Wednesday, February 23, 2005

Boston Sports Media Market

5. Boston

2.4 Million Television Households

In 1984, the Red Sox and Bruins launched New England Sports Network (NESN). To this day, the Sox own 80% of the network and the Bruins 20%.

Over time, NESN has grown into a cash machine. The Red Sox 80% share in NESN was thought to be valued at approximately 50% of the $700 million paid by John Henry and Tom Werner for the team in 2001. This means that the total value of the network (including the Bruins' share) was approximately $440 million at that time. However, it is difficult to separate team value from network value since teams will often underpay themselves for rights to avoid league revenue sharing.

The Sox normally air 120+ games on NESN, with Friday night games licensed to local UPN affiliate WSBK. Some Bruins games appear on WBZ (CBS 4). Obviously none of these rights will change any time soon.

A couple of years ago NESN merged its website with the Boston Globe, which is owned by NY Times - a minority partner in the Sox.

The odd man out in this situation is the Celtics. However, this has probably worked in their favor in terms of rights fees. The entire schedule of regional games airs on Fox Sports Net New England, which is now 50% owned by Cablevision and 50% by Comcast. Comcast acquired their ownership stake from AT&T, who in turn acquired it from MediaOne. The Celtics have a long term deal with FSNNE through 2017.

New England is rich with colleges and universities, so there is plenty of additional local programming to support two RSNs, especially hockey and basketball from BU, BC, etc.

In the near future, look for Cablevision to sell its 50% stake in FSN New England to Comcast as part of its yard sale of assets. As the dominant cable MSO in the Boston area, Comcast can wait another 12 years to put the screws to the Celtics while cutting out the middleman in the meantime. Gaining full control will also allow them to amortize the cost of Comcast SportsNet programming over yet another network.

NESN is in the the enviable position of being able to negotiate a hard line with Comcast in all future negotiations because viewers cannot live without the Sox and Bruins. The only possible changes to NESN may eventually be a switch from all hyper-regional shoulder programming to some Fox Sports Net network programming if/when Comcast drops the FSN national feed on its new Comcast SportsNet New England.

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