Concurrent Carriage Disputes Result in City-Wide ‘Blackout’ of Nuggets, Avalanche

JohnWallStreet

Carriage disputes between Altitude Sports, the exclusive broadcast partner of Denver’s winter sports teams, and the three biggest cable and satellite providers in Colorado's Capitol (Comcast, Dish Network and AT&T) has resulted in a near city-wide blackout (there is one sports bar on Pepsi Center property that has a feed) of Nuggets and Avalanche games. Altitude Sports’ agreements with the three pay-TV distributors expired in August. The RSN has been unable to agree on new terms with the triumvirate offering “50% to 70% less to carry the channel this time around.”

Howie Long-Short: Back in mid-October, Sinclair Broadcasting Group (SBGI) announced a long-term retransmission agreement with AT&T (one of the three carriers looking to cut back on the fees paid to Altitude Sports). While it’s reasonable to wonder why AT&T was willing to pay one content provider's price and not another's, the answer is simple; ‘leverage’. SBGI controls 180 stations (including the 23 RSNs), Altitude stands alone as an independently owned network (controlled by Rams, Nuggets and Avalanche owner Stan Kroenke).

‘Leverage’ also explains why the three carriers can get away with offering Altitude Sports pennies on the dollar. One well-respected senior media executive explained that “Altitude has 150 live sporting events. They don’t have the NFL, they don’t have college football; they don’t have anything else to package with 75 basketball and 75 hockey games.” The lack of content is Altitude's biggest problem, but allowing its three biggest distribution deals to expire on the same date has placed the company at a further disadvantage.

Consolidation in the media sector has made cable and satellite distributors much more powerful, so the the problems Altitude faces are not unique to the Denver RSN business. In fact, he suggested that “all of the independents [think: NESN, SNLA, MASN etc.] are going to get squeezed over the next few years.” While the biggest content companies can “fight back”, the little guys are in a tough spot.

Altitude isn’t going to take a 50% to 70% haircut on carriage rates (particularly as the costs of media rights continue to rise), so our source suggested the regional sports network would be better off “selling to - or partnering with - Sinclair or Comcast; because Denver is a big Comcast market.” They could consider a deal with Amazon (AMZN), who entered the RSN business with their investment in YES Network. Under that scenario, it's likely that AMZN would look to pick up MVPD distribution.

Altitude struck a deal with the local broadcast network KTVD so that fans could watch last Friday night’s Nuggets home opener, but licensing games to over-the-air stations is not a viable long-term solution. While Denver’s NBC affiliate could offer Altitude some short-term revenue, “it’s hard to do over-the-air in any meaningful way without totally under-cutting your pay-TV business and [a more expansive package is] going to be in violation of MFNs they have with other distributors under contract, anyway.

Fan Marino: Unfortunately for fans who want to watch games, (legal) streaming isn’t an option, either; the local team’s games are excluded from the leagues’ digital packages.  

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