Will Charter’s New Plan To Stave Off Cord Cutting Work?

Many consumers have been fed up with the high cost of cable and have been cord cutting (leaving for streaming TV only) or cord shaving (moving to a lower priced package). Much of the high price is due to the cost of sports, which you have to pay for whether or not you watch sports. The number two cable operator, Charter Communications
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, has announced it will offer a new lower-priced version of its most popular Spectrum-branded package which will not include local sports and league channels.

Spectrum Select will be split into two packages in a number of its markets, with Spectrum Select Plus including RSNs and league networks like NBA TV and MLB Network, while Spectrum Select Signature will be about $10/month less and not include these channels (although it will have popular national sports channels like ESPN and FS1).

Of course, in some markets, cable operators will have no choice. I have written a number of stories about the drama playing out in the bankruptcy case of Diamond Sports Group, a subsidiary of Sinclair Broadcast Group
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, as a number of Regional Sports Networks (RSNs) owned by Diamond haven’t been paid and want to abandon ship on the RSN model and sell their sports rights to broadcast or stream them.

Historically, the owners of RSNs have had so much leverage over cable and satellite operators that they have forced them to put the expensive RSNs on the basic tier. Given that most RSNs charge a fee of $5 or more per subscriber per month wholesale, and given the fact that there are multiple RSNs in many markets, this has been a key driver of consumer’s cable and satellite bills going up.

In other Charter news, the company announced that it was able to extend its carriage agreement with the third largest multichannel operator, DIRECTV, for its Spectrum-branded RSNs. DIRECTV now has “more flexibility in how it distributes Spectrum SportsNet (which carries the Lakers) and Spectrum SportsNet LA (which airs the Dodgers games).

Reading between the lines, this probably means that DIRECTV won’t have to carry the channels on its lowest tier, which could ding revenue at the two RSNs. Nexttv reports that one pay TV insider told them that the penetration threshold for some RSNs has been dropped from more than 90% of subscribers to just 60% of subscribers, allowing the RSNs that are to remain on the air, to be placed in more expensive packages than basic.

Spectrum got the two RSNs when it acquired Time Warner Cable in 2016, although it’s unlikely they are making money. Time Warner Cable signed a massive $4 billion 20-year deal with the Lakers in 2012, and an $8.35 billion 25-year deal with the Dodgers in 2014.

Charter is another sports video programmer to jump into the streaming world, saying it will offer non-subscribers to watch a direct-to-consumer (DTC) version of Spectrum SportsNet and Spectrum SportsNet LA out-of-market for a fee. The price has not yet been announced, but existing video subscribers will have free access.