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‘Problematic’ blackout rules must change as sports networks struggle, Cardinals say

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As Major League Baseball navigates through the current uncertainty at the local broadcast level toward a more sustainable, profitable model, it is essential Cardinals ownership said Monday that the “antiquated” blackout policies are abandoned, especially for markets like theirs who are losing subscribers as a result.

“The territorial rights geography of MLB is like 100 years old, maybe,” said Bill DeWitt III, Cardinals team president. “It’s been modified with expansion, but you can imagine it creates distortion because of the antiquated nature of it. There is a lot of talk in the owners’ meetings about cleaning it up. Put it that way. It’s a bigger issue than just us. I think these blackout areas are really problematic in baseball and everybody knows it.

“We’re hopeful that some of that gets solved through this local media rights changing of the guard.”

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With millions of viewers clipping their cords and dropping cable, the once flourishing, DVR-proof business of live sports on TV is under duress and several Regional Sports Networks (RSN) are in jeopardy. Diamond Sports, a branch of Sinclair Broadcast Group, may have to explore bankruptcy, and what that means for its Bally Sports networks is unclear. The Cardinals and Blues have broadcast deals with Bally Sports Midwest, and the Cardinals are in the middle of a 15-year, $1.1-billion deal that also includes, for the first time in their partnership, an ownership stake in the network.

At the time of the deal, an executive with the Cardinals noted that stake allowed them to benefit from shared revenue growth and tech — such as streaming — but also share in the risk.

“It’s a risk factor for us going forward, but I think MLB is on the case and has a lot of contingency planning in place that should something happen there we feel good that there’s a game plan,” DeWitt said during a meeting with the media Monday at the team’s 26th Winter Warm-up. “MLB is doing a lot of work. I think they’re really on the cutting edge of understanding that industry because every team is dealing with it in one form or another, whether the team owns a piece of its RSN or whether a team is just receiving rights fees. There are a lot of models out there. The bottom line is the overall economics of RSN have been in decline and that’s concerning to us all and all of sports.

“It’s something we have to be cognizant of.”

Cardinals ownership said that questions about the immediate and long-term future of RSN has not altered how they budget for the big-league team, not at the moment.

This past week, Major League Baseball hired Billy Chambers as its first executive vice president of local media. His hiring signals MLB’s intent to be more present and active in the local broadcast of games. Commissioner Rob Manfred recently called the RSN model “probably not sustainable over the long-term.” One possibility is that the leagues will take ownership of the broadcast rights controlled by Diamond Sports. Fourteen teams have deals with the Sinclair brand. But what the teams and Major League Baseball do to distribute the content from there must be decided. The league and its owners own and operate a potential vehicle to help: MLB Network.

The Cardinals signed their current deal with Bally Sports Midwest less than 10 years ago to start with the 2018 season. That was a bountiful time for sports and cable deals because live sports remained appointment viewing and lucrative for both cable subscriptions and advertisers. Since 2012, however, households that pay for cable have been cut 30%, The Washington Post reported.

A tagalong issue for Major League Baseball has been its maddening and inconsistent blackout rules for services like MLB.TV. There isn’t a big-league team in Iowa, and yet a fan in Iowa City is under blackout restrictions for Cubs games, White Sox games, Twins games, Brewers games, Royals games, and Cardinals games. Major League Baseball sees Las Vegas as a potential market for a team, but subscribers to MLB.TV in the city are kept from the games due to confusing blackouts of home games for the Dodgers, Padres, Athletics, Giants, Angels and Diamondbacks. 

Such policies that limit games restricts the potential growth of streaming subscribers when they get an archaic jigsaw puzzle of access and not access to a team even tangential to their region, let alone adjacent. 

That, chairman Bill DeWitt Jr. said, is a frustration for a team that relies on a regional fan base and regional ticket sales as a major source of revenue. The Cardinals’ radio network’s reach is the largest geographically of any team — but its streaming footprint is cramped.

“It’s especially important for us because we do have a regional fan base and our subscribers have been declining because (of) the mode,” DeWitt Jr. said. “We’ve lost subscribers — not because they don’t want to watch Cardinals baseball. It’s just not available. I think (things) definitely are going to change. MLB is on the case. … In a not too long period of time, it’s going to be a different delivery system where everyone will have an opportunity to watch Cardinals baseball.”

The immediate decision facing the Cardinals and their RSN partner is the hiring of a new play-by-play broadcaster.

Dan McLaughlin, the longtime television voice of the Cardinals, left the broadcast by mutual decision with Bally Sports Midwest and the Cardinals. McLaughlin was arrested in early December and charged with driving while intoxicated for the third time. A search for the next play-by-play voice began this past month, and Post-Dispatch staff writer Dan Caesar reported that invitations to Joe Buck and Bob Costas to do some games were politely declined.

Bally Sports Midwest is driving the decision, Bill DeWitt III said, and is beginning to interview leading candidates. The Cardinals join the talks in the coming week with a decision possibly coming as early as the end of this month, DeWitt III said.

He added that St. Louis ties are a bonus, not a prerequisite.

“I wouldn’t say it’s the only factor when you look at it,” DeWitt III said. “There are some great outside candidates who have done some great stuff. Baseball play-by-play folks, guys, and women who have done other sports who are interested. Some of them have St. Louis connections. That’s part of the mix.”

Through the years, the Cardinals have tied their baseball operations spending to revenue from ticket sales, but nearly a decade ago the broadcast deal gave that a boost. The team budgeted an increase in payroll that mirrored the built-in escalators of their broadcast deal, and this year, as the team described a raise in payroll, it was in part to get back on that curve.

The shrinking of the cable audience in recent years has unplugged the RSN jackpot, but its trouble could hasten an inevitable change that widens the geography of who has access to Cardinals and the revenue as a result.

“It’s a concern and a fluid situation,” chairman DeWitt Jr. said. “There’s no question about it. Something is going to happen sooner rather than later. It’s a big part of our revenue stream. The RSN model is at risk. We’re operating like it’s going to stay, but the reality is there’s going to be change.”

St. Louis Cardinals player Jordan Walker talks about his anticipation for spring training at the Winter Warm-Up. Video by Derrick Goold

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