A change is coming Charter communicationcable TV packages – especially for sports networks.
The cable and broadband company said Monday that it plans to offer a new, two-tier cable package system that will allow customers to choose a lower-cost, sports-friendly TV option without regional sports channels.
The crucial move comes as the industry grapples with more people choosing to break away from cable in favor of streaming services. That weighed heavily on sports channels and has hit regional sports networks, which have long provided lucrative fees to leagues and teams, especially hard.
Diamond Sports Group, the owner of the largest portfolio of regional sports networks, filed for bankruptcy protection earlier this year. Other networks have launched direct-to-consumer streaming options at prices that won’t shake the long-standing lucrative pay-TV model. But they are often considered expensive to consumers and can put off potential streaming customers.
Charter, which itself owns two regional sports networks, wants to change the formula. As of Q3, the company said its Spectrum cable TV business will be relaunched as two new services.
Spectrum Select Plus includes the provider’s full range of sports programming and regional sports networks, while Spectrum Select Signature excludes certain sports programs for a reduced rate.
The two options will be launched on a market-by-market basis across most of Charter’s US footprint.
Customers who choose the option with select sports programming will receive free direct-to-consumer streaming apps for the local sports networks in their area. Charter will also be able to market and sell this app for regional sports networks to its broadband-only customers. Major networks such as ESPN and FS1 will continue to be available on Spectrum Select Signature.
“This new model paves the way for a more flexible approach to the legacy sports packaging model, and it puts the focus where it belongs, on the customer,” said Tom Montemagno, Charter’s Executive Vice President of Programming Acquisition, in a news release. . Edition.
The company noted that, historically, sports network agreements require distributors to pay for the rights to the content and make their programming available to a large majority of subscribers — typically more than 80%. That’s the case even if many of those customers never turn on the channel.
Pay TV bills usually split the cost of regional sports network fees. National sports networks, such as disney‘s ESPN, are known as some of the most expensive for pay TV distributors such as Charter and DirecTV.
Charter noted that the new two-tier system still gives sports fans what they want, while providing non-sports viewers with a more affordable option. The company also said the model will support the sports networks pursuing streaming options.
As both a distributor and owner, Charter is exposed to the issues facing sports networks. The company inherited two regional sports networks — Spectrum SportsNet and SportsNet LA, which broadcast Dodges and Lakers games — when it acquired Time Warner Cable in 2016. Charter also plans to launch a streaming alternative to those channels.
In addition, Charter and DirecTV announced a new distribution agreement for those regional sports channels on Monday.
As part of the deal, Charter agreed to a “significantly lower threshold of penetration”, allowing DirecTV to “better target their subscribers who want Lakers and Dodgers programming.” It also allows DirecTV to offer cheaper and more flexible options to customers who aren’t interested in sports.
Spectrum Networks CEO Dan Finnerty said in a press release earlier Monday that while viewing habits are shifting, regular season sports programming is still popular.
That said, given that these customers represent a relatively small percentage of the total video subscriber base, and given the marked increase in direct-to-consumer choices, the model for RSNs needs to evolve to reflect the realities of today’s market ,” said Finnerty, the senior vice president and general manager of Spectrum Networks. “With this agreement, we are taking a step to shift the business model so that customers have more control.”
Correction: This story has been updated to reflect that Charter’s Spectrum Select Signature tier will still offer some sports networks.