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Published on 29 August 2014

When college football's 2014 regular season kicked off last night, it marked more than the beginning of college football match ups from the Atlantic Ocean to the Pacific. It showcased the separation of regional sports networks (RSN) into two categories, the "haves" and the have-nots.

The distinction has been brought close to a head as subscription TV service providers struggle mightily to cope with rising sports programming carriage costs, a predicament that has them and their customers (football fans or not) very unhappy about the resulting increases in their service.

Math-lete?

Make no mistake; the challenge facing providers is huge and expanding. It extends way beyond college football to the top four professional sports, college basketball, baseball and hockey for starters. Some RSNs feature one team while others span an entire conference or division.

Doing the math – and economics – of demand, cost and ROI seems like a task better suited for Watson given all the variable and constant change. The situation grabbed notice of many subscribers earlier this year when some providers started charging customers a monthly RSN fee.

What's the Problem?

First and foremost among the college football content owners haves is the new Southeastern Conference (SEC), which TV providers raced to sign up as it arguably offers the highest level of competition in the U.S. having had a member win the national championships many times of late.

By contrast, the Pac-12 Network is foremost among the have-nots, with college football fans claiming its teams' provide the lowest level of competition among the five most prominent conferences. As a result, sports programming giant DIRECTV has refused to carry the RSN to its subscriber masses.

Demand, Pricing & Fees

Sure, the more customer demand, the more the service provider interest. But the real business issue here is that those paying to carry RSN programming have to make the toughest of carriage choices and actually even say no to some content owners to avert breaking the camel's back.

A chief factor in RSN carriage decisions is the all but guarantee that TV subscription providers (cable, telco and satellite) that have no interest in sports and don't even watch ESPN –one of the most expensive channels to carry - are being pushed to the edge of cord cutting as sports costs drive their bills ever higher. Many already have jumped to non-sports OTT services such as Netflix, Amazon, etc.

Much of the intensifying debate among TV service providers, given rising content costs and the growing number of RSNs overall, is whether to offer the haves to the basic cable masses, or to combine them in an extra add-on tier for interested fans, which they can charge extra for. The answer seems obvious.

By the Horns?

And then there's the dilemma of what to do with team-specific networks (channels) which started in earnest when the Longhorn Network, which only carries University of Texas sports programming, launched three years ago this month. Heisman Trophy Winner Johnny Manziel helped boost the viewership value for this live sports property immensely.

The Longhorn Network is now carried by such providers as AT&T, Charter Communications, Cox, DISH, Grande Communications, Google Fiber, Time Warner Cable (Texas), Verizon, Consolidated Communications, Cablevision and others.

Conspicuously absent from the list are Comcast and DIRECTV. The network says it's in "active discussions with other cable and satellite providers and hope to have more agreements in place soon."

Instead of carrying it nationwide or across their entire TV system, some of these providers only offer it in a few states or throughout a specific geographic region. By contrast, the new SEC Network is being carried system-wide by providers because of broad, multi-region, viewer interest.

Drop Off

And then, believe it or not, there are instances when RSNs get dropped by a provider.

Such was the case when DISH Networks decided to cut ties with CSN New England (CSNNE), the live game and overall home of the National Basketball Association's Boston Celtics. This action focuses the discussion of the bottom line and simple demand and supply as the make-or-break factors.

The (Very) Ugly

If you've read my past stories on the standoff between Time Warner Cable, which has the local rights to L.A. Dodgers games, and other providers such as DIRECTV who won't carry them claiming the price is too steep; you can skip these few paragraphs as the situation has still not been resolved.

This situation has kept roughly 70% of Dodger fans from seeing a single game on local TV so far this season with only TWC customers and those of a few small providers unaffected. This would sure seem like a nuclear winter for fans of any team at any level.

This RSN situation shows just how bad things can get when service providers think the price of the content carriage is just too high to make sense. And with just over one month left in the six-month regular season, it's hard to imagine a resolution to this stalemate that will close the wounds of any involved party.

Read this

Just this week L.A. Mayor Eric Garcetti has asked federal regulators to examine the stalemate that's prevented much of the region from watching the Dodgers so far this season. If it is examined, we all need to know what was learned – on the business side at least.

The Bottom Line

Because it's the most coveted live content, and to fans the most coveted content period, college and pro sports games present all TV service providers with an epic and seemingly unsolvable challenge: how do you spend smart and profit from your decisions while keeping customers happy?

Sadly, there is no one right answer to this question. That's evidenced by the above listed steps providers are taking with RSNs to manage the mayhem. And often these steps are forced.

Keeping the customer happy in an ever changing business and technology environment always works, but clearly isn't always possible economically. When it comes to the complicated world of live sports, no one provider can keep all of its customer happy all of the time. Most of the time is a goal worth shooting for but the demands of a growing population of RSNs makes that a long shot.

Here's to hoping for a bull's-eye.

Stay tuned.