The Cubs are absolutely banking on the cable bubble not bursting before they can cash in with a new TV megadeal. There are so many variables within that equation, from a red-hot, DVR-proof team to Major League Baseball’s byzantine rules to Congress and federal regulators. It’s the rise of Netflix, Amazon and HBO Go, plus technology we’re not even thinking about now.
But Crane Kenney can survey the entire landscape and look back at the Dodgers and see what’s happening with SportsNet LA and say this much with certainty: “That deal will never happen again.”
That would be Time Warner Cable’s $8 billion boondoggle and yet another cautionary tale for the entire industry. As president of business operations, Kenney is on the clock again, saying the Cubs are still “focused 100 percent” on launching their own network by 2020.
But there’s no Dodger blueprint with a $300 million payroll on the horizon and a blank check to sign international players (and all those carriage issues in Southern California).
“Remember, there is no sell the rights to someone else and they take all the risk,” Kenney said Saturday, speaking with reporters after his Cubs Convention presentation at the Sheraton Grand Chicago. “The world doesn’t work that way, with one exception: That’s what happened in L.A., where now Time Warner can’t clear the games in half the homes. And obviously it’s a huge loss for them.
“Like everything we do, whether it’s Kiss Cams or anything else, we’re studying it to death to look at the pros and cons and weigh the risks of launching on our own, or launching with a partner.”
This is a central part to the follow-the-money story in Wrigleyville. Team president Theo Epstein is waiting for that windfall to make sure this young core matures into a perennial contender. Outside of changing baseball leadership and hiring Epstein, chairman Tom Ricketts called this the biggest decision for his ownership group.
“Got to get it right,” Ricketts said.
Kenney also stressed there’s no scenario where the Cubs are getting 100-percent equity in a new channel. It’s always going to have to be working with another big media player, either a content producer and/or a distributor with the infrastructure to get the games into your living rooms.
“The Dodgers are a one-off world,” Kenney said. “But the other deals you read about, whether it’s St. Louis or Seattle, where they got big equity pieces, they’re wearing the risk of cord-cutting and cord-shaving no different than we are at Comcast SportsNet.”
The Cubs have an ownership stake in CSN Chicago, which keeps exclusive cable rights through the 2019 season. Kenney estimated the Cubs would need a two-year runway to build out their new network.
“Can I predict exactly what 2019’s going to look like?” Kenney said. “No, I can’t. (But) we love the trajectory of sports rights. So if you look at any of the recent deals that were done, they’re still going up.
“We love that trajectory. We watch with a very wary eye what’s going on in the cable universe, though. You’d have to be a fool not to pay attention.”
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Kenney did predict one smaller breakthrough for this season: authenticated in-market streaming. MLB recently made a deal with Fox Sports involving 15 teams, which will make games on regional networks available to local cable subscribers (without erasing MLB’s complicated blackout rules).
“I’m finally pretty confident we are going to have streaming in 2016 (on) our mobile devices,” Kenney said. “All of the Fox RSNs will be up this year, (and) I think that’s going to give the league both the pressure and the momentum to get something done with Comcast.”