Charter's RSN-Less TV Offering Not Seen as Curbing Cord-Cutting Challenges
Other cable operators are likely watching Charter Communications' plans to roll out a video package without regional sports networks (RSNs) and may follow suit, but those efforts are too little too late in the face of cord cutting, cable TV and video industry watchers tell us. Charter's cheaper Spectrum Select Signature video tier will roll out in Q3, the cabler said last week.
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"Sports programming has been the glue that holds the traditional linear video business together," emailed MoffettNathanson's Craig Moffett. "With the collapse of the RSNs, that bond is now broken, and the bundle is falling apart." Creation of a cheaper, non-sports cable video offering comes too late to make much of a difference, he said. "Scripted entertainment has already long made the pivot" to subscription VOD, he said. "What’s left, if not for sports, is just news. I think you’ll see more of these offers, but I doubt they’ll do much to reverse the tide," he said.
Charter's taking this step five or six years ago might have slowed cord cutting, nScreen Media's Colin Dixon told us. However, people leaving the traditional pay-TV universe are largely leaving pay TV altogether, with about 25% opting for a virtual MVPD subscription, he said. If the Spectrum Select Signature offering is notably cheaper, such as $20 cheaper, "maybe that becomes a little interesting" and diverts some people who would have gone with an vMVPD, he said. Non-sports fans have options for a selection of channels "for dramatically lower" costs already via services like Philo or Sling, he said. Dixon said other cable operators are likely watching Charter to see what happens with cable subscriptions.
Sports -- long a backstop for traditional cable -- already is migrating to direct-to-consumer options, Dixon said, pointing to Apple TV's carriage of Major League Soccer and the NFL Sunday Ticket's availability on YouTube. "Those sorts of erosions will continue," he said.
As video consumption habits have changed, with increasingly fragmented audiences, expect more skinny bundles in the next couple of years, said University of Maryland marketing associate professor Bobby Zhou. Programmers have less leverage in forcing bundling, he said.
Demand for sports content is going to grow as Zoom and similar videoconferencing tools allow for simultaneous watching and commenting on content, with live sports particularly lending themselves to that, Zhou said. That will elevate the value of sports programming, he said. Zhou said sports content providers such as leagues might start partnering with tech companies for closer integration of mobile devices with sports content, such as coming preloaded with apps and limited time free subscriptions.
The RSN-less package is not markedly different from other skinny bundles available, said Jon Lewis, Sports Media Watch creator. The RSNs in question had been affiliated with Fox, but Charter's move got easier once Sinclair, which has no national cable networks of note, purchased the RSNs, he said. But ultimately cable TV can't afford to do without sports, he said. "Cable without sports is not going to last particularly long," he said. Lewis said other cable providers likely will follow Charter but not imminently. Comcast, with its cable sports programming and NBC, is going to want to have a cable outlet for that content, he said. At the same time, giving consumers that sports-less option will be vital in the effort to slow cord cutting, he said.
Charter's Spectrum Select Signature package will come as part of a relaunch of its Spectrum TV Select video package, with Signature and Spectrum Select Plus -- which will offer RSNs -- offered market by market, the cabler said. Charter said it also plans to launch a direct-to-consumer option for its own RSNs, Spectrum SportsNet and Spectrum SportsNet L.A. Charter also announced it had reached a distribution agreement with DirecTV for Spectrum SportsNet and SportsNet LA that involves "a significantly lower" penetration threshold. Charter said that would let DirecTV offer more affordable and flexible options for customers not interested in premium sports programming. With viewers of regular season pro sports programming being a relatively small part of the overall video subscriber base, and with increased direct to consumer options, "the model for RSNs needs to evolve to reflect the realities of the current marketplace," said Dan Finnerty, Spectrum Networks general manager.