulls games and 39 Hawks games.
More uncertain is how the move will affect the thousands of viewers who now watch Fox Sports Net games via satellite, through DirecTV and other providers. It is not clear whether Comcast, which considers satellite providers competitors, would shut out those viewers.
Games currently on broadcast stations WGN-Ch. 9 and WCIU-Ch. 26 would not be affected.
All three team owners have long considered launching their own sports network as a way to get around escalating fees that eat into revenue from the television rights fees they sell to cable companies.
Cable companies such as Comcast complain that cable programming providers, specifically sports channels, have raised the rates they charge distributors so much that it is becoming too costly to carry some programming.
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But programmers, such as sports giant ESPN, say escalation of rights fees by the teams is forcing them to charge cable distributors more.
Cable company Cox Communications got into a much-publicized spat with ESPN, owned by Disney Co., earlier this year over rising fees. Cox threatened to pull ESPN off its cable systems.
While Comcast has started other local sports networks in its hometown of Philadelphia and in Washington, D.C., this would be the first time the majority of major pro sports teams in one market would come together to start a station. Such joint equity arrangements were previously unheard of.
It helps that all three have what many sports observers say is the closest relationship among team owners in any major market. Reinsdorf and Wirtz share ownership in the United Center, where the Bulls and Blackhawks play. Tribune President and CEO Dennis FitzSimons and Reinsdorf have had a relationship dating back to when FitzSimons ran Tribune’s WGN-Ch. 9 and struck a deal to bring the White Sox and Bulls to the station.
Though the owners have discussed starting their own network, Comcast came into the picture last year after it bought out the cable system of AT&T, which covered most Chicago-area cable households.
Now Comcast expects to eliminate what effectively has been the middleman. In doing so, it would obliterate any leverage Fox Sports Net will have in future negotiations with the cable company.
Without any pro sports on its slate, many media executives question whether Fox Sports Net will be able to survive in this market as a stand-alone entity.
Financial details, such as how the equity arrangement is split, are still sketchy. But Comcast will operate the network and will still pay the teams rights fees, as it does in Philadelphia and Washington. But all three will share in the profits from advertising and sponsorship deals.
Though it is unclear who will run the operation here, insiders said that one of the names under consideration is that of current Fox Sports Net Chicago station boss Jim Corno.
So far, the success of teams controlling their own media destiny is uneven.
In Philadelphia, where Comcast owns both the Flyers and the 76ers, Comcast has added shows around the sports teams as well as its own morning local sports newscast.
The Yankees’ YES Network, though, has had a more difficult start. A spat with Cablevision in New York over its fees has kept the Yankees off the main cable television system in Manhattan.
But sports marketing executives said that in the proposed Chicago deal, the teams carry little risk because of the size of the market as well as the fact that they are hooking up with the area’s largest cable provider.
What they give up in terms of potentially higher rights fees–collected even when the teams are playing poorly–they hope to make up in terms of the advertising and sponsorship money they can make being in the third-largest sports market.
“It’s just like New York. I don’t think they would be doing it if there was a lot of risk,” said Wally Hayward, president of Relay Sports and Events, a division of media buying giant Starcom MediaVest Group. “When you look at the size of the market and the teams we’re talking about and the passion of the fans, there’s little downside. It’s not a high-risk proposition compared to a place like Miami, when you’re not sure whether the fans will come out and support a team like the Marlins.”
In addition to the financial arrangement, the owners are said to be interested in the control they would have in the local shows surrounding the games.
“With Fox, it was a straight rights fees deal,” said a source close to the negotiations. “The teams had no say in the content of the programs around the games.”
With such an arrangement in place, though, some media observers complain that there will be little if any objectivity in analyzing the teams’ play.
It is not clear yet how Comcast plans to fill the programming the remainder of the day when a team isn’t playing, but team executives were intrigued with, for example, the local sports news program “Sportsrise” that Comcast’s station in Philadelphia runs every morning and could possibly replicate here.
Sources also say it is possible Comcast could pick up other programming elements from Fox Sports Net. Earlier this year, Comcast was in negotiations to buy some or all of Fox Sports Net’s regional channels, including Chicago.
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