Tuesday, May 12, 2009
NEW ENGLAND MONOPOLY
Comcast has the most to gain by purchasing the NYTC stake in NESV, LLC because of NESN. (Jeremy Jacobs / Delaware North would likely be interested, as well, to increase his share in NESN and secure the Fenway concessions contract, but Comcast has more to gain.) Owning a little over 14% of NESN would provide Comcast with the benefits of both vertical and horizontal integration.
Regional Sports Networks are costly for cable providers. RSNs need to be a part of the basic tier, which causes a high percentage of cable customers to subscribe and high monthly service fees paid back to the Network. A strategy to reduce this cost is to team up with the RSN to enjoy the margins on both the wholesale and retail sides. This type of partnership usually happens in the RSN development stage to avoid any kind of distribution issue, and with the cable company likely paying a below market price. Obviously, this will not be the case with NESV, LLC, as the NYTC is floating $200M and needs to get ever last cent. But the acquisition should be on the Comcast conference table considering the power they and NESN could have in the Boston media market.
Comcast, Henry, and Jacobs could combine and spinoff NESN and Comcast SportsNet to gain leverage over television advertisers. In an area that’s entertainment is dominated by professional sports, which also happens to be one of the few DVR proof programs, the newly created RSN would be the biggest player in the industry. If your company’s target is Boston-Manchester males aged 18-39, your media buyer is on the phone with a sales rep at NESN/CSN. With any merger between former competitors, redundancies are throughout the new organization and could be eliminated thereby increasing profitability. A merger between NESN and Comcast SportsNet would be an even larger cash cow for the threesome then if they are as rivals.
Comcast has the most to gain by purchasing the NYTC stake in NESV, LLC because of NESN. (Jeremy Jacobs / Delaware North would likely be interested, as well, to increase his share in NESN and secure the Fenway concessions contract, but Comcast has more to gain.) Owning a little over 14% of NESN would provide Comcast with the benefits of both vertical and horizontal integration.
Regional Sports Networks are costly for cable providers. RSNs need to be a part of the basic tier, which causes a high percentage of cable customers to subscribe and high monthly service fees paid back to the Network. A strategy to reduce this cost is to team up with the RSN to enjoy the margins on both the wholesale and retail sides. This type of partnership usually happens in the RSN development stage to avoid any kind of distribution issue, and with the cable company likely paying a below market price. Obviously, this will not be the case with NESV, LLC, as the NYTC is floating $200M and needs to get ever last cent. But the acquisition should be on the Comcast conference table considering the power they and NESN could have in the Boston media market.
Comcast, Henry, and Jacobs could combine and spinoff NESN and Comcast SportsNet to gain leverage over television advertisers. In an area that’s entertainment is dominated by professional sports, which also happens to be one of the few DVR proof programs, the newly created RSN would be the biggest player in the industry. If your company’s target is Boston-Manchester males aged 18-39, your media buyer is on the phone with a sales rep at NESN/CSN. With any merger between former competitors, redundancies are throughout the new organization and could be eliminated thereby increasing profitability. A merger between NESN and Comcast SportsNet would be an even larger cash cow for the threesome then if they are as rivals.