The Nuggets and Avalanche seasons are underway without resolution for the multi-year carriage dispute keeping games off local television on the state’s largest cable provider.
From a business standpoint, though, Altitude TV enters 2021 mostly unscathed.
The independent regional sports network (RSN), still at legal odds with Comcast, says it has not laid off or furloughed any of its more than 100 full-time employees over the past year due to the economic strain of the coronavirus pandemic. Altitude’s financial resilience — with DirecTV/AT&T as its only carriage option — is a reflection of owner Stan Kroenke’s estimated net worth of $8.3 billion.
“We have such good staff and employees across all of our companies, and it was very important to maintain that family,” Matt Hutchings, COO of Kroenke Sports and Entertainment (KSE), said in an interview with The Denver Post. “Appointment television, it all changed. … The good news is, the one thing we know is that people love sports, fans love sports, and fans are always going to want to come back and stay connected to their favorite teams and to feel a part of something.”
While Altitude projects confidence, evolving sports viewership habits accelerated by the pandemic should concern RSNs across the country, with the need to tap into new revenue streams — such as capitalizing on legalized sports gambling — growing.
Upon the re-start of professional sports in 2020, the first batch of Nielsen Ratings showed a national TV viewership annual decline of 32% for the World Series, 61% for the Stanley Cup Playoffs and nearly 70% for the NBA Finals. The potential causes for that freefall range from oversaturation of sports returning all at once, to a contentious election year, to fan lifestyle changes.
Maintaining local interest in the Avalanche and Nuggets might prove difficult in 2021 with attendance prohibited at Ball Arena and the majority of Denver-area cable subscribers unable to watch from home due to Altitude’s dispute with Comcast.
“I think the sports that are really in for a struggle are the MLB, NHL and NBA; where primarily most of their viewership is local on RSNs,” said Jason Gurwin, co-founder of thestreamable.com, which has tracked industry trends since 2017. “As costs of RSNs and cable bundles go up, these streaming services no longer want to carry RSNs because it’s the most expensive part of the bundle that a very small proportion of their viewers watch. At some point, there is going to be this downward cycle.
“RSNs, as a whole, are kind of in a death spiral right now.”
Place your bets
Altitude, which does not publicize its Nielsen data, is countering the viewership challenge by joining an industry-wide RSN trend: Going all-in on sports betting.
“The money in sports gambling is going to be there and somebody is going to make it. Why wouldn’t you want to participate in that revenue stream?” said Jim Martin, former KSE president and CEO who retired at the end of 2019, several months before Colorado legalized sports wagering. “As it opens up and becomes legal in more states, there will be more opportunity and less stigma with doing it.”
The sportsbook PointsBet, with its U.S. headquarters based in Denver, signed a contract with KSE that made it the exclusive betting partner of the Avalanche, Nuggets and Ball Arena. Fans watching games on Altitude can expect a heavy dose of analysis driven by point spreads, over/unders and prop bets. But the NBA and NHL also place limits on the amount of sportsbook advertising in each game broadcast.
“Our goal is to be involved pregame, in-game, and postgame,” PointsBet’s U.S. COO Eric Foote told The Denver Post. “It’s how we weave a contextual story or message that enhances the experience of the consumer into what they call ‘wager-tainment.’ We want to give the viewer a better experience to learn and be educated on sports wagering, but secondly, have the talent at Altitude talking about it.”
Altitude isn’t alone in its commitment to sports betting. In November, the Sinclair Broadcast Group announced it sold the naming rights for 21 of its RSNs to the sportsbook Bally’s. The deal will reportedly net Sinclair $85 million over the next 10 years. It leads to an interesting question for Colorado sports viewers: Is PointsBet TV on the horizon?
A single naming-rights deal replacing Altitude would not come close to the Sinclair-Bally’s contract, but PointsBet has expressed interest in expanding its partnerships with Kroenke Sports. PointsBet is currently a primary sponsor for Altitude, but the sportsbook does not have exclusive media rights for game broadcasts.
“We would never rule anything out,” Foote said. “Those (naming-rights) discussions have not come up with the Kroenkes to date.”
Hutchings said there are no imminent plans to rebrand Altitude TV, but added: “There are a lot of folks (in sports media) doing a lot of unique and very cutting-edge ideas. In any business, you’ve got to be smart, and you’ve got to always look and see what opportunities are out there.”
PointsBet is also a keen observer of the Altitude/Comcast legal dispute, as the burgeoning U.S. sportsbook currently has partnerships with eight different NBC RSNs (owned by Comcast). The PointsBet footprint in the Denver area would certainly grow faster with resolution and more fans watching games on TV.
“We’re obviously aware of what’s going on having conversations not only with the Kroenkes but also with our relationship with Comcast NBC,” Foote said. “Those discussions are strictly between the Kroenkes and Comcast directly. We’re optimistic those will get ironed out and that will increase the distribution.
“What we’re working on with the Kroenkes is: Are there other means of distribution for live content?”
Direct to consumer
Streaming service giants like Netflix, Hulu and Disney Plus reaped the benefits of a global pandemic and strict public health orders in 2020 with a combined 50% annual increase of U.S. subscribers, according to the Wall Street Journal, with “cord-cutting” from cable or satellite TV packages growing in popularity.
A common refrain from frustrated Avalanche and Nuggets fans is the lack of streaming options to watch games on Altitude. It wasn’t until last August, one year into the Comcast blackout, that Altitude announced its partnership with AT&T to stream live games without a cable or satellite package.
But it doesn’t come cheap. Altitude is available on AT&T TV NOW Max for $80/month or AT&T TV Choice for $65/month, per thestreamable.com. Hutchings said Altitude continues to seek more nontraditional options to broadcast games.
“Fans have so many different ways that they can consume and watch their favorite games and there are so many different platforms,” he said. “That technology is exponential. It changes on a daily basis. That’s something we stay very, very close to and we keep an eye on the newest technology. … We continue to try to answer the call to our fans in how they want to consume (sports) and how they can get connected to their teams.”
Bob Thompson spent nearly three decades in the sports television industry before retiring in 2009 as the president of Fox Sports Networks. He does not believe the traditional distribution method for Altitude, packaged with cable or satellite bundles, is over.
“The bundle might be having some rehabilitative surgery, but it’s not dead,” Thompson said. “If we get to this point down the road and ratings are still well below where they were in previous years, then I think you have to take a real hard look at the whole model and see if there is something wrong there.
“Everybody is going to have a little bit of tempering of expectations. Whether that be the team owners, the RSN owners, or (TV) distributors. It’s a model that worked brilliantly for years and maybe some things got out of whack.”
It appears Altitude is uniquely positioned to withstand the financial downturn of the pandemic while being carried by only one major television distributor. The Comcast blackout is likely to continue into the foreseeable future after a federal judge partially denied a motion to dismiss Altitude’s antitrust lawsuit — with the final pretrial conference not set until April 4, 2022. But industry precedent suggests a jury trial is unlikely.
It all sets up for another disappointing season for local Avalanche and Nuggets fans subscribed to Comcast for their TV service.
“Networks should be and are looking at new avenues for distribution and revenue streams — not just the gambling — but streaming and other models,” said Martin, the retired KSE president and CEO. “The world has changed and there are competitive distribution models and broader platforms. Regional sports, and sports in general, have to learn to adapt to that.”
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