Change is coming Charter Communications‘ cable TV packages — especially for sports networks.
The cable and broadband company said Monday it plans to begin offering a new, two-tier cable package system that will allow customers to choose a cheaper, sports-lite TV option without regional sports channels.
The major move comes as the industry grapples with more people opting to cut the cord in favor of streaming services. This greatly affected sports channels and hit regional sports networks that had long provided lucrative payments to leagues and teams, especially heavy ones.
Diamond Sports Group, which owns the largest portfolio of regional sports networks, filed for bankruptcy protection earlier this year. Other networks are launching direct-to-consumer streaming options that come at price points that won’t elevate the long-profitable pay-TV model. But they are often considered expensive for consumers and can turn off potential streaming customers.
Charter, which owns two regional sports networks, wants to change the formula. Beginning in the third quarter, the company said its Spectrum-branded cable TV business will be relaunched as two new services.
Spectrum Select Plus will include the provider’s full sports programming and regional sports networks, while Spectrum Select Signature will exclude certain sports programming at a reduced price.
These two options will launch on a market-by-market basis in most of Charter’s US territories.
With certain sports programming, customers who choose the option will receive direct-to-consumer streaming programming for local sports networks in their area for free. Charter will also be able to market and sell this regional sports networks application exclusively to its broadband customers. Major networks like ESPN and FS1 will still be available on Spectrum Select Signature.
“This new model paves the way for a more agile approach to an outdated packaging model for sports and puts the focus back on the customer,” Tom Montemagno, Charter’s executive vice president of programming, said in a news release. release
The company noted that historically, sports network contracts have required distributors to pay for content rights and deliver their programming to the vast majority of subscribers — typically more than 80%. This is even if many of these customers never open the channel.
Pay TV fees typically break down the cost of regional sports network fees. such as national sports networks Disney‘s is known to be one of the most expensive to carry for pay TV distributors like ESPN, Charter and DirecTV.
Charter noted that the new two-tier system still gives sports fans what they want, while giving non-sports viewers a more affordable option. The company also said the model supports sports networks that follow streaming options.
As both a distributor and an owner, Charter is exposed to the challenges faced by sports networks. When the company acquired Time Warner Cable in 2016, it inherited two regional sports networks, Spectrum SportsNet and SportsNet LA, which broadcast Dodgers and Lakers games. Charter also plans to launch a streaming alternative for these channels.
Additionally, Charter and DirecTV announced Monday a new distribution deal for those regional sports networks.
As part of the deal, Charter agreed to a “significantly lower penetration threshold” that would allow DirecTV to “better target subscribers who want Lakers and Dodgers programming.” It will also allow DirecTV to offer cheaper and more flexible options for customers who aren’t interested in sports.
Spectrum Networks CEO Dan Finnerty said in a news release Monday that while viewing habits have changed, regular-season sports programming is still popular.
“Given that these customers make up a relatively small portion of the overall video subscriber base and the significant growth in direct-to-consumer options, the model for RSNs must evolve to reflect the realities of the current market,” he said. Finnerty, senior vice president and general manager of Spectrum Networks. “With this agreement, we are taking a step to change our 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.