In a bid to make up for the lack of action on its regional sports networks, the nation’s largest cable operator on Thursday said it has begun issuing credits to subscribers who’ve been impacted by the pandemic-related shortfall.
Speaking this morning on the company’s second-quarter earnings call, Comcast Senior VP and Chief Financial Officer Mike Cavanagh said that distribution revenue at the NBC Cable Networks unit was “adversely impacted by accrued RSN fee adjustments” that were necessitated by the spring’s glaring lack of MLB, NBA and NHL games.
Distribution revenue at the cable networks group fell 15% compared to the year-ago period to $2.52 billion. Cavanagh told investors on the call that the distribution line item would have declined by a far more manageable “low-single-digit range” if not for the RSN credits issued by the parent company.
Comcast owns seven NBC Sports-branded RSNs in such high-impact media markets as Boston, Chicago and its home turf, Philadelphia. The cable giant also holds a minority interest (8%) in the New York Mets’ SNY.
As noted in the company’s 8-K filing with the Securities and Exchange Commission, Comcast’s average monthly revenue per cable customer was $150.17, down sequentially from $156.71. Overall, the credits didn’t pose much of an existential threat to the core business; subscriber revenue was flat at $14.4 billion—that haul would have increased 1.4% if not for the customer makegoods—and the total number of Comcast subscribers increased 4% to 32.1 million.
Comcast had hinted that some sort of RSN credit was in the works as far back as April, when a spokesperson said that rebates would be determined as soon as it became clear what the future held for the three pro sports leagues. While the Comcast RSN fees are not uniform (Celtics fans in Boston don’t pay the same monthly toll as do Bay Area Warriors fans), the surcharge in Philadelphia is a little more than $8.50 per month.
Comcast’s RSN situation is complicated by its simultaneous ownership of multiple components in the transaction. For example, NBC Sports Boston is paying the Celtics for the rights to air the team’s eight upcoming seeding games in the local market. The channel in turn assesses a fee to the operators that carry its signal, and in Boston, the largest multichannel video programming distributor is … Comcast.
Less tricky to track is NBC’s TV advertising business, which in the absence of sports fell 28% versus the year-ago period. Commercial impressions at the broadcast network shrunk 28%, as NBC in the quarter averaged just 769,000 adults 18-49 in prime, per Nielsen C3 ratings. In the span of just four years, half of NBC’s second-quarter C3 deliveries have vanished; in the analogous period in 2016, 1.53 million primetime viewers watched the network’s commercials within three days of their initial airdate.
While Comcast’s move to help dull the pain of the sports drought may not spur other operators to do likewise, some powerful advocates may look to turn up the heat on any foot-draggers. In early May, as the coronavirus was raging in the Empire State and tens of millions of Americans had found themselves out of work, the New York State Attorney General fired off a letter to the heads of Comcast, Dish Network, Charter Communications and other pay-TV services that effectively asked them to freeze all RSN fees.
Now that the NBA, NHL and MLB are back in the swing of things, some of the other distribution heavyweights may follow Comcast’s lead. At present, no legislation has been introduced that would force an operator’s hand, but the less antagonistic the MVPDs’ relations with lawmakers are, the better.