Sports-TV Fans: Your Rebate Check Is Not in the Mail

Brian Steinberg

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Sports fans love to turn on the TV and watch baseball, football or hockey. Now they are monitoring a game of a different sort: a marathon ping-pong between cable and satellite distributors, sports networks and big-league sports organizations over who, if anyone, should get money back when live matches have been scuttled by a global pandemic.

The issue has been bubbling for weeks, with both the NBA and NHL suspending current seasons and Major League Baseball delaying its Opening Day until – well, that’s not clear. These games command big money. A 2019 report from Kagan, a market-research firm that is part of S&P Global Market Intelligence, estimated that sports programming brought in $18.55 per cable or satellite subscriber per month in fees – 22.1% of average revenue per user .That figure has surged since 2009, when sports programming captured 14.1%, according to Kagan.

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On Wednesday, the debate spilled into the public sphere, when Letitia James, New York State’s Attorney General, sent a dispatch to the companies that extract those fees from sports-TV fans: Altice, AT&T, Charter Communications, Comcast, Dish Network and Verizon. “At a time when so many New Yorkers have lost their jobs and are struggling,” she wrote, “it is grossly unfair that cable and satellite television providers would continue to charge fees for services they are not even providing.”

New Yorkers and others looking for a sports rebate check in the mail ought to find something else to do. None is coming.

TV sports are paid for by the nation’s big media companies, who shell out billions over the course of a contract for the ability to show something like “Thursday Night Football” on Fox (more than $650 million per year for five years) or golf matches on ESPN, NBC and CBS (more than $680 million per year over nine years). The games bring in the medium’s biggest live audiences at a single moment, and they are unable to skip past the commercials that accompany the show. And so TV uses the games to command top advertising rates from Madison Avenue and to leverage huge programming fees from distributors like Charter and Comcast.

With that complex system in place, the cable companies can easily kick the issue to someone else. “We would love to pass through the sports programming costs back to the customer, if it isn’t paid or the events don’t occur,” said Tom Rutledge, chairman and CEO of Charter Communications, during a recent call with investors. “There is still a big question about whether the games are going to be playing, and if they are played, most likely, the costs will not be rebated to the customers.”

Anyone who was dreaming of a getting a $20 check for each month games are not available now has to wake up. When’s the last time a subscriber got cold, hard cash back in exchange for a programming blackout?

Such events have become more common over the years, thanks in part to new pressures on both programmers and the distributors they negotiate deals with every few years. There’s also an increasingly antagonistic Dish, the satellite-provider that has gone nose to nose with everyone from HBO to Fox News Channel.

Any loosening of purse strings is likely up to the sports leagues. “As long as the NBA or MLS or NHL state they are in more of a status of suspending and not canceling, there’s some legal protection,” explains Daniel Cohen, senior vice president of global media rights consulting at Octagon, the Interpublic Group-owned sports marketing agency. “They still have to get paid by the networks, and if the networks have to make those payments, then the networks aren’t going to give any relief on affiliate fees to the MVPDs. And if the MVPDs can’t get any relief from the affiliate fees, they are not going to pass that on to the consumer.”

Even the leader of the nation’s biggest cable operator says he is powerless before the sports organizations. “The leagues have to decide are they going to be playing, what happens to the future if they’re just starting a season or the current one that got disrupted,” said Brian Roberts, chairman and CEO of Comcast, during a recent investor call. “If we are able to get clarification, then we can give that to our customers.”

Other sports consumers are getting a measure of relief. In Europe, the very same Comcast that has deferred to U.S. sports leagues, is letting subscribers to its Sky Sports – sold separately from other programming options – take a pause in the billing cycle. Comcast believes that system will prevent wholesale cancellations and allow the company to keep subscribers on board. Nonetheless, said Roberts, “Given how the sports programming business works in Europe, the postponement of so many games has been a material event.”

In some cases, notes Octagon’s Cohen, media companies with European sports-rights deals poised to end are telling leagues they will not pay for a truncated or cancelled season. And there are questions about direct-to-consumer businesses operated by the leagues themselves and whether subscribers to them can get money refunded.

If only things were as simple in the U.S.

No matter whether a season is delayed, suspended or thrown out the window, the leagues, networks and video distributors might want to find some way to tell pay-TV subscribers they are appreciated. “Fans are dying right now for that touch with their favorite team or favorite league,” notes Cohen, who suggests all parties find some way to offer merchandise, a sweepstakes or a way to let fans talk to players. “This is where Comcast and ESPN and Charter and Turner Sports can all really come together to offer some make-good that goes way beyond a financial rebate,” he says.

Besides, as discussed, that financial rebate is about as likely as to happen as the NBA Finals are to take place this June.

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